Auckland stays near top of unaffordable list - Check out Hong Kong

[CokeZero]

An author of an international housing affordability survey that lists Auckland as one of the most unaffordable cities in the world says he has never been more confident that the trend in New Zealand was about to change.

The ninth Annual Demographia International Housing Affordability Survey has found housing in New Zealand has become slightly more unaffordable in the last year, with median house prices now 5.3 times the median income (median multiple), up from 5.2.

All eight of New Zealand's property markets were "seriously" or "severely" unaffordable and London, New York and Los Angeles are all ranked more affordable than Auckland.

Hong Kong, China is the most unaffordable place to buy a house, with a median multiple of 13.5.

Christchurch-based co-author Hugh Pavletich said the Government was "now very strongly committed to doing what's necessary to start getting affordable housing built".


Pavletich said he had never been more confident something was being done about housing affordability since he started the annual Demographia survey in 2005.

However, Pavletich said the Government should have been "onto this issue" immediately after the 2008 election.

Housing affordability has now "gotten intolerable" and majority of New Zealanders want to see change, he said.

"This is the most confident I've been that there is actually going to be some change," he said.

Auckland continues to be the least affordable market, with a median multiple of 6.7, followed by Christchurch (6.6), Tauranga-Western Bay of Plenty (5.9), Wellington (5.4) and Dunedin (5.1) all severely unaffordable.

Palmerston North (4.4), Napier-Hastings (4.5) and Hamilton (4.7) are all ranked as seriously unaffordable.

Auckland is still more affordable than Australian cities Sydney (8.3) and Melbourne (7.5), but less affordable than Adelaide (6.5), Perth (5.9) and Brisbane (5.8).

Houses are now nearly 80 per cent more expensive than the historic affordability housing norm of 3 times the median income, which was last experienced in the 1990s.

Deputy Prime Minister Bill English, the Minister for Infrastructure, says the issue is "simple": "It costs too much and takes too long to build a house in New Zealand."

English, who wrote the introduction to the recent Demographia survey, said the Government was committed to addressing the findings by last year's Productivity Commission report on housing affordability.

He said the Government's focus was on "land supply, infrastructure provision, costs and delays due to regulatory processes and improve construction sector productivity".

Green Party co-leader Metiria Turei said the report was "proof that the housing market is broken and that major government action is needed".

"Under National and previous governments, home ownership has become an unaffordable dream for many Kiwi families but it doesn't need to be that way," she said.

"Kiwi families need a government that will act, rather than play the part of a disinterested bystander."

Turei said Green policies, including a capital gains tax, would "remove speculators from the housing market and give families a fair chance of buying a home at an affordable price".

The affordability report points to urban containment policies, especially urban growth boundaries, as being responsible for the rising price of housing relative to income.

"This inevitably leads to a reduced standard of living and increases poverty rates because the unnecessarily higher costs of housing leave households with less discretionary income to spend on other goods and services," the report says.

"The higher costs ripple into rental markets, tightening the budgets of lower income households, who already suffer from lower discretionary incomes."


Affordability around the world:

Housing market, median multiple

Hong Kong, China, 13.5

Sydney, Australia, 8.3

Melbourne, Australia, 7.5

Auckland, New Zealand, 6.7

Adelaide, Australia, 6.5

New York, US, 6.2

Los Angeles, US, 6.2

Perth, Australia, 5.9

Brisbane, Australia, 5.8

London, United Kingdom, 5.1

Dublin, Ireland, 3.6

Source: Annual Demographia International Housing Affordability Survey

(Median multiple represents the median house price divided by the median income)

- APNZ

[Baywatcher]

And your point is?

[oriental flyer]

That living here is exceedingly expensive and getting worse daily
Taxi fares to go up, Supermarket prices constantly getting more expensive,
Housing is at impossible levels. Electricity going up, Petrol is near record levels

The only thing that isn't going up is my salary, Well its about time that changed

[DUSKY DOG]

If all the crews went on strike simultaneously from all local carriers that would change

[The Messiah]

These prices are based on median salaries, which in Hong Kong is 13k per month. How does your salary not to mention housing allowance compare to that?

[bekolblockage]

Taxi fares?? Are you serious??!!!

****, they could triple and still be considered reasonable.

Well said Messiah.

