Daily: Dutch house price declines steepest on record
The accelerating decline of Dutch house prices puts the Netherlands into a group with the US, the UK, Spain, Ireland and the Baltics that have seen housing bubbles pop as a result of the Great Financial Crisis. Dutch house prices are now at levels last seen in 2004. Dutch mortgage to GDP ratios are well over 100%. The sub-prime nature of lending in the Netherlands is now coming back to haunt the country and causing a balance sheet recession, one reason the Dutch are having debt and deficit problems in the wake of the financial crisis
Other countries vulnerable to this kind of price action in housing in Europe are France and Denmark. Outside of Europe, Australia and Canada come to mind. When talking about the Canadian situation in April, I wrote this about the debt levels in the Netherlands and Denmark:
Also as a reference point, while household debt levels in the US were lower than Canada’s when the US property bubble popped, levels are significantly higher in Denmark and the Netherlands, which have also seen prodigious rises in house prices (Denmark’s is 310% of GDP while the Netherlands is 249% of GDP).
My understanding is that the situation is leading at once to an anti-euro and an anti-austerity sentiment within the Dutch electorate, which votes to replace the caretaker government that collapsed earlier this year.
Dutch House Prices Tumble – WSJ.com
“The slump in the Dutch housing market deepened in July as prices posted the steepest drop on record, highlighting the challenges facing the Netherlands ahead of next month’s general elections.
With prices now plumbing levels last seen in 2004, the downturn is weighing heavily on household consumption and has raised concern about the country’s huge mortgage debt pile, among the largest in Europe”
EconoMonitor : The Wilder View » Dutch domestic demand dragging real home values
“In real terms and indexed to 2005, home values are down 10.1% over the year in July and dropped 21.3% since the August 2007 peak.”
Europe
This is the Austrian version of the report on the meeting of German-speaking foreign ministers in Liechtenstein. A lot of different subjects were up for debate including the euro expulsion mechanism. Syria and Greece were particularly important topics. Also on the agenda was the elimination worldwide of the death penalty.
This is the article I pointed to earlier today showing that the Austrian and German foreign ministers favor setting up explicit expulsion mechanisms for the euro zone as an ultimate penalty for countries that are repeat violators of the stability and growth pact deficit hurdle.
Frank Stronach enters Austrian politics with call to dump euro | Economy | News | Financial Post
““Clearly this is not just an Austrian development but more representative of the so-called stronger countries which have the highest credit rating,” said Zsolt Darvas, research fellow at the Brussels-based Brugel think tank. “In Germany, Finland or the Netherlands you see exactly the same or similar movements.””
Spain Deficit Goals at Risk as Cuts Consensus Fades: Euro Credit – Bloomberg
““The problem is that each one is trying to save time by blaming someone else,” said Jose Antonio Herce, a public administrations consultant in Madrid with Analistas Financieros Internacionales. “No one wants to tell voters they have to meet the targets with the resources they have because there simply isn’t more money.””
FT Alphaville » Spanish and Italian bond issuance, once the holiday is over
“All in all, the total amount of gross bond issuance from Spain in 2013 could be in excess of EUR 120bn. That is around 40% higher than this year, 10-20% higher than in 2009 and almost four times larger than the average amount of Spanish bond issuance recorded in the previous four years.”
Estonia’s Economic Outlook Brightens – WSJ.com
“The near-term growth prospects for the euro zone’s youngest member, Estonia, could be better than previously expected, thanks to an expected summertime uptick in household spending that has come despite the cloud of uncertainty hanging over the European economy.”
United States
There’s Little the Fed Can Do – Room for Debate – NYTimes.com
I wrote this piece for the NYTimes and the gist of it is that the Fed’s policy options are small beer compared to what the fiscal agents could do. But nothing is going to happen on the fiscal side. So the economy will continue to be poor for the foreseeable future.
Toll Brothers Earnings – Business Insider
“We believe the housing recovery is being driven by pent-up demand, very low interest rates and attractively priced homes. Customers who have postponed buying for a number of years are moving into the market.”
