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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Elroy Jetson who wrote (12925)	10/6/2004 9:07:30 AM
From: mishedlo	Respond to of 116555

China to phase out macroeconomic cooling measures - report Wednesday, October 6, 2004 4:31:52 AM afxpress.com BEIJING (AFX) - China will phase out measures aimed at reining in the overheating economy amid fears that the tough controls may lead to a hard landing, the South China Morning Post reported, citing unidentified sources. The Hong Kong-based newspaper said the central government is expected to announce a decision to "adjust" the macroeconomic controls either later this month or early next month. The announcement would be made during the annual national economic conference to plot growth targets for next year, the paper said. At the conference, top government officials are expected to declare "preliminary success" in curbing runaway fixed-asset investment and bank lending. The officials will likely stress that the planned withdrawal of administrative measures does not signal a relaxation of all macroeconomic controls. They are expected to announce that macroeconomic controls in general - including keeping a tight rein on growth in land and money supply - will remain the medium- and long-term policy to prevent the economy from overheating again. "The real situation is worse than official data has suggested," one source was quoted as saying "Many banks have largely stopped lending for fear of breaching the central government's rules, and this is not healthy." In addition, the sources said policymakers have become less concerned about strong inflationary pressures. "Inflation is mainly driven by rising food prices, but this is good news for the country's millions of farmers," one source was quoted as saying "The government does not want grain prices to drop just as it is planning to boost the living standards of farmers." Since the middle of last year, the central government has introduced a series of administrative measures aimed at cooling investment in fast-growing sectors such as aluminium, steel, cement, property and auto manufacturing Banks were ordered to exercise caution when issuing loans, while inspectors were deployed to force local officials to comply with decisions to shut down hundreds of industrial zones built on illegally seized farmland. The measures proved highly effective with investment in the mainland's factories, roads and other fixed assets slowing to 26 pct year-on-year in August from 43 pct in the first quarter.

To: Elroy Jetson who wrote (12925)	10/6/2004 10:09:27 AM
From: mishedlo	Read Replies (4) \| Respond to of 116555

Interesting info found on Yahoo finance: biz.yahoo.com "Throughout history if you didn't have the drachma, you literally could be enslaved by your debt, and you'd become the property of your creditor." [I'd argue that its still true today. mish] Some other snips: Some 1.6 million U.S. households -- one of every 73 -- filed for bankruptcy in 2003. Average per household debt in the U.S., not counting mortgage debt, is about $14,500 -- especially noteworthy because before the 1930s, most middle and working class people had no major debts. Banks would not lend to them; they rented their homes and if they did own a house, it was paid for as it was being built. Some 40 percent of American families annually spend more than they earn. About 60 percent of active credit card accounts are not paid off monthly. Average card debt among people who have at least one card is $9,205 -- triple what it was in 1990. Average personal wealth of a 50-year-old American, including home equity: less than $40,000. [In other words, negative, after the bubble collapses. mish] The average interest rate on credit cards is 18.9 percent. Last year the credit card industry took in $43 billion in card fees. The average graduate student has six credit cards and one in seven owes more than $15,000. The personal savings rate in the United States has dropped from 8 percent in the 1980s to just under 2 percent since 2000. Medical debts sink the ship in one of every 20 bankruptcies. Typical health care debt: $25,000. Typical victim: a senior on a fixed income. Typical scenario: pricey prescriptions bought on high-interest credit cards.

To: Elroy Jetson who wrote (12925)	10/6/2004 11:10:48 AM
From: mishedlo	Read Replies (2) \| Respond to of 116555

Elroy (or anyone) can you answer this question from Kestral presented on my board on the FOOL. ================================================================ One of my best friends is much older than myself (he's in his mid-40's) and we were talking about housing, since we are both looking to buy a place at some point in the near future. He said something that really struck me. He did the numbers and nevermind inflation, just take Housing Cost (as in total cost of buying a home) as a percentage of one's Annual Income (pre-tax) and he said that when his parents got married and bought a house, the cost of buying a house was roughly one and a half times his yearly pre-tax salary. We did some quick math on an average home and we can clearly see this is not the case today. In fact, it's more like ten times one person's yearly pre-tax salary! I tried to do some Googling to see if I could find housing as a percentage of annual income and wasn't too successful but I'd really be interested to see what the results are. I'd be willing to bet that the chart would be a LLUR (lower left to upper right) pattern with the latter half of the upper right going extremely parabolic. I'd also be interested to see what the historical average would be (and I'd be willing to bet we are well above that number). If it's true that reversion to the mean inevitably happens, then there could be a lot of pain in the future. But I'm more interested in knowing for personal reasons. At this point, I'm stating the obvious but it seems like renting is a much better deal than buying at the moment.

To: Elroy Jetson who wrote (12925)	10/6/2004 12:11:49 PM
From: GraceZ	Respond to of 116555

Your misreading of charts is so obvious that some have gone so far as to privately suggest to me that you may be blind. They suggested that your computer can read the message text to you, but you can't actually see the charts. Did anyone here even ask where the underlying data came from? Am I the only one who attempted to recreate it from loan data? Recreate that 300 billion using loan data and see where it came from, then get back to me and tell me which one of my assertions was false. their investments are doing poorly; wages have remained stagnant; the number of unemployed people who are no longer eligible for unemployment benefits are at record numbers; living costs have risen drmatically (in spite of what the Economagic Lie Server says). As painful as your own situation might be, you really can't extrapolate your experience onto the macro data. Most people include their homes as an investment. For the majority of households in the US it is the largest or only investment and it has performed rather well in the last three years. We have a lower unemployment rate than the 70s, 80s and most of the 90s. I don't want to argue this anymore, the largely unemployable population on SI will never believe that people, for the most part, have jobs here in the US. The participation rate has barely budged, if it had fallen precipitously you'd have a chance of making the claim that the government has simply taken the long term unemployed out of the work force to make the rate appear better than it is, but the participation rate is within a point of where it was in 2000. Living costs have risen dramatically where you live, I have little doubt that is true, this tends to happen when you live around people with a lot more money than you have.

To: Elroy Jetson who wrote (12925)	10/6/2004 12:42:50 PM
From: GraceZ	Read Replies (1) \| Respond to of 116555

People have extracted the equity in their homes at a shocking rate during the past four years because they need the money Nobody takes out a 80k HE loan to put in a $5000 Hobart stove, a $4000 dishwasher, a $12,000 Sub Zero along with heated Italian tile floors and marble counters out of economic necessity.

To: Elroy Jetson who wrote (12925)	10/6/2004 1:36:17 PM
From: mishedlo	Respond to of 116555

From hunnj onthe fool I just put my house on the market and plan to rent for a few years but just for kicks, I called Quickloans to see what kind of a mortgage I could get based just on a house price and my credit rating -- no proof of income, no proof of assets, nothing--just a credit rating. The amount was mind-boggling -- well over half a mil at 90% loan to house price. He then explained how I could get that to over 100% with a home equity loan kicker. My how things have changed and it's no wonder foreclosure rates are booming.