Anyway, the majority of Hong Kongers love this sort of notoriety. Almost a status symbol.

[local]

Yeah, well the only good thing about Auckland is that its got a motorway running straight through it!

[broadband circuit]

Yeah, well the only good thing about Auckland is that its got a motorway running straight through it!

Don't forget about the departures aisle at the airport

[Frogman1484]

Eventually the property market in Hong Kong will correct. Probably when interest rates go up maybe sooner. When it does happen you will have lots of people trying to run for the same exit at the same time.

[Threethirty]

Bring it on I say. Property prices are criminal right now, propped up only by Bernanke and his bankster buddies, they exist on a bubble of thin air.
Hong Kong is the ultimate in elitist mentality, people are only here to get rich quick, monkeys in suites selling derivatives that are backed by only the willingness of the FED to print non existent 1 and 0's out of the ether. What with the lowliest of low finance type expats coupled with the ultra materialistic Mainland-Chinese money is God mentality and what are we left with but a seething puss of effluence and a city built upon greed, avarice and corruption.

[cxorcist]

330,

Agree with your post, but nobody is forcing Hong Kong to tie its dollar to the USD. So don't blame the US when it all comes crashing down. The Fed adjusts its monetary policy based on the needs of the US... Not Hong Kong!

[Threethirty]

I agree to some extent but I would substitute what you said about the Fed basing it's policy on what it is good for the US for the FED inventing policy for what is good for the global banking sector.
Hong Kong will always align with the dollar for as long as we're alive, it still doesn't take away some of the blame from the US and more specifically unelected Federal Reserve bankers for spending it's/their way into oblivion and for committing trillions upon trillions in cocaine QE money for bankers to gamble with in London, NYC and Hong Kong, which in turn has the unintended or perhaps intended consequence of driving up risk "assets"; which happens to include Hong Kong property.

This Is What 1,230 Days (And Counting) Of Explicit Market Support By The Federal Reserve Looks Like | Zero Hedge (http://www.zerohedge.com/news/2013-01-22/what-1230-days-explicit-market-support-federal-reserve-looks)

[cxorcist]

330,

I certainly agree that banking sector health is considered by the Fed, but do you disagree that the current Fed monetary policy has more to do with deficits and debt than making the fat cats fatter? The Fed realizes correctly that US government borrows nearly half of every dollar it spends. Annual deficits are nearly 1 trillion. The US government's debt is now more than its GDP. How do you think a government finances this type of crime against its own people? Can you imagine how much worse the fiscal crisis would be if the Fed put rates higher or didn't have massive monthly bond auctions?

The problem in the US is not the Fed. The problem is spending. No amount of realistic taxation could cover the government outlays. Everybody talks about the Fed as if they are to blame. We should look no further than the Obama administration and Congress for perpetuating a massive fraud against the people. Balance the budget, start paying down debt, and the Fed policies will return to more reasonable levels... As will property in Hong Kong and inflated markets around the world.

[crwkunt roll]

Begs the question, if they can print so much money at will, why are there charities and why do I need to pay tax?

[cxorcist]

Because nothing in this world is free, even if you control the printing press. Somebody has to pay. When we print money, we dilute the wealth of those who have cash. It might as well be a tax, but the printer is much more palatable politically.

[Threethirty]

