Chinese Government fights Asset Bubbles and Speculation, Housing Prices Fall as does Economic Activity

Posted by PITHOCRATES - April 21st, 2012

Week in Review

The Chinese housing market isn’t what it was.  Which can be quite the problem considering the housing boom was 13% of China’s GDP (see China new home prices slide for sixth consecutive month posted 4/18/2012 on BBC News Business).

Property prices in China have fallen for a sixth consecutive month amid government efforts to control prices and curb speculation.

New home prices in 46 out of 70 Chinese cities fell between February and March. Meanwhile prices were lower than a year ago in 38 cities.

There have been fears of the formation of asset bubbles in China…

The booming housing industry supported China’s expansion in recent years, with real estate investment making up 13% of the nation’s gross domestic product in 2011…

“The ultimate goal of the property tightening is to drive down prices but maintain growth in construction and investment.”

Hey, this kind of sounds familiar.  Prior to 2008, the U.S. housing market was red hot.  People were being approved for mortgages they didn’t have a chance in hell of being able to repay.  And house flippers were walking in and getting mortgages for zero down.  Fixing them up and putting them back on the market.  The subprime mortgage made both of these possible.  And the government was doing everything within its power to put as many people in houses as possible.  Keeping interest rates artificially low.  And having their GSEs Fannie Mae and Freddie Mac buy up toxic subprime mortgages from banks and unloading them onto unsuspecting investors in the guise of ‘safe’ mortgage-backed securities.   The economy was booming.  Then the housing bubble burst.  As did the economy. 

The lesson here is the same the Japanese learned in the Nineties.  If you put your housing market on government steroids (artificially low interest rates, laws to force lenders t make bad loans, loan guarantees, etc.) it will crash and burn one day.  And if you keep building houses you will lower prices on homes already built.  The houses people are paying mortgages on.  And if you build enough new houses the value of the older houses will be less than the mortgage they’re paying.  Especially after the bubble bursts.  And you see how well that worked out in the U.S.  Suffice it to say President Obama is not running for reelection on his economic record.


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Problems in Chinese Housing Market as Developers file Bankruptcy?

Posted by PITHOCRATES - April 21st, 2012

Week in Review

Looks like the Chinese are having some troubles of their own (see More Chinese developers file for bankruptcy: report by Alex Frew McMillan posted 4/20/2012 on Reuters).

More Chinese property developers have filed for bankruptcy, the South China Morning Post reported on Friday, as some small real-estate companies struggle after more than two years of measures by Beijing to curb home prices in China…

With around 60,000 developers in China, analysts expect more failures among unlisted companies, which would benefit big, geographically-diverse listed developers such as China Vanke 000002.SZ and Evergrande Real Estate (3333.HK)…

Other developers have been selling off assets to pay down debt.

That kind of sounds like a housing bubble.  High home prices that Beijing has tried to curb for two years?  Selling off assets and filing bankruptcy?  Either home prices are too high and people aren’t buying.  Leaving a lot of empty houses on the market that developers can’t sell.  And as a result can’t repay their debt.  Or Beijing has been successful in curbing home prices.  And they’re selling below the amount of debt it took to build these houses.

Whatever the reason it’s bad for the housing market.  Correcting prices in an overvalued market is painful.  As it is always more painful on the down side of irrational exuberance.  And housing bubbles.  Talk to any U.S. homeowner whose house went underwater in 2008.  It ain’t pretty.  The U.S. economy could lose a decade of growth before the correction is over.  Much like the Japanese during their Lost Decade.  Who could also tell you a thing or two about housing bubbles.  And painful corrections.

Is it China’s turn?  Is it time for their economy to crash and burn?  Perhaps.  For they do like to meddle in their economy.  Just as the U.S. and the Japanese liked to meddle in theirs.


