China’s real estate bubble overflowing into targeted US cities – Hong Kong imposes 15 percent tax on property purchases made by foreigners. The push for housing near quality universities.
The amount of money flowing in from global markets is incredibly strong. To be more specific buyers from China are big players in many prime areas especially in California. Access to high quality universities and prime neighborhoods is simply another factor that will keep prices inflated more than people may think. Canadians have firsthand experience […]
Not everyone is convinced that housing is back. Banks are slowly selling off repossessed homes; that overhang will curb any upward price movement, said Chris Whalen, senior managing director at Tangent Capital Partners LLC. Too few would-be homebuyers can qualify for mortgages from banks that, because of tighter regulations, are reluctant to extend credit.
Homebuilders like Weyerhaeuser Co. (WY) are showing tempered enthusiasm for the rebound in the housing industry.”While today’s construction levels are still low by historic standards, all forecasts point to continued recovery in 2013, as we begin to return to long-term trend levels that are needed to house a growing number of U.S. households,”
Mark J. Perry caused a minor sensation on October 22, 2012 when he posted a blog about record-breaking fossil fuel production in the United States. Perry is an economics professor at the University of Michigan at Flint and a visiting scholar at the American Enterprise Institute. His blog is titled as an economics and finance website but a great deal of content is about energy.
In “U.S. fossil fuel production will reach all-time high this year; America’s energy self-sufficiency will be highest since 1990” (http://www.aei-ideas.org/channel/carpe-diem/page/2/), Perry shows a stunning graph of U.S. fossil fuel production (coal, natural gas and crude oil) from 1975 to 2012 (Exhibit 1).
I was able to reproduce his graph using EIA data but I had to include natural gas plant liquids to make it match. When I plotted this data on a more conventional y-axis scale, the enormity of the anomaly shrinks to what it really is, namely an increase in overall fossil fuel production within a narrow range of fluctuation over three-and-a-half decades (Exhibit 2).
2011 fossil fuel energy production was 1.3 quadrillion British thermal units (Quads) higher than the previous peak in 1998 with 60.6 Quad in 2011 and 59.3 Quad in 1998. The EIA reports comparative energy production in Quads to normalize the various measures of its components: cubic feet for gas, barrels for crude oil and natural gas liquids (NGL), and short tons for coal. A Quad is a measure of the heat content of those energy sources when burned. Exhibit 3 shows how this conversion is made.
One Quad is approximately equal to 1 trillion cubic feet of gas, 180 million barrels of oil, 120 million barrels of NGL (about 65% of the thermal content of crude oil), and 36 million short tons of coal.
Exhibit 4 shows the various components of total fossil fuel energy at a scale appropriate to understanding which sources increased and decreased over the period of the graph.
Comparing 1998 with 2011 production, coal decreased by about 184,000 tons per day, natural gas increased a whopping 11 billion cubic feet per day (bcf), crude oil decreased almost 605,000 barrels per day and NGLs increased approximately 160,000 barrels per day (Exhibit 5).
Dr. Perry celebrates the success of the shale revolution in his blog calling it “a big deal.” He points out that the U.S. is closer to energy self-sufficiency than at any other time in the past 22 years. But the problem for the U.S. is not total energy. We have always had an abundant endowment of coal and natural gas. The problem is liquid fuel for transport and that comes from crude oil. The shale revolution in oil that he describes is notable and important but it only returns production to 2003 levels which were lower than at any time after 1951.
There is nothing untrue in Perry’s blog but it, unfortunately, contributes to the distorted viewpoint that the U.S. will soon become energy independent and will no longer need to import foreign oil. The U.S. has used more oil than it produces since records were kept in 1920 but became a true net oil importing country after World War II (Exhibit 6).
After production peaked in 1970, not even the discovery of Prudhoe Bay, the largest oil field in the U.S. (12.8 billion barrels produced to date), brought production back to the 1970 peak. Including the recent increase from shale oil, the gap between production and consumption is approximately 9 million barrels of oil per day, almost as much as 1970 peak production.
I am encouraged by the slight reversal in U.S. oil production but see no way that we will become oil independent. The star performer in total fossil fuel production is natural gas. While it is true that gas offers the possibility of replacing crude oil refined products as a transport fuel, this will be decades in the future (massive equipment changes and distribution infrastructure) and does not address the near- to medium-term problem of oil imports. Curiously, nowhere in his blog about economics and finance does Perry discuss the cost and profitability of shale gas or shale oil. Rather than write so much about energy, a subject outside of his training and experience, it would be useful if he wrote about the economics of the shale developments that he is so exuberant about. That would be a big deal.
U.S. Housing and Urban Development granted a 90-day moratorium on foreclosures to homeowners affected by Hurricane Sandy. The special mortage insurance program will help families and individuals start the rebuilding process.
Individual homeowners do not have standing to sue MERS over county recording fees, according to a decision from the U.S. District Court for the Western District of Texas.
As of Nov. 1, new short sales guidelines from the Federal Housing Finance Agency will take effect. The Fannie Mae announcement shows its mortgage insurers are on board with the changes.