I do blame the Fed because they are printing money out of thin air to buy treasuries which they purchase via the banks, the banks in turn make a healthy profit off this trade. Importantly the Fed is not Federal at all but is actually owned by the banks themselves. So in essence the private banks and the Fed are encouraging spending because it increases the profits for the banking sector.
If the Central bank and it's magical printing press didn't exist the US would be forced to reign in it's spending. This is not a chicken and egg scenario, the Fed brought about the end of traditional banking, encouraged leverage and fractional reserve lending. In the past the US was always able to balance it's books until the likes of Greenspan and Bernanke came along. In this regard, it is fairly obvious to me that this rash spending spree didn't happen without some support from both the Fed and the Treasury, the latter of which is headed up by none other than Matt Zames a JPMorgan banker, as the yanks say, Go Figure!
Spending does not help ordinary people, as you've said yourself future generations will have to pay and by not taking action now the inevitable crash will be much harder and more disastrous than if we took the medicine immediately.
What needs to happen is the complete opposite of what you have said. Firstly interest rates need to rise, it encourages saving as opposed to gambling and spending both of which created the mess we're in now. The only beneficiaries of low interest rates are Investment banks and Governments. Investment banks borrow money for nothing, which encourages extreme leverage and gambling activity, this leads to a reluctance to lend money to people on the street for mortgages. They earn more money from creating immoral and fraudulent derivatives than doing what they're supposed to be doing as traditional banks.
You mentioned that the resulting crash would have been more severe had the Fed not stepped in, I beg to differ. What you are seeing right now is a full blown depression, unemployment in the US is more like 22%, the official figures are bogus. People are mistaking the strength of the stock market for a sign of recovery, this is evidently not true, the number of people on food stamps in the US has grown exponationally! The only difference between this depression and the last one is that there are no food queues, they are now in the form of food stamps! If we had done the right thing by punishing the banking sector and written off the bad debt we would of had a short sharp recession followed by a boom. If you have any doubt on this just look at what happened in Iceland, they did all this and are now flourishing, an example for all right-minded people who care to notice.
By advocating more of the same failed monetary policy such as rampant spending, Quantitive easing and low interest rates the US and the rest of the Global economy will limp along in zombie like fashion. Spending will keep on increasing, inflation will skyrocket, jobs will hemorrhage, banker fraud and corruption will thrive even more and illegal wars of an Imperialistic nature will continue to be fought. By doing what is right such as increasing interest rates, reinstalling a spirit of capitalism by letting corrupt institutions fail and not rewarding fraud and crime; we are more likely to see a return to solid growth and an environment more in favour of enterprise and entrepreneurship, not to mention a realistic value for HK property! If you get the time I suggest you might want to read this below.

Guest Post: The Global Economic Disease In 8 Points And The Cure In 4 Points | Zero Hedge (http://www.zerohedge.com/news/2013-01-24/guest-post-global-economic-disease-8-points-and-cure-4-points)

FleeceBook: Meet JP Morgan's Matt Zames | Zero
Hedge (http://www.zerohedge.com/news/2013-01-11/fleecebook-meet-jp-morgans-matt-zames)

Learning A Harsh Lesson | Zero Hedge (http://www.zerohedge.com/news/2013-01-24/learning-harsh-lesson)

It's Official: Worst. Recovery. EVER | Zero Hedge (http://www.zerohedge.com/news/2013-01-24/its-official-worst-recovery-ever)

[cxorcist]

330,

You wrote a bunch, and I'm not going respond to all of it because I'm similar to most typical Americans in that I have a short attention span. However, I agree with much of what you wrote. That said, I DO think this is a typical chicken and egg situation. Which is cause and which is effect? Is the Fed the problem in that it enables government over-spending OR is the over-spending government the problem in that it forces the Fed to adopt ridiculous monetary policies just to preserve the "integrity" of the federal credit rating? Honest question???

Isn't the root problem that the American electorate wants to have its cake and eat it too? Yanks now want Euro-style government benefits and low taxes all at the same time. In my mind, it's decision time... Slow growth, high taxes, and high unemployment with a large social safety net; or low taxes, low unemployment, higher growth, and less welfare.

[Liam Gallagher]

You say interest rates need to rise. This argument is often made, however when the US owes US$16,400,000,000,000 can they afford for interest rates to rise?

Long term US interest rates sit just below 2%, which results in an annual interest bill of about $300bn. To put this into context, this is about a third of the US Defence Budget and dwarfs the recent tax rises which will generate about $60bn. Consider an interest rate rise to, say 5%, and 4 more years of Obama annual deficits of $1,300bn. The US would owe $21,600bn and at 5% that results in an annual interest bill of $1080bn. Again, to put that in context, the annual interest bill would be greater than the Defence Budget and, assuming Total Revenues of $3000bn (currently $2,500bn), for every $3 of revenue, $1 is spent on interest.

Even if interest rates stay at 2%, the picture is not pretty. The market knows the US has the assets to back this debt and, when compared to the rest of the world, the US remains a good debtor. However, the US is on a fiscal trajectory to running out of cash (not assets). The Obama administration know that in 4 years, this is some else's problem.

It's call inter-generational theft!!

[cxorcist]

Exactly right Liam! Unfortunately, most Americans cannot do the basic maths you laid out. I think Obama and the Democrats love debt. Not only do they get to spend more and buy votes with it, they know that eventually the bill has to be paid, and then they will finally get to invoke truly punishing taxes on the wealthy so that "social justice" can realized.

