Friday, 30 May 2008
ok..let's cool down few seconds and see what others are asking:
"Finland's Christian Democrat parliamentary faction on Friday demanded a repeat general election in the interest of wiping the slate clean after the 2007 general election campaign funding controversy."
hummm, a rerun...well i'm asking more. I want the government to resign in mass especially the housing minister that seem to be the ring leader with regard to land tax reform.
Now, wasgonna (tm) happen? noting (tm)
(tm): TradeMark, registered expression to housingFinland
Well, I think it's very serious what is currently hapenning to the Finnish political sphere. Let's put it shortly : a crisis of confidence.
The problem, in all of that, is that previous reforms and passed law might have been decided not in favour of the Finnish people but instead based on the business lobbying.
For example, they are clearly dragging their feet with regard to housing and land reforms. The impact is a mushrooming of Commercial building popping up almost everywhere even near prime location. Another point, nothing has been done to stopp the municipalities to act as speculators, greatly influencing land price thus distorting the true cost of housing.
Mr Minister, your opinion cannot be bought, as you might know, people do not care about opinion but do care about law that are passed by the parliament and that has a big impact on the hard working people that represent THE VAST MAJORITY. GOT IT? If not then you should resign...
Wednesday, 28 May 2008
"European Central Bank President Jean- Claude Trichet urged companies not to set a ``bad example'' to workers by awarding large pay increases to executives.
Trichet followed European officials in pressing for wage restraint among the region's top earners as a way of cooling inflation. Central bankers including Nout Wellink of the Netherlands and Bank of England Governor Mervyn King have warned that bonuses paid to bankers risk distorting their economies.
``It's legitimate to raise questions on increases of certain salaries, which are already very significant,'' Trichet said in an interview with L'Express. Pay moderation is ``valid for everyone without exception,'' the French magazine cited him as saying. "
Among their salary, those executive are getting as well stock options that can bring them as much as 1, 2 or 5 time their annual salaries. If they step down, (yes we don't call that 'get fired'), then they get 'golden parachutes'...
They have as well "smart" accountant that manage to get very low tax on their income and in some case they use offshore account either in Switzerland in order to avoid paying high tax. Some as well relocate themselves in Tax Paradise country such as Monaco, Lichteisten and Luxembourg
Of course, You have as well businessmen that start to bribe politicians in order to get tax reforms (see inheritance reforms etc...), tax break etc... what is lost in one hand has to be taken on the other. The other being higher social fees as witnessed recently with childcare soaring (15%), public healthcare
Just have a look into the previous article : not on diet
Tuesday, 27 May 2008
The oldest section of the building complex dates from 1896 and it was extended in 1988. The premises include 48 flats of an average 54 square meters. The existing residents' rental agreements will be valid until further notice. The house also contains meeting and leisure facilities which the Bank of Finland will rent from SATO.
The Bank of Finland decided to give up the property due to the impending renovation requirements and maintenance costs. The Bank no longer considers the upkeep of residential property to belong to its tasks and has already sold similar property in the recent past."
2- "Bank of Finland to sell commercial building plot to YIT ConstructionToday, 26 May 2008, the Bank of Finland and YIT Construction Ltd have signed a preliminary real estate agreement on the sale by the Bank to YIT of a section of a plot of land zoned for commercial development in the Viinikkala district of Vantaa.
Sometime you wonder, if there is some conflict of interest in the real estate market. Why on earth Bank of finland had invested in Flats if not to get fat profit from it. I think you start to understand why the market is not healthy, especially when the lesson giver are the one that speculate on large scale...
Saturday, 24 May 2008
"Europe is facing a protracted period of high inflation rates, the newspaper quoted Trichet as saying. Trichet also said the ECB would deliver price stability in the medium term, the newspaper said."
"The ECB has refrained from following the U.S. Federal Reserve and Bank of England in lowering interest rates to shore up growth after an increase in borrowing costs. While euro-region inflation slowed to 3.3 percent in April from a 16-year high of 3.6 percent in March, it's still above the ECB's 2 percent limit."
Friday, 23 May 2008
"In March 2008, building permits were granted for a total of 3.2 million cubic metres, which is a good 30% lower than one year ago. Cubic volumes went down in all building types." Statistics Finland wrote.
For those who still believe that we have just a minor slowdown then...they should just wake up to the reality. The housing boom has ended, and has peaked about 1,5 year ago as stated in this blog many times.
Housing Permits reflect the future of the construction industry. The professional have seen their stock growing fast amid a slump in demand due to unrealistic pricing and higher interest rates.
The market have been kept alive artificially by the media through "the buy now" subliminal type of programs, the newspapers by parading "puppet" economists preaching that this time it's a normalization and among the worse, the king of the vulture, the master of the chacals...the right arms of banks : Kiinteistomailmaa, Huoneistokeskus, Habita and Viva to name few.