Of course the headline was almost immediately redacted … Now should The Onion feel moved to recycle that title for their own nefarious purposes, would the WSJ feel compelled to vigorously defend their IP? Thank goodness Penguin is safe from Mr. Murdoch (at least for the time being) Related posts:Op-Ed Friday: We Need a Mortgage Meltdown Laugh Is Manufacturing Consent a Collapsing Industry Too? DEPART MEN ICE WASH
Related posts:Op-Ed Friday: We Need a Mortgage Meltdown Laugh
Read this item at Housing Doom…
By Charles Hugh Smith, OFTWOMINDS
The destructive whirlwind that hits New York in 2013 will be a financial Frankenstorm.
We are like passengers on the Titanic ten minutes after its fatal encounter with the iceberg: though our financial system seems unsinkable, its reliance on debt and financialization has already doomed it.We cannot know when the Central State and financial system will destabilize, we only know they will destabilize. We cannot know which of the State’s fast-rising debts and obligations will be renounced; we only know they will be renounced in one fashion or another.
The process of the unsustainable collapsing and a new, more sustainable model emerging is called revolution.Rather than being powerless, we hold the fundamental building blocks of power. We need neither permission nor political change to liberate ourselves. A powerless individual becomes powerful when he renounces the lies and complicity that enable the doomed Status Quo’s dominance.
Thank you, Michael S. ($25), for yet another magnificently generous contribution to this site–I am greatly honored by your steadfast support and readership.
for the full posts and archives.
This is interesting. A cat fight has broken out between two State media mouthpieces. The fight began on October 26th when the New York Times published an article on the family wealth of Wen Jiabao. The outgoing Prime Minister’s family controls assets worth $2.7 billion, according to the New York Times.
The article details the usual list of cosy deals and contracts that reserved for connected insiders and family elites in all cultures throughout all time. On the face of it, the story is neither new nor particularly surprising. It’s the timing that’s interesting.
China is in the middle of a leadership transition. It’s been as opaque and shady as you’d expect from the ruling Communist cadres. An in-depth expose on the routine graft, corruption, and favouritism at the highest levels is exactly what the Party would be hoping to avoid right now, when it’s aiming for maximum credibility with the Chinese people.
The People’s Daily — the official mouthpiece of the Chinese Communist Party — hit back two days ago with its own op-ed about the decline in standards at the New York Times. It cited past plagiarism scandals and talked about the New York Times’ deteriorating reputation. It also accused the New York Times of faking and fabricating news.
In an amusing sidenote, the Financial Times reports that the People’s Daily op-ed accusing the New York Times of plagiarism is, itself, almost entirely plagiarised from a melange of previous articles. There is no honour among propagandists. But what really is going on here?
The New York Times story is the third major story this year in the Western press about the ‘hidden riches’ accumulated by China’s leadership. Is this information war at work? Is the New York Times cooperating with the US State Department or merely doing crack investigative journalism?
Perhaps the Chinese are being a bit thin skinned. If you want to be the world’s number one economy and emerging superpower, you have to deal with the haters too. Welcome to the club. Besides, the People’s Daily could have easily pointed out the history of dynastic power succession in American politics (the Kennedys, the Bushs, the Clintons). Oligarchy goes beyond national borders these days.
The Australian take on this will be interesting, given that we’re now officially living in the Asian Century (a term that’s less threatening than the Chinese Century). James Packer becomes the latest Australian businessman to talk his own book by telling everyone to let up on the China bashing. Packer will give a speech in Canberra in which he instructs paid political servants to ‘stop treating China like it’s the Cold War’.
He’s right, of course. It’s not the Cold War. It’s the Code War.
And finally, some reader mail.
“In the meantime, let’s ask a really important question: do intelligent people drink more beer?”
I believe that the answer was aired in an episode of that great 1982 “documentary” on bar life named “Cheers” in an exchange between the proverbial “font of knowledge” Cliff and bar fly Norm-
Well ya see, Norm, it’s like this. A herd of buffalo can only move as fast as the slowest buffalo. And when the herd is hunted, it is the slowest and weakest ones at the back that are killed first. This natural selection is good for the herd as a whole, because the general speed and health of the whole group keeps improving by the regular killing of the weakest members.
In much the same way, the human brain can only operate as fast as the slowest brain cells. Excessive intake of alcohol, as we know, kills brain cells. But naturally, it attacks the slowest and weakest brain cells first. In this way, regular consumption of beer eliminates the weaker brain cells, making the brain a faster and more efficient machine. That’s why you always feel smarter after a few beers.
All that is left to say on the matter is-
prost; salud; sant’e; i sveikata; Iechyd da !!
Avid DR reader
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From the Archives…
Investment Horizons – Introducing the Hubble Market Theory
26-10-2012 – Nick Hubble
The Big Fall in the Stock Market is Still to Come
25-10-2012 – Murray Dawes
A Safer Than Super Investment?
24-10-2012 – Nick Hubble
The Lost Generation in the US Economy
23-10-2012 – Bill Bonner
NAB and Australian Banking is Oversized and Under Pressure
22-10-2012 – Dan Denning
- What Australia Has That China Needs
- Lifting the Curtain on the Chinese Communist Party
- China’s Gold Strategy
- A Chinese Mini Communist Revolution
- Smart Kids Drink More as Adults, Non Drinkers ‘Dull’