[flyingkiwi]

not to start a US political debate but wasnt it the previous administration that put the country into debt, under clinton they were running spurplus

[Frogman1484]

The problem is the structure of the whole financial system. We all have to keep on borrowing in order to keep the whole ponzi scheme going. Not just the USA but everyone. The scheme will keep on going as long as we continue to run to the US dollar. The day we loose confidence in the US$ is the day we will have the biggest financial crisis to date... One day it will happen.

[Threethirty]

The solution, stop spending money on offense sorry I mean defense, stop fighting illegal wars, stop bailing out banks, get corporations to pay tax, ban lobbyists from finding loopholes ensuring the likes of Starbucks get away scot-free. The solutions are simple, just not popular to the 1% elite. Will this ever happen, like f@ck it will, the point of this post is?

[Liam Gallagher]

Flyingkiwi,

George W. borrowed about $9000bn in his 8 years and Obama has put on just over $7000bn in his first 4 years. The point to note is the debt trajectory under Obama and the effect of compounded interest rates. There is plenty of blame to go around, so neither Democratic nor Republican are blameless here.

However, Obama is President and responsibility rests with him. I find it amazing that around every table in America, families discuss their finances and make a plan around some basic principles, like,

1. A scenario of spending more than you earn is not sustainable. It is not acceptable to say you need to save money and then move the conversation to what coloured car you are buying.

2. If you need to raise your overdraft limit to ensure you can pay your mortgage, you have a problem.

3. The only way to fix a financial problem is to write a budget and stick to it.

These principles are so obvious to individual citizens, yet on a national level, look at the performance of Congress (both Parties)

1. Both parties agree they have a problem, yet neither party has promoted a comprehensive plan to raise revenues and cut spending. In any conversation. both parties pay lip service to debt and quickly move to talking about raising spending.

2. Last week Obama stated he needed Congress to raise the debt ceiling to ensure America can pay its debts. Not one member of the Press picked up on the story. Would you be happy to borrow money to make your mortgage payments?

3. The Obama administration has not produced a Budget for nearly 4 years. America has no fiscal plan. America has spending policies, a fixed income and borrows to cover the shortfall.

Why should we care? Whether Frogman likes it or not, the US is the World's number 1 economy and if they catch a cold, we catch pneumonia. Also, the US is the "goto" country in time of crisis. If they go into full austerity, in time of crisis the America presence, whether Military, Diplomatic or Humantarian will be sorely missed.

I find it amazing that many people are concerned about Climate Change and the planet they leave their children, yet and completely blind to the debt mountain they will leave their children. Climate change may have a profound effect in 50 years or so, but this debt will have an effect in 10 years.

[Liam Gallagher]

The basic numbers are the US receives $2500bn in Revenues and spends $3800bn, so consequently borrows $1300bn to balance the budget.

Let's debunk a few myths,

1. Defence spending is $900bn. If the US spent no money on Defence, they would still need to borrow money.

2, Social Security costs are rising rapidly and sit at about $1500bn. An aging population and rising medical costs are prime causes in increased spending. Regarding medical costs, more money is spent in the final year of life, than the the other years of their life combined.

3. More than 50% of babies are born to unmarried mothers. Statistically, children from fatherless families fare badly economically in later life and are more likely to become a net-taker from the State.

4. The bailout cost about $1000bn. However, it preserved a lot of jobs and companies and the consequent tax revenues. Whether that was worth doing is debateable, however can you or any else say with certainty how the economy would have fared without the bailout?

5. The US GDP is $17,000bn. The 1%ers represent $170bn of the US economy, so even if you taxed them at 100%, you so do not even dent the national debt. The Starbuck's issue does remind us that if you raise taxes too much, taxpayers move to jurisdictions that have lower taxes. This is not a loophole, but the reality of a modern globalized economy. Don't believe me, just walk through Soho in Hong Kong on a Friday night.

In short, the popular media will focus on Defence spending, bad mouth Wall Street and promote the idea of taxing the 1%ers, but the US needs to come to terms with a rapidly aging population, expanding healthcare costs and an exploding subculture of people who will always be a drain on the Budget.

Boring, unpalatable, even unelectable, but true.....