Those vultures have been setting prices far too high but yet attracted the honest workers that was just asking a professional service and correct valuation of those real estate they were ready to commit for the rest of their life.
Higher commission and a race for massive profit have pushed those banks and real estates to wrongly rate or valuate those assets. Price fixing, and conflict of interest had as well destroyed free market values by distorting the natural equilibrium of the market and pushed people into an unbearable indebtedness.
What next? a correction.
How much? -5% to -60%
Why? You see the U.S. economy has never been in such bad shape at a time of an oil and agro shock. The balance of the world economy could go either way. Indeed if the situation doesn't stabilize as planned in the U.S., then the global economy could deteriorate at a very fast rate.
My scenario, is not that extreme, I will just see a -10 to -20% in the most overheated area, but in a more prolonged period, not as sharp as in the 90's but as slow as in Japan, so maybe 5 years a 20% drop which could be about 2-4% drop per year. In that sense you could say that price won't grow but inflation will eat its value...
Vulture Owner: Banks have send them high in the sky in search for capital. Any victim is good, young, old, native or not.
Vulture goal: Commision, replenish bank coffers and keep profit from plunging.
Vulture future: many nest will desappear.
Maybe 6% seems unrealistics, but so was 100$ oil price 2 years ago... time has changed, the easy credit or begnin inflation is gone but bear in mind we are not going to witness the 1970's Finnish central bankers mistakes. Today we have the ECB, and he has been very clear in the past few month on his mandate: "Fighting inflation" meaning higher rates if needed to bring back inflation in check (i.e around 2%).
Thursday, 22 May 2008
The real problem is not that the government publishes dubious numbers but that investors believe them and make decisions based upon them, he said.
"A readjustment of investor mentality in the valuation of all three of these investment categories -- bonds, stocks, and real estate -- would mean a downward adjustment of price of maybe 5% in bonds and perhaps 10% or more in U.S. stocks and commercial real estate," Gross wrote in his monthly letter to clients of Pacific Investment Management Co., the largest fixed-income money managers in the world.
Gross argued that inflation rates in the rest of the world have averaged nearly 7% over the past decade, while the U.S. official inflation rate has averaged 2.6%. "Does it make any sense that we have a 3% to 4% lower rate of inflation than the rest of the world?" Gross wondered.
Investors are finally waking up to the notion that "U.S. inflation should be and in fact is closer to worldwide levels than previously thought," he said.
"If core inflation were really 3% instead of 2%, then nominal bond yields might logically be 1% higher than they are today, because bond investors would require more compensation," Gross wrote.
I suppose the same can be applied to Europe and to a greater extent Finland. Those statisticians seem in their laboratory, to have studied mice instead of human, and seems not to have put a foot inside the real world!
What if they really made a mistake and that core inflation is really much higher as they tell us? then you will have a sudden rise of long term interest rates...thus helping banks to repair ther balance sheet??...
Wednesday, 21 May 2008
And that's the reason why the german are asking for higher interest rates. They don't have a housing bubble as most european country do. They are very competitif in term of innovation, productivity. The high euro against the dollar seems not to be hurting their performance.
Tuesday, 20 May 2008
"He warned the 'financial bubble' of the last 25 years could be drawing to an end and the post World War II 'super-boom' era could also be over."
"He predicted a 'more severe and longer' US slowdown than most people expect."
"The UK housing 'boom (bubble)' is twice as in the U.S. , and housing price and houshold endebtness twice as big in the U.K."
I'm going through a serie of financial guru and reliable forecasters.
This series allow you to remove lots of noise coming from 'novice' economists (actually often parading in the HS or Kauppalehti columns) that are just giving a false sense of reality and just try to get your money or commitment at a very risky time.
Both made those warnings from the U.K. as we know U.K. might fall into a very severe recession next year or so. It will have ripple effect on Europe, no doubt about it.
Monday, 19 May 2008
"The credit crunch is continuing and it is not evident that the worst is over, the head of the European Central Bank has told the BBC."
"Jean-Claude Trichet said we were seeing 'an ongoing, very serious market correction,' during an interview with the BBC business editor."
"He warned that if central banks were tempted to cut interest rates now, more serious problems could follow."
"He compared recent rises in energy and food prices to the 1970s oil shock."
"Mr Trichet said the failure of most European economies to digest tighter monetary policy in the 1970s caused higher wages that undermined the region's ability to compete. The net result was mass unemployment."
"He added that we were still fighting unemployment that was a 'legacy' of that era."
"While the Consumer Prices Index (CPI) has risen sharply, high inflation "will not last forever," said Mr Trichet."