Buffett cuts $16 billion municipal credit bet in half | Reuters
“Berkshire Hathaway Inc will terminate $8.25 billion in credit default swap protection it has sold on municipal debt, more than half of a total $16 billion in protection it has sold on bonds of states, cities and towns, the company said in a regulatory filing this month.”
Buffett cancelled municipal debt bet 5 years early: WSJ | Reuters
“the early termination is deepening questions among some investors about the risks of buying debt issued by cities, states and other public entities.”
Open Mouth, Insert Foot: Going Viral? | The Big Picture
“As I recently discussed with BR, and as he has written about countless times, this is the risk one runs when letting one’s ideology run wild – that one twists, contorts, and distorts the facts (in extreme cases, perhaps, without even realizing it) to fit one’s narrative.”
Chances of QE3 Diminishing – Tim Duy’s Fed Watch
“It is not that Lockhart believes the economy is surging forward. It is muddling along. But muddling along at a rate that does not justify additional easing. Nor is it clear that such easing would be effective as the remaining problems are beyond the scope of monetary policy. The logic appears to be that employed by Bernanke – the benefits of addition easing at this point do not exceed the risks. And while for the hawks those risks are inflation, for the middle ground I suspect the risks are to the functioning of financial markets.”
Tech
Dell’s outlook disappoints as PC market falters | Reuters
“Dell – once the world’s top PC maker and a pioneer in computer supply chain management – is struggling to defend its market share against Asian rivals like Acer Inc and Lenovo, and the fast-growing adoption of tablets like Apple Inc’s iPad.”
Why the Nook is failing: One chart, four reasons — paidContent
Amazon Glacier – The Most Affordable Online Backup Service Ever!
“Amazon Glacier is a new online backup service where you can store your files for as little as 1¢ per GB per month. This is the cheapest storage plan offered by any cloud storage vendor even and Amazon promises 99.999999999% durability which, in plain English, is like a guarantee that your files will always stay safe in their data centers.”
Other links
Egypt asks IMF for $4.8bn in aid – Telegraph
“The request was made during a visit by IMF managing director Christine Lagarde to Cairo, during which she met with both President Mohamed Morsi and his prime minister, Hisham Qandil.
“The original terms were $3.2 billion, (but) we asked for a raise up to $4.8 billion, even more,” Mr Qandil said in a joint press conference with Ms Lagarde.”
China bubble in ‘danger zone’ warns Bank of Japan – Telegraph
“China risks a repeat of Japan’s boom-bust disaster 20 years ago as exorbitant property prices combine with a demographic tipping point, a top Japanese official has warned.”
This is a move clearly aimed at allowing Fernandez to remain in power.
“Belize, the Central American nation that’s home to 333,000 people and the largest barrier reef in the Western Hemisphere, missed a US$23-million coupon payment yesterday on US$544-million of dollar bonds due in 2029. The government is unlikely to make the payment during a 30-day grace period, Finance Secretary Joseph Waight said in an interview.”
Weak Japan exports, hit by Europe, raise questions on recovery | Reuters
“Japan’s exports slumped by their most in six months in July, dragged down by collapsing shipments to debt-ridden Europe and a sharp fall in sales to China, fuelling worries that fragile recovery in the world’s third-biggest economy could stall.
The 8.1 percent annual fall was far deeper than economists’ median forecast of a 2.9 percent drop. And a 25.1 percent plunge in exports to the European Union, the biggest such drop since Oct 2009, saw Japan post a record trade deficit with the region.”
RBS under investigation by US authorities – Telegraph
“Royal Bank of Scotland is under investigation by US authorities for potential breaches of sanctions against Iran.”
Progressive’s #Fail in Social Media May Be Warning to Insurers – Deal Journal – WSJ
“Progressive Corp. was trying to save $75,000. Instead, it unleashed a flurry of social-media rage against the company.”
In U.S., Majority Overweight or Obese in All 50 States
“Nearly seven in 10 adults in West Virginia, Mississippi, and Kentucky are either overweight or obese — more than in any other state in the first half of 2012. At the other end of the scale is Colorado, the least overweight state in the union, but even there, 55.1% of residents are overweight or obese.”
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