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Doctors Working in the NHS must now Prove that they are Fluent in English to Treat their British Patients

Posted by PITHOCRATES - April 21st, 2012

Week in Review

They speak English in America.  Canada is bilingual.  They speak English and French.  They speak English in the United Kingdom.  They speak French in France.  German in Germany.  Japanese in Japan.  And English in Australia.  Planes fly between all of these countries.  Flight crews are in constant communications with air traffic controllers during these flights.  At departing airports.  With en route controllers.  And at their destination airports.  Communication is important.  Because there are a lot of airplanes in the air.  And it’s the direction giving from these air traffic controllers that keep these planes from flying into each other.  So this communication is very important.  And it’s because of this there is a universal language for international flights.  English.  But not just any English.  The official language spoken by these flight crews is American English.  Because it’s the most common form of English spoken.  And therefore the most easily understood.

International flying, though, is not the only place communication is important.  It’s also good practice to make sure doctors speak the language their patients speak.  To prevent any accidents from arising due to a misunderstanding (see Consultation over language tests for foreign doctors posted 4/18/2012 on BBC News UK).

Doctors wanting to work for the NHS will have to prove they are fluent in English if proposals go ahead…

The move comes after the case of Daniel Ubani, a German locum doctor who gave a 70-year-old patient a fatal painkiller overdose on his first and only shift in Britain in February 2008…

Niall Dickson, chief executive of the General Medical Council, said: “This is a vital issue for patients – they must be able to have confidence that the doctor who treats them has the communication skills needed for the job.”

Yes, communication is important.  Which is why an official language is important in a country.  So people can understand each other.  Read road signs while driving.  To understand what you’re eating in case you have a food allergy.  To explain to a doctor what household chemical your child swallowed that is making him sick.  There are times when there is no time for a translator.  And it’s not cultural insensitivity.  Someone shouldn’t expect a doctor to be bilingual at home.  Just as we shouldn’t expect people in other countries to be bilingual there for our cultural sensitivity.  If you live in a country you should just learn their language.

Canada is interesting in this respect.  The province of Quebec has forced a bilingual language standard on the rest of Canada.  So in most parts of Canada signs are in both French and English.  But not in Quebec City.  The capital of New France.  Where their provincial motto is “Je Me Souviens.”  Which means ‘I remember’.  That I’m French.  For in Quebec City the signs are only in one language.  French.  (At least the last time I was there.)  So the larger part of Canada has accommodated the smaller province of Quebec.  But Quebec shows no cultural sensitivity to the larger part of Canada.  Interesting.  Which is always fun to discuss with my Canadian friends.  Both in Quebec.  And in the larger part of Canada.


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The Weight of Europe’s Sovereign Debt Crises forces Rich People to flee with their Wealth to Escape ever Higher Taxes

Posted by PITHOCRATES - April 21st, 2012

Week in Review

The problem with the European sovereign debt crisis is the population growth rate.  These nanny states set up their social democracies when people were having babies.  And based their calculations on a continuing rising birthrate.  Which would have paid for their social democracies until the cows came home.  But then something happened.  They stopped having babies.  And now have a declining birthrate.  Which means they have an aging population.  There are more people becoming seniors than there are being born.  There are more people leaving the workforce than there are entering the workforce.  And worse of all is that they have better health care.  And are living longer.  Put it all together and you have a real big problem (see Europe’s old wealth seeks new home in Asia by John O’Callaghan and Charmian Kok posted 4/17/2012 on Reuters).

Wealthy people from Europe and the Americas have long looked to the East for ways to build and preserve their fortunes. But only recently have they started opening family offices – private companies that manage the trusts and investments of rich households – in the region in earnest…

Campden Wealth, which provides research and data on family offices, says up to 10 European family offices have moved to Singapore since the financial crisis in 2008, bringing $5-$10 billion worth of assets with them.