"The ECB has kept interest rates at 4% as a result of continuing inflationary pressures, even amid an economic slowdown, and Mr Trichet implied that a cut in interest rates was not on the cards. "
Friday, 16 May 2008
"Prime Minister Matti Vanhanen could have indirectly received election campaign funds from businessman Toivo Sukari, a financier of the proposed Vihti business park. The PM has recently given his support to the controversial project.
The Prime Minister has recently expressed his support for the Vihti Business Park Scheme despite opposition to the proposal from some cabinet colleagues including Minister for Housing Jan Vapaavuori.
"Other recipients of cash from the same Association include National Coalition MP Sauli Niinistö and Minister for Trade and Development Paavo Väyrynen."
The Association plans to build a business park in Vihti similar to that constructed two years ago in Lempäälä, near Tampere. It would include a huge rural shopping mall as well as business premises. Objectors say such business parks are environmentally unsustainable and endanger local established retailers. "
Today, it's clear that it's not only the playing game of Spanish politicians. Easy money attract 'flies'. It's amazing for a country that has been perceived as being the less corrupt in the world act that way.
The question as well will be who has profited indirectly for such project. Indeed investors who had known that such project will be backed by a high official and will get the green light would have invested in Housing, retail and bought shares in some contruction company.
To my opinion, I will not call the resignation of "Matti Vanhanen" for this corrupt behaviour but I would urge the NBI (National Bureau Of Investigation) to check who were involved in the scam.
As usual, the poor will be hit by such a project as local property price will shoot up and local retailer will go bankrupt. Shamefull for a country that is supposed to lead in the wellfare of the people.
UPDATE: Here is the list of all Member of Parliament that have been corrupted by the "Kehittyvien Maakuntien Suomi" (KMS), an association funded by businessmen
Marja Tiura, the deputy chair of the National Coalition party faction, told the justice ministry she had received 20,000 euros from KMS.
For their part, Jyri Häkämies (cons), the defence minister; Jyrki Katainen, the finance minister and National Coalition party leader; Ilkka Kanerva (cons), the foreign minister; Pekka Ravi, the chairman of the National Coalition party faction; Petri Salo (cons) and Anu Vehviläinen (centre), the transport minister, suddenly recalled that each of their campaigns had benefited from 10,000 euros of KMS funds.
Henna Virkkunen (cons) and Sampsa Kataja (cons) said they had received 5,000 euros each from KMS.
Related: Not on Diet
"Myron Scholes, chairman of Platinum Grove Asset Management LP and 1997 winner of the Nobel Prize in economics, said the worst of the crisis in credit markets may not be over.
'From my perspective, I think that we don't know if the storm has passed or if we are still in the eye of the storm,' Scholes said
'In my view, this is probably as bad or worse than the 1989-1990 crisis and may even rival the worst crisis we've seen since the end of the Second World War,' Scholes said.
Former Fed Chairman Alan Greenspan has also said the turmoil is the most 'wrenching' since the war. "
Wednesday, 14 May 2008
.....Be careful...If you need to buy, hire a Finnish and Spanish lawer and make sure that the property has been build legally and has not involved any corrupt local politicians or law maker. Nethertheless you are warned....
"Some are holiday homes, others were intended for retirement: all were bought with hope, optimism and excitement.
But the stories behind their "for sale" signs are the most stark warning yet that the Spanish property bubble has finally burst.
Here in Southern Spain, bitter expats talk about "Helldorado" - paradise that has mutated into a nightmare.
Tumbling property prices, a glut of new properties still flooding onto the market and rising Spanish interest rates are taking their toll."
You are warned, investment or retirement plan in Spain or other exotic location are now investment trap.
Source : Daily Mail
Tuesday, 13 May 2008
The slump in mortgage and corporate loan markets could bottom out this year, said Dimon, whose bank largely side-stepped the losses and mark-downs that have hobbled rivals during the past year.
Yet the economy may face a longer-term challenge even as financial markets begin to function again, the "slower burn" of a recession that may rival the severity of the 1982 contraction, he said.
These challenging conditions, marked by tighter bank credit, new rounds of mark-downs, further capital infusions and asset sales by banks, could last through next year and into 2010, he said "
Friday, 9 May 2008
"Real prices of dwellings have now fallen for two successive quarters.
According to preliminary data, in the first quarter of 2008 real prices fell by 1.0 per cent from the previous quarter in the whole country.
Nominal prices went up by an average of 0.3 per cent in the whole country. Prices remained unchanged in Greater Helsinki but rose by an average of 0.5 per cent in the rest of Finland."
So price have reached their maturity, now the question is how well the economy and unemployement will hold next year. If there is deterioration, then house can fall further.
