couple more snips from Prudent bear Bulletin
prudentbear.com
Asia Inflation Watch:
April 1 - Reuters (Nao Nakanishi): “China’s overloaded railway system is nearing collapse as it struggles to cope with the demands of a roaring economy. And the side effects could be global. Against a backdrop of endemic power cuts, overcrowded and decaying roads, and ports filled with unloaded ships, the problems on the railways highlight the urgency behind the government’s drive to bring growth down to sustainable levels. Industry and foreign company managers involved in moving China’s massive raw material imports say the shortage of railway containers and tracks has compounded the problem. With no wagons to shift cargoes, ships must wait longer and longer outside ports, worsening the global shortage of vessels caused by China’s voracious appetite for all kinds of commodities ranging from crude oil, to iron ore, to grains. But to build more tracks, wagons or engines, they need to import even more raw materials. ‘There’s an extreme shortage of railways, which is not geared to cope with this huge demand...Ships are used as storage," said Harry Banga, vice chairman of Noble Group, one of Asia’s biggest diversified commodities trading companies. ‘Now the government is in the process of ordering new railways and new wagons. That again is putting more pressure to produce more steel. That is putting more pressure to import more iron ore,’ he said…To make matters worse, the Chinese government has prioritized internal transport of coal or grains as it eyes the threat of social discontent in provinces hit by power shortages or surging food prices due to the booming economy.”
California Housing Bubble Watch:
March 28 – Los Angeles Times (Daryl Kelley): “The money was good, the job was a natural fit and you can’t beat the balmy seaside weather of coastal Ventura. But before new City Manager Rick Cole accepted his job last month, the City Council needed to provide a $325,000 down payment on a modest 75-year-old house. Cole, 50, is an expert on things that make communities tick. But the extent of the Southern California housing crisis didn’t hit home until he began searching for a new house for his family. ‘We paid $675,000 for 1,481 square feet,’ said Cole, who fell into a bidding war for a 1929 Spanish-style house in a resurgent neighborhood with classic architecture, but an abandoned elementary school and streets full of potholes. The price started at $639,000 and just kept going up. It was an absolutely unbelievable experience,’ said Cole’s wife, Katherine Aguilar Perez. ‘Ordinarily, you’d walk away,’ Cole said. ‘Except the next house is going to be the same, and a month later it’s going to be worse.’ His three-bedroom, one-bath house in midtown Ventura — an uneven collection of small dwellings and tattered apartments, some with distinctive architectural styles — has increased $480,000 in value since 1997, when it sold for $195,000. A Santa Barbara couple, Thomas and Cara Hill, purchased the same house in 2000 for $320,000… ‘It’s fairly obscene,’ said Hill, 35, who owns a Santa Barbara surf T-shirt business and whose wife teaches elementary school… ‘It was our first home. And we moved here out of pure necessity. We’re UC Santa Barbara graduates, and we wanted to live there. But housing for us in that market was nonexistent.’ Today, the Hills are counting their good fortune. They are taking more than $350,000 in equity up a Ventura hillside to buy a Spanish-style house of 2,700 square feet and slight ocean view for $900,000. ‘We’re still trying to catch our breath,’ Hill said. ‘And we’re feeling we’re kind of rolling the dice a little bit. But when you compare coastal Ventura with the rest of Southern California, I think there’s still some room to appreciate some more.’”
April 1 - Long Beach Press Telegram: “Low interest rates have helped keep demand high, causing values in Long Beach to appreciate between 20 percent and 30 percent in the last few years. ‘I think all the indications are right now is that it’s the best time to buy because of the interest rates,’ said Rosemary Voss, manager of Coldwell Banker Residential Brokerage. The California Association of Realtors recently upped its forecast for median home price appreciation to 20 percent to 24 percent for 2004. On a typical home, that’s $8,000 worth of appreciation each month, Voss said. ‘In our industry people used to say ‘I wish I would have bought five years ago.’ Now they’re saying ‘I wish I would have bought in February,’” Voss said. ‘What will they be saying next?’” |