[Threethirty]

You're way off the mark on the bailout costs, the actual figures are in the region of 29 trillion dollars L. Randall Wray: Bernanke's Obfuscation Continues: The Fed's $29 Trillion Bail-Out Of Wall Street (http://www.huffingtonpost.com/l-randall-wray/bernankes-obfuscation-con_b_1147291.html) given to finance houses. Most of the debt incurred by Obama, all 6 trillion dollars of it, has gone to the banks. Bailing out banks has not saved jobs it has destroyed them. The post bailout world has given us sluggish to zero growth, excessive inflation and propping up off stale, zombie like, parasitical enterprises such as Bank of America and Citi bank. The current reality in the US as I have discussed is not conducive to a thriving economy, America is now a kleptocratic hell hole run by oligarchs. The constant bailouts/QE combine to suck the lifeblood out of the economy, Obamacare meanwhile has created a bureaucratic minefield for small companies making it increasingly difficult and expensive for them to employ anyone.
The only jobs saved have been for bank employees who created the mess we are in today. Moral hazard doesn't come close to describing the assault on our liberties incurred by this event. Using the US as an example, employment has nosedived, the 7.8 million unemployed is a figure which only a moron would believe. If not unemployed the populace can look forward to a part time job in Walmart, retiring in their 70's and picking up food stamps to supplement their meagre income.
You mentioned that if pushed to pay tax companies would move away from the US, then why not let them? What has the country got to lose, certainly not tax money! It is not acceptable for corporations to not pay their fair share of tax, Goldman Sachs pays less than 1% for f@ck sake. I find it incredible that anyone would condone this behaviour from fat-cats.
At some point ethics has to take centre stage. Do we honestly condone what has happened in the world? Is it right to reward fraud and corruption? What example is this setting for future generations? I commonly find that when talking about these issues with people in Hong Kong; opinions often tend to side with the corporate angle rather than that of individual sovereignty, an unfortunate reminder of just how much moral slippage exists is this place.

Visualizing The True Cost Of The First Bank Bailout: $3.5 Trillion And Rising At Over $1 Trillion Every Year | Zero Hedge (http://www.zerohedge.com/news/visualizing-true-cost-first-bank-bailout-35-trillion-and-rising-over-1-trillion-every-year)

The true cost of the bank bailout | Need to Know | PBS (http://www.pbs.org/wnet/need-to-know/economy/the-true-cost-of-the-bank-bailout/3309/)

Alternate Unemployment Charts (http://www.shadowstats.com/alternate_data/unemployment-charts)

ShadowStats: Real US Unemployment at 23% - YouTube

[cxorcist]

330,

US corporations pay the highest corporate tax rates in the world. That is NOT the problem! Why do you think so many of them move their holdings overseas? They are trying to avoid punishing taxes. I really think you have only to look at Hong Kong to find a simple and fair taxation scheme. Maybe in the US the rate would have to be more like 20-25% instead of 15%, but it could work.

[Threethirty]

Don't believe the hype, read this and weep.

http://www.businesspundit.com/25-corporations-that-pay-less-taxes-than-you-do/

[Liam Gallagher]

I could trawl the Internet and find links to support my argument, indeed I could trawl the web and find links to prove the moon is made of green cheese, however I am not going to.

If you choose to believe the US Government, who receives $2,500bn a year in revenue, found $29,000bn stuffed behind the sofa to bail out Wall Street (who has a market cap of only about $16,000bn) then you go right ahead and believe that. Surely, if the US could generate that amount of cash, then there is no fiscal problem in the US. The whole US debt must be a myth, because Wall Street no longer requires bailouts and the US could easily repay their national debt of $16,400bn.

Again, the argument regarding taxing so called US companys is well rehearsed, but utter nonsense. If it was easy to write legislation to compel companies, who are global entities, to pay US taxes, that legislation would have been written decades ago.

You are free to blame to the bailout, the War against Terror, big business not paying what you deem to be an appropriate amount of US Tax, however whilst you are seeking to apportion blame, the debt is mounting, the interest on that debt is mounting, to levels the US can no longer service.

Threethirty, if you are an American with kids, I am sure as your kids struggle with the debt your generation racked-up, they will be very forgiving when you emerge from under your Coffee Table, take off your tinfoil hat and blame the Bailout, American Corporate greed and anyone else you can think of. Much easier to do that than face the fact that the America cannot continue to borrow 40 cents for every dollar it spends.