So inflation is not helping anybody, since if the price growth is lower than inflation then you certainly have a property that is deflating slowly.
I think it should come at a surprise to anybody, especially the ones that have followed this blog, that prices have reached their peak level.
2009-2010 will be a period of asset deflation. By how much? it all depends on the global economy, inflation and government policies.
See link from some tentative prediction done few months ago : Technical Housing Analysis
"But at the same time, there is a danger that that the good development in our employment situation will come under threat."
Thursday, 8 May 2008
In Finland, data shows clearly that banks haven't yet put any brakes in providing loan to the households.
At a time of record high consumer debt level (even higher than in the 90's crisis), consumers have kept on pilling up debt.
The latest new car registration data, a 26% year on year jump, shows that "Fins" keeps on consuming? or is it simply the "neighbor effect" or "lamb effect" combined with government policies that is pushing people debt to grow amid a slowing global economy.
This goes in sharp contrast with the latest consumer confidence survey that showed that "Fins" were willing to save more...
Tomorrow the housing data will probably show that housing price spiked up as well, same rythm as rents...
Whatever policies you conduct , whatever media information you provide , no one can remove the "animal" spirit that is build in the consumer. Thus avoiding a "Boom and Bust" is an illusion...
Wednesday, 7 May 2008
Local economist, and politicians didn't help. They were brainwashing people in telling them that everything was fine. I guess it was a technique to avoid a total panic...
Now the unemployment is rising fast and the economy is slowing sharply. Let just hope that the global econnomy doesn't slow further...
"Greenpeace "apes" lock up diesel pumps in Helsinki, Finland
Finnish police have detained several Greenpeace activists who protested at a Neste petrol station in Helsinki on Wednesday.
A dozen protestors, some of them dressed in hairy full body orangutan suits, used bicycle locks to close diesel pumps selling palm oil diesel and disrupted the operation of the gas station."
I already wrote about it in a previous article...
Tuesday, 6 May 2008
"OP-Pohjola Group Central Cooperative's Executive Board decided on 6 May 2008 to raise OP-Pohjola Group's OP-prime reference rate from 4.25 per cent to 4.50 per cent, effective 20 May 2008.
The decision was based on the rising trend in market interest rates. The prime rate was last revised in June 2007."
How long would the other banks wait before raising their prime rates?
"One housing veteran once said to me, never trust or take the bank low prime rate. When the main ECB interest rates will start falling, banks will drag feet to lower it"
A report from Bank of Finland, clearly highlight the fact that the housing borrowers are looking for the cheapest alternative, thus switching from 12 month euribor (4.9%) to bank prime rates (4.25%).
"Euribor rates lost some of their popularity as reference rates used in new housing loan agreements in March.
The shift was mainly in favour of prime rates, the share of which has increased clearly.
In March, these two reference rates were used equally 48% in new housing loans."
I'm really wondering if a 0.5% can really make a difference??, if so then households are pretty highly leveraged which could explain why the saving rate has exploded in the past 6 months at a time where consumer confidence has plummeted.
I think a vast majority are still hoping that the housing will stabilize or at best follow inflation. That's most probably the reason why appetite for housing has not yet receded. Figures will show us that, a still healthy housing market, at least until end of the summer...
Symptoms have appeared in different forms, but no one can believe that a downturn could start ...
I stick to my prediction that company such as YIT, Ramirent are going to see their shares going back to 2003 level, a single digit level at around 3-4 euro.
These two companies are reflecting the housing bubble that has developped in the past 5 years as they show clear similarities as the nasdaq bubble or technology bubble...
Monday, 5 May 2008
"Food Crisis Hits Finland's Poorest. Here in Finland, the "silent tsunami" as it's being called, is beginning to make itself felt among society's vulnerable groups.
Heikki Hursti of the Laupeudentyö Foundation says "Over the last month the lines have grown so that I've calculated that there are anywhere up to 1300 people coming for food."
In spite of the evidence at ground level, officials say they are not yet seeing changes in hard statistical data.
But Ulla Pesola, who is in charge of managing the distribution of food aid from the EU through the Lutheran Church Resources Agency, says her numbers confirm what is happening in the bread lines."
Sometimes you really wonder how do they gather their statistical data. More worrying, in gathering those data, lot of participants can distort the data for they own benefit, you can call that corruption or manipulation.
I think they should put in place another agency that scrutinizes, independently, any data submitted for anything that participate into shaping our economical and political policies.
Another example of big failure , was the credit agencies, that were clearly manipulating data, to make appear a risky asset as safe ones. It's not magic but it is some kind of corruptive behaviour that the sole aim is to profit. They somehow put the base of this credit crisis.
Have you seen the number of SUV running on our road nowadays. In the past 3 years, this new "animal" is growing fast. High