Spring should be a boom time for building new homes in the USA. But in fact, May’s single family housing starts (bottom chart) fell 17.2% versus April, as the $8k tax credit ended. Yet affordability should be high, with prices down 30% from the peak, and mortgage rates at the lowest levels for decades. This […]
Chemicals and the Economy
Fannie and Freddie lose another $19bn
Senator Dirksen’s great one-liner in the US Senate, “A $bn here, a $bn there, and pretty soon you’re talking real money” is beginning to seem sadly out of date, as the costs of the financial crisis escalate. Today saw the Eurozone announce a €750bn ($936bn) bail-out fund, including €250bn from the IMF, to support its […]
US house prices face ‘double-dip’ risk
February was a milestone in US house markets. For the first time since December 2006, prices were higher than a year ago, according to today’s authoritative S&P/Case Shiller Index. But the rise in the 10 City and 20 City indices was just 1%. And as the above S&P chart shows, prices are still only at […]
Betting against the American dream
The political firestorm inspired by the SEC’s citing of Goldman Sachs for fraud shows no sign of dying down. It has even inspired a Broadway song that describes how another hedge fund, Magnetar, allegedly made money out of betting against the housing securities it helped to create. Click here to see it (the video is […]
IMF targets bankers’ FAT
We are often told that investment bankers are much cleverer than the rest of us. But sometimes, they do seem to lack common sense. Their behaviour since the Crisis, in paying out $bns in bonuses to the lucky few, seems no way to appease understandable public anger over the cost of the banks’ bailout. The […]
China’s bank lending falls 43% in Q1
There are increasing signs that China is getting serious about tightening its lending policies. The above chart, from China’s central bank, shows how lending has fallen since January. Then, it was 14% down versus 2009. But by the end of Q1, lending was down 43% versus Q1 2009. In addition, the government has begun to […]
Seasonal strength returns to chemicals demand
In December, the blog suggested that “2010 might see the industry return to its normal seasonal pattern, with a strong H1, followed by a slow Q3 holiday season, and then a final burst of activity in October/November before the Xmas break“. The chart above, from the excellent American Chemistry Council’s weekly report, provides welcome evidence […]
China’s housing market “a wild tiger”
More evidence is emerging of the real estate bubble that China’s easy money policy has created over the past year. Wen Jiabao, China’s premier, has described property markets in some cities as now being like a “wild tiger“. And new figures explain his concern, with the government reporting property sales rose an astonishing 80% last […]
China’s lending causes central bank headache
No wonder alarm bells were ringing in China’s central bank last week. The above chart (from China Daily) shows how total lending rebounded to $204bn in January, only 14% below the 2009 level. Total lending doubled during 2009 to $1.4bn, an astonishing amount for a country with total GDP of $4.3trn. Of course, this enabled […]
No news on Obama’s plans for Fannie and Freddie
Its nearly 18 months since the US government nationalised the 2 home loan giants, Fannie Mae and Freddie Mac, at the start of the September 2008 financial crisis. Today, their current obligations amount to $3.7trn – larger that the total UK economy. And the Wall Street Journal notes that their cumulative losses on home loans […]
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