Tuesday, April 26, 2016

The Poverty Of The Wealth Effect
Barry Ritholtz* on why the so-called wealth effect is more a case of correlation rather than causation .. this is bad news for the Federal Reserve, which hoped many of its initiatives would propel a wealth effect on the economy for its recovery .. "The fallout from the credit bubble -- the ongoing deleveraging that is curtailing spending -- is with us to this day and 'still dominates the public mood three elections later,' as Bloomberg News reported. Unfortunately, the Fed seems committed to fight this drag on growth with policy remedies that are based upon what is probably a false economic belief."
LINK HERE to the essay


Anonymous said...

More on #Urbancorp fallout

Calls to Urbancorp went unanswered Monday.

Lawyer Ted Charney, who represented buyers in cancelled Urbancorp developments, said consumers stand to lose their deposits since they’re not required to be held in trusts.

“They can lose their deposit and they can lose their interest in that project because the project will be cancelled,” he said. “That’s what they’re facing after waiting for years for their house to be built.”

But Lamb says there could be insurance on the buyers’ deposits that could pay what Tarion doesn’t cover. It’s the contractors and real estate agents whose commissions haven’t been paid that stand to lose the most, he says.

“There’s no way to sugar coat this; it’s not good for the industry or anyone in the industry,” Lamb said.

http://www.thestar.com/business/2016/04/25/urbancorp-restructuring-ends-up-in-israeli-court.html …

Anonymous said...

“Mortgages are not the problem,” said Ercan Uysal, a banking analyst at Istanbul-based research firm Integras. “Developer leverage is.”

To keep sales brisk, builders are helping buyers defray their costs. For instance, at Istanbul’s $1.5 billion Maslak 1453 development, whose name recalls the Ottoman conquest of Constantinople, the developer is offering to secure below-market interest rates and accept a 10 percent deposit -- below the 25 percent minimum required for a bank mortgage.

Borrowing and loan defaults from builders are on the rise in the world's top housing market http://bloom.bg/1SlXX5o