The only solution is to raise taxes on the middle class and cut entitlement spending.

[Threethirty]

Taxes have been raised on the middle classes from Jan 1st, do the research, http://www.zerohedge.com/contributed/2012-07-10/obama’s-middle-class-tax-scam meanwhile big companies have been given tax breaks.
The 29 trillion is very real, "only" about 3.5 trillion in bailout money came from the Treasury, the rest came from the Fed which printed money out of thin air to give to the banks. In this regard you make a very important point, if the Fed can give money away to banks from a limitless well of free money, why do we as tax-payees have to pay tax?!
This is the crux of this issue Liam, bankrupt the whole world through fraud and greed and get rewarded but act as a responsible middle class citizen and get pummelled into the ground by the government who expect you to pay for parasitical groups at both extremes of the political spectrum!
As for sources, I didn't need to look hard to find them; simply because there is a wealth of material to support the argument.

This is a must read below!

Guest Post: Apparitions In The Fog | Zero Hedge (http://www.zerohedge.com/news/2013-01-23/guest-post-apparitions-fog)

[Liam Gallagher]

I think you need to broaden your reading beyond rants on the blogosphere. You also need to understand the difference between Quantitative Easing, the Government providing backing and guarantees and "Printing Money out of thin air".

You appear to float the idea the US can solve its problem by simply printing $16,400bn and pay off the debt and then print a further $1,300bn a year to Fund the Federal deficit. Whilst I not saying an element of printing, with the negative consequences, will be required to solve this, its usefulness is limited. In short, if any government over does the printing they become Zimbabwe!!

Should the US just print $16,400bn and then pay back its creditors, there would be a total loss of confidence in the US dollar and if anyone was to lend money to the US in the future they would insist the loan was in a currency other than $US and the interest rates would be punitive. Printing the equivalent of the annual US GDP would be hugely inflationary globally. If you think HK property is expensive now....

The blog you highlighted was highly emotive, but behind the emotion it is saying exactly what I am saying, US Debt is out of control and the negative effect of that will be felt markedly around the globe. Rather than propose a solution the blog chooses the lazy option of apportioning blame.

Printing is not the solution, Taxing Multinationals is not going to happen. Taxing the 1% must be done, but won't generate enough money. It's time for America to "Eat it's brocolli" and raise its tax revenue and cut its spending. It must accept this will be recessionary, there is no silver bullet.

Given the amount required, the bulk of the US populace, being the middle class, has to be targeted. On the other side of the ledger, spending cuts are required and again given the bulk required, Defence and Social Security Entitlements have to be targeted.

Maggie Thatcher said, "You cant buck the market". The Party needs to end before the International Money Market shuts it down. Put down the champagne and caviar and eat some brocolli.

[Frogman1484]

The USA can print until people or govenrments loose confidence in the USD. When they stop buying treasury bonds, the game will be over. The unwind will be very quick and sudden, as they all run for the same exit at the same time.

The Fiat currency system is going to fail again just read you history books to find out why.

Are Fiat Currencies Headed for a Collapse? (http://www.cnbc.com/id/48349503/Are_Fiat_Currencies_Headed_for_a_Collapse)

[Liam Gallagher]

I think you need to read the link about Midde Class Tax rises more carefully. It was written pre-election and reinforces what I am saying. The removal of the Bush Tax Cuts for those earning $250k (your article), $400k in reality, is largely window dressing. Obama likes to talk up the revenue generated by quoting 10 year figures, but the reality is only $60bn p.a. will be is generated versus a yearly spending deficit of $1300bn.

The 2% increase in FICA came as a surprise to many. Equally, Obamacare starts to kick in. I understand the Obamacare Act was over 1,000 pages long and I am yet to meet anyone who really understands the effect of Obamacare. However, a European style Healthcare system it is not!!

Bottom line, if you think the middle-classes are getting hit post 1 January 2013, do the math. The expired Bush Tax cuts generate $60bn, coupled with 2% FICA rise gives $180bn increased revenues. That increase in revenue does not even pay the interest bill on the current debt.

Such is the scale of the problem.