Singapore, a global banking and investment centre in the heart of Southeast Asia, is an attractive base for its efficient registration process, relatively benign regulations, smooth movement of money, financial infrastructure and low tax rates…

Asia’s prospects are alluring as economies in Europe and the United States look weak. After the crisis, regulatory pressures in the West and a crackdown on offshore centers have hastened the pace of family offices moving to Singapore and Hong Kong…

The Spinolas are clubbing together with two other family offices to cut costs and leverage on efficiencies. Parly officials declined to identify the partners, other than to say they are “household names” in Europe – one is an English entrepreneur who has donated much of his money to charity and the other is a Swiss-based family…

Concerns about the health of big banks and dismay at their hard-sell tactics that pushed products of dubious merit onto high net worth clients – such as mortgage-backed securities that turned toxic – are other factors.

The tax-consumers are growing at a greater rate than the taxpayers.  Which means you have to raise tax rates on taxpayers.  Find other things to tax.  Or cut back on pensions and health care for retirees.  Not a difficult decision for the politicians to make.  They’re going to raise tax rates.  And find other things to tax.  Precisely because the population is aging.  For they’re just not going to cut any benefits from the largest voting block out there.

And, of course, the fallout is that rich people will finally say enough is enough.  They’ll take their wealth and leave.  Because they’re tired of being screwed.  Whether it was the American government passing off toxic subprime mortgage backed securities as safe investments through their GSEs Fannie Mae and Freddie Mac.  Or government taking an ever larger piece of their wealth through ever higher taxes and costly regulations.  They’ve had enough.  So they’re taking their wealth (i.e., much coveted investment capital businesses so desperately need) to greener pastures.  Investing in economies in other nations.  And donating large sums of their wealth to charities in other nations.  Which, of course, will cause ever greater budget hardships.  Because contrary to popular belief rich people pay the lion’s share of a nation’s income tax.  So when a big chunk of their wealth leaves the country it will explode budget deficits.

The sad truth is this.  There isn’t enough wealth to confiscate to pay for rising pensions and health care benefits with a declining birthrate.  There just aren’t enough rich people.  No matter how you crunch the numbers.  You just can’t have a declining number of taxpayers pay for a growing number of tax consumers.  It will only lead to deficits.  And sovereign debt crises.  Kind of like what they’re having in Europe right now.  Because of their unsustainable social democracies.  And unless they start having babies like they once did there is no way to sustain the unsustainable.


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Short of Beds in the NHS they discharge Patients (Including the Elderly) in the Middle of the Night

Posted by PITHOCRATES - April 21st, 2012

Week in Review

 Most of us no doubt have stayed in a motel or hotel where there was an early morning knock on the door.  Followed by an opening of your door by housekeeping eager to make up your room.  Which can be rather surprising.  Annoying.  And even frightening.  Especially if you’re undressed and about to turn on the shower.  Or otherwise occupied in the bathroom.  But you understand.  Because we’ve also been at the check-in desk before our check-in time.  Waiting.  Because we can’t go to our room yet.  Because housekeeping hasn’t made up our room yet from its last guest.  So on the one hand you don’t want to be disturbed early morning by housekeeping.  But on the other you want housekeeping to rouse late risers to get them out of your room so you don’t have to wait.  Apparently it’s the same way in the National Health Service (NHS) in England (see NHS’s Sir Bruce Keogh warns over overnight discharging posted 4/17/2012 on the BBC News Health).

Hospitals in England have been told to end the practice of discharging patients in the middle of the night in order to free up beds.

The NHS medical director has written to Strategic Health Authorities saying it is unacceptable to send people home when they may have no family support…

They suggest 100 NHS trusts sent 239,233 patients home between 23:00 and 06:00 in 2011…

“While some patients may of course choose to be discharged during these hours, the examples highlighted of elderly patients being left to make their way home by themselves in the middle of the night are obviously unacceptable, and need to be addressed urgently,” Sir Bruce wrote.

