Bankocracy

US auto loans hit $1 trillion for first time

"The loan balances have been driven up by a combination of three factors -- strong car sales, rising car prices and low interest rates. Interest rates are low. Borrowers with top credit scores can get loans for less than 3%. But the amount owed is up 11%, a sign of the increase in the size of car loans due to rising prices. The average amount borrowed is about $21,700, and buyers owe nearly $18,000 on average. The average new car purchase price now stands at $32,529, according to sales tracker TrueCar. The average car loan balance is rising faster than it is for mortgage loans, according to TransUnion. The average payment now stands at just under $400 a month." Continue reading →

Continue ReadingUS auto loans hit $1 trillion for first time

HK property developers push HK$1.3 billion in home loans to buyers

"Facing fierce competition amid a tightening of mortgage policies, a growing number of developers have been skirting bank regulations by providing home loans of up to 95 per cent of the purchase price through wholly owned financial institutions to lure buyers. They began offering mortgage loans after the maximum loan-to-value (LTV) ratio for bank mortgages for self-use residential properties with a value below HK$7 million was lowered from 70 per cent to 60 per cent in February last year. That meant home buyers needed to make a 40 per cent initial down payment, up from 30 per cent, when purchasing an apartment." Continue reading →

Continue ReadingHK property developers push HK$1.3 billion in home loans to buyers

China slaps cap on overseas UnionPay cash withdrawals

"The gatekeeper of China's foreign exchange has moved to plug a loophole in the capital account by capping the value of overseas withdrawals on bank cards, amid rising concerns over capital outflows and illicit money transfers. The State Administration of Foreign Exchange has slapped an annual cap on overseas cash withdrawals for UnionPay cardholders at 100,000 yuan or its equivalent per card. SAFE requires banks to add accounts that exceed the cap to a watch-list and forbid further cash withdrawals outside of China. Still, the withdrawal cap did not address another obvious escape route, the number of cards for which an individual can apply." Continue reading →

Continue ReadingChina slaps cap on overseas UnionPay cash withdrawals

Chinese state begins buying stocks after Monday’s rout

"China's stocks rose in volatile trade as state-backed funds were said to intervene after a plunge on Monday wiped out $590 billion of market value. Trading was halted on Monday after the gauge plunged 7 percent, triggering new market circuit breakers that some analysts said exacerbated the sell-off. State-controlled funds bought equities and the securities regulator signaled a selling ban on major investors will remain beyond this week's expiration date, according to people familiar with the matter. The China Securities Regulatory Commission also suggested it's open to tweaking the circuit breakers, while the central bank conducted the biggest reverse-repurchase operations since September." Continue reading →

Continue ReadingChinese state begins buying stocks after Monday’s rout

Puerto Rico Defaults On Bonds: Return Does Not Come Without Risk

"Many American investors bought Puerto Rican bonds over the past five years as we all searched desperately for yield in the face of the Federal Reserve pushing interest rates down to historic lows. Normally, investors understand that higher yields come with greater risks. However, during the past six years of extraordinary interventions by the Fed into all sorts of financial markets, many investors may have decided that those higher yield investments weren’t really all that risky. Puerto Rico’s problems may serve as a much-needed wake up call to investors. As rates rise, capital will move back toward safety and the risk premium demanded of higher risk projects is likely to increase." Continue reading →

Continue ReadingPuerto Rico Defaults On Bonds: Return Does Not Come Without Risk

China Launches Frightening ‘Social Credit’ Game; Soon Mandatory

"'Going under the innocuous name of Sesame Credit, China has created a score for how good a citizen you are,' explains Extra Credits’ video about the program. 'The owners of China’s largest social networks have partnered with the government to create something akin to the U.S. credit score — but, instead of measuring how regularly you pay your bills, it measures how obediently you follow the party line.' In the works for years, China’s ‘social credit system’ aims to create a docile, compliant citizenry who are fiscally and morally responsible by employing a game-like format to create self-imposed, group social control. In other words, China gamified peer pressure to control its citizenry." Continue reading →

Continue ReadingChina Launches Frightening ‘Social Credit’ Game; Soon Mandatory

Et Tu, Brute? (How Empires Die)

"The state-owned Bank of China has been ordered by an American court to hand over customer information to the US. The bank has refused to comply, as to do so would violate China’s privacy law. The US court has subsequently ordered the Bank of China to pay a fine of $50,000 per day. China is a sovereign nation, halfway around the globe from the US, yet the US seems to feel that it’s somehow entitled to set the rules for China. All over the world, those who live outside the US are increasingly observing that the US has become so drunk with power that they’re threatening both friend and foe with fines, trade restrictions, monetary sanctions, warfare, and invasions." Continue reading →

Continue ReadingEt Tu, Brute? (How Empires Die)

John Hussman: Reversing the Speculative Effect of QE Overnight

"Last week, without taking any care to reduce the size of its balance sheet, the Federal Reserve instantly changed the monetary environment to one that is observationally equivalent to the one that prevailed in 2009. By raising interest rates artificially (through interest payments on reserves and reverse repurchases) and applying those payments to everything but currency in circulation, the Fed has neutralized the misguided speculative prop it created through 6 years of policy distortion, and it did so in one fell swoop. From the standpoint of investors, the overall effect is just as if the Fed had suddenly reversed every dollar of quantitative easing since 2009 ($1.7 trillion)." Continue reading →

Continue ReadingJohn Hussman: Reversing the Speculative Effect of QE Overnight

IMF Approves Reserve-Currency Status for China’s Yuan

"The IMF will add the yuan to its basket of reserve currencies, an international stamp of approval of the strides China has made integrating into a global economic system dominated for decades by the U.S., Europe and Japan. It’s the first change in the SDR’s currency composition since 1999, when the euro replaced the deutsche mark and French franc. It’s also a milestone in a decades-long ascent toward international credibility for the yuan, which was created after World War II and for years could be used only domestically in the Communist-controlled nation. The IMF reviews the composition of the basket every five years and rejected the yuan during the last review, in 2010." Continue reading →

Continue ReadingIMF Approves Reserve-Currency Status for China’s Yuan

Bill Gross: Central bank ‘casinos’ to run out of luck

"Investors should cut risk heading into 2016 as central banks trying to pump up their respective economies make losing bets, bond guru Bill Gross says. Institutions like the Federal Reserve and the European Central Bank are like 'casinos' that create money instead of chips 'they'll never have to redeem,' said Gross, founder of bond giant Pimco who now runs the $1.4 billion Janus Global Unconstrained Fund. Furthering the gambling analogy, he said central bankers are using a familiar ploy — doubling down on losing bets until they break even. 'How long can this keep going on? Well, theoretically as long as there are financial assets (including stocks) to buy,' Gross said." Continue reading →

Continue ReadingBill Gross: Central bank ‘casinos’ to run out of luck