[cxorcist]

Liam,

You are very knowledgeable, and I tip my hat to you. I can't find a single chink in your armor. I hope you are American. We need more like you in our country.

330,

You have allowed anti-business, super-conspiracy blogs to become your information source. I think that is very unwise. Your numbers are wild, and the assignment of blame accomplishes little.

[Threethirty]

Liam, you've totally misunderstood me, I don't advocate printing money at all, quite the opposite! I was simply highlighting the fact that we live in a world where banks, who caused the crisis, are given free money on a plate whilst the current middle class and future generations have to take it up the rear. Austerity only applies to every person and industry other than finance, that was my point. I abhore money printing and you have made my point for me, by continually bailing out the banks by printing money, the US dollar will eventually collapse.
In addition you mentioned that I was confused about the various forms of supplying money, there is no difference between QE and the Fed giving banks secret bailouts, it's all money printing.
Cxorcist, zerohedge is a well respected blog not some nutter fringe element. You call it anti-business, the only anti-business faction is your current brought and paid for Government and a Federal Reserve that props up "too big to fail" parasitical banks at the expense of every man woman and child in what was once a great Republic. I would speculate that it's not good business sense to hand over upwards of 29 trillion dollars to a corrupt, greedy and brazen element of your economy and if that's not enough; let them dictate to you through threats and bribery what future policy will be! I would say that adequately describes the insestous relationship you know have in the US between those that make the decisions and those that are too well connected to fail, China anyone?

Worth watching below,

Olafur Ragnar Grimsson Iceland president 'Let banks go bankrupt' - YouTube (http://www.youtube.com/watch?feature=player_embedded&v=51-Jfh6ADH0)

Daniel Hannan | Occupy Wall Street Debate | Oxford Union - YouTube (http://www.youtube.com/watch?feature=player_embedded&v=7ZpJeHN0_gw)

[Liam Gallagher]

The problem i am referring to is the uncontrolled US Debt and the very detrimental effect a failure to bring it under control will have on the World Economy. I don't agree with your views that the cause of this problem was "the banks". It was caused by two successive Presidents spending more than they received and funding the shortfall by borrowing money. Currently the annual revenue received is $2,500bn and the spending is $3,800bn, of which interest on debt is about $300bn (about 12% of revenue). Obama expects to borrow $1300bn this year and is on a trajectory to leave Office with the US owing $22,000bn, which equates to about 150% of GDP which is approaching Greek levels!!

You have told me you don't support "printing money", so what is your solution to the US debt problem?

By the way, QE is very different to "secretly bailing out banks", which you characterized as "printing money". The current round of QE differs from the first 2 rounds of QE on a number of counts, however the current QE involves the Fed "printing" $40bn a month, then using that money to purchase $40bn a month of debt (mortgages/loans) from the banks. As these loans/mortgages are repaid by the banks' customers, their repayments go to Fed who then "unprints" this money. The purpose of this round of QE is not to bail out the banks, but to provide the banks with temporary liquidity (Money) in the believe (hope) they will lend to businesses, thereby creating jobs. The Fed is trying to stimulate the US economy to get people off Social Security and get paying taxes. The current round of QE is actually fixed to the unemployment rate.

I am not saying QE is effective, all I am saying is QE is not printing money "Zimbabwe Style", nor is it a form of bank bailout, nor is secret.

[Threethirty]

The Fed is taking worthless Mortgage Backed Securities (MBS) off the banks, the majority of MBS are linked to foreclosed properties, they are dead in the water. It's not called "cash for trash" for nothing. Why do you think the Fed has to buy them off the banks? It's because they aren't selling them to each other, knowing full well that what lies beneath the veneer is worthless garbage! This is what QE is, a fire-sale of all the sh#t the banksters can't get off their balance sheets.

When you say that QE3/4 is not a bailout because the Fed will eventually get their money back, you're referring to Sterilized versus Unsterilized asset purchases. Sterilized is when an agency buys an asset but does not print outright to obtain the "asset", this would be the case in a swap, one asset for another, as in "Operation Twist". Unsterilized is obviously the opposite of sterilized, in this case the Fed would be buying assets outright from the balance sheets of the so called Too Big to Fail banks. So in your mind QE3/4 is Sterilized. Sadly you're very much mistaken, you've been suckered into believing what the Fed and the Financial Times wants you to believe. The theory you espouse assumes that one day in the distant future, Ben Bernanke and his Federal Reserve will find buyers for these dodgy "assets"; purchased from the insolvent Too Big to Fail banks. To be frank, I seriously doubt that the Fed will ever find anyone in this lifetime or the next to buy this crap, why do you think they had to buy them in the first place? The only solution would be if we could find another planet full of suckers to invest in this garbage but even then you'd probably struggle. In summary then, these purchases are cast iron 100% Unsterilized asset purchases, make no bones about it.