That’s pretty cold.  Even in the worst motel/hotel you’ve ever stayed at they don’t kick you out in the middle of the night to make up your room.  I guess that’s because the motel/hotel business has greater resources than the NHS.  And can wait to make up your rooms after the sun rises.

This is yet another example of rationing in national health care.  Which is what we can expect with Obamacare.  They are so short of beds that they are kicking people out in the middle of the night to open a bed for another patient.  Why?  Because they are so overcrowded that they just don’t have enough beds for their patients.  So out they go.  In the middle of the night.  Some of them senior citizens.  Left to fend for themselves in finding a way home. 

But it’s better this way.  Because in national health care they put people before profits.  Unlike in private health care.  Where they put profits first.  And, because they do, they don’t have to kick out patients in the wee hours of the morning.  They can wait until after the sun rises.  Because they have more resources for their patients in private health care.  Such as they have in the U.S.  That is, until Obamacare kicks in.  Which will add more patients into the health care system.  Far more than the NHS has.  And they will, therefore, have to ration more than the NHS does.  So they can stretch those resources to cover everyone.  Where some will have to go without.  To make resources available for others.  And you can guess who those people going without will be.  The same people who have the greatest trouble finding their way home in England after getting discharged in the middle of the night.  The elderly.

Welcome to Obamacare.


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A Company in New Zealand finds Promising Results when using Pig Brain Cells to Treat Parkinson’s Disease

Posted by PITHOCRATES - April 21st, 2012

Week in Review

During the 2006 midterm election a little dustup occurred between Michael J. Fox and Rush Limbaugh.  Fox has Parkinson’ disease.  He was supporting a Democrat candidate who was in favor of embryonic stem cell research.  According to Fox embryonic stem cells held the greatest hope in finding a cure.  Those on the right oppose this for two reasons.  For one they questioned the ethics of ‘farming’ human embryos for scientific experimentation.  The other being that the track record for adult stem cell research had a better track record then embryonic stem cells.  Fox appeared in a campaign commercial visibly shaking from the affects of Parkinson’s disease.  Limbaugh said that he went off of his meds to make the affects of his disease worse for political purposes.  Even imitating a shaking Michael J. Fox.  Images of Rush Limbaugh’s imitation played across mainstream media.  Which the left also used for political purposes.

The Democrats won both houses of Congress and a majority of governorships in the 2006 midterm elections.  The Democrats then won the white House in 2008.  So like it or not the Democrats had the power.  And if embryonic stem cells held the cure they were in a position to do something about it (see Reuters: New Zealand firm to trial pig cells to treat Parkinson’s by Victoria Thieberger posted 4/17/2012 on Reuters).

A New Zealand company plans to implant pig cells in the human brain in a clinical trial to treat Parkinson’s disease and help improve movement and brain functions in patients.

And here we are in 2012 and what are researches using in the battle of Parkinson’s?  Pig cells.  Why are they experimenting with pig cells?  Well, adult stem cells had shown promise.  They worked a little.  But the improvements were fleeting.  Studies done with embryonic stem cells had shown some promise, too.  But there were side effects.  Including tumors.  And the disease sometimes spread to the newly implanted cells.  Which is why they’re trying pig cells.  So as of yet they haven’t proven embryonic stem cells to be the panacea some people have claimed them to be.

So perhaps the debate over embryonic stem cells has been more political than scientific.  For it would help those on the left in the debate over when human life begins.  If we started ‘farming’ embryonic stem cells for scientific experimentation and, better yet, used them for medical treatment, it could change a lot of minds.  Boiling the debate down to a simple choice.  Save lives?  Or ban abortions?  Some people may go all Mr. Spock in their rationalization.  “The needs of the many outweigh the needs of the few.  Or the one.”   Especially if they believe the one isn’t a human yet.

Let’s hope the New Zealanders are on to something.  And can find a cure for this horrible disease.  Let’s also hope that they are basing this research on good science, though.  And not politics.  For there is nothing worse than giving someone false hope just because it’s politically expedient.


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