If by some chance you meant that the MBS are still being payed for by homeowners and are somehow worth something, that is unfortunately not true either. Like I said the securities are tied up mostly with sub-prime foreclosed properties which are currently mostly vacant. Like I said, MBS are worthless. Playing devils advocate, if by some slim chance fore-closed upon, sub-prime properties are still occupied and paid for by mortgage payers, then there would still be a market for these toxic derivatives. The fact that these corrupt institutions have to sell them off to the Fed as a last resort, is proof positive that there is absolutely no market for these crappy financial products, other than that provided by the Fed to prop up the very same institutions. That is not capitalism.

As we've seen from the previous three rounds of QE, the banks are not lending money, nor will they in the future. No amount of QE will get them lending, what is the motivation to do this when they can borrow infinite free credit from the Fed at no interest then speculate on the stock Market? QE unlimited has been proven time and time again to do diddly squat for jobs or for the middle class, it's a bank bailout dressed up as an economic fix so the average sheeple while buy it. QE4 is yet another bailout, banks borrow off the Fed for next to nothing; use this money to front run the Fed by buying Treasury bonds, then get rewarded by receiving a fat profit in the ensuing transactions.

I tell you what, let's have this conversation this time next year when the slimy bastards are rolling out QE5/6, will people still believe this is about jobs then? At what point does it become obvious that the Fed is not interested in you and I but their bankster masters instead? They've pulled the biggest stunt on man kind in recent history, they've lied cheated and stolen but then they've twisted and manipulated the facts so that we think the blame lies with us, then they've lied and cheated again by saying that the only solution is to give them even more of the spoils, unbelievable!
Lastly, reference the initial article, the vast majority of the bailout was conducted in secret by the Fed, printing money behind closed doors, it took an audit by the GAO to uncover this, here look: The Fed Audit - Newsroom: Bernie Sanders - U.S. Senator for Vermont (http://www.sanders.senate.gov/newsroom/news/?id=9e2a4ea8-6e73-4be2-a753-62060dcbb3c3), and again: http://www.sanders.senate.gov/imo/media/doc/GAO%20Fed%20Investigation.pdf. If that's not enough proof I don't know what is!

Yes you're right the entitlement culture has got to stop but unfortunately that's all that's left for a nation that shipped most of it's industry to third world hell holes such as China.

[Pilot852]

New Black Ops 2 maps are out!
BOOM!!!!

[Liam Gallagher]

I think the difference between you and I is, where I see "c0ck-up", you see conspiracy. However, where we do agree is the acknowledgment of the urgent need for Entitlement Reform. Obama is never going to agree to that and therein lies the problem.

To the relief of Captain Dart I will attempt to bring this thread back to base. It is argued the Hong Kong Property Market is fuelled by the supply of plentiful cheap money. This cheap money comes in no small part from the issues we have been discussing. Whilst everyone has tuned out of our discussion, I predict that very soon people will adopt in their lexicon two phrases, "sequestration" and "Debt ceiling". Whilst "Fiscal Cliff" became popular in late December these two issues have the potential to drop some pebbles in the water, the ripples of which will be felt in Hong Kong later in the year.

I note in the news today Fitch Credit Ratings agency is already positioning for a downgrade of US Debt. Those HIBOR mortgages may start to get slightly more expensive soon and the HSI may have a few wobbles coming its way.

[Threethirty]

I agree, I think HK property is due for a tumultuous fall. Will bring a smile to my face when everyone and his dog said it would never happen.

[boxjockey]

Threethirty,

While I definitely agree with your sentiment re: financial apocalypse, I don't agree with your ideas that everyone believes the HK property market can only go up. Nearly everyone I work with seems to believe that it is set up for a large correction. I think this is part of the reason for such low transaction volume. Perhaps it is just speak from those "not in the game", but I think many believe the same as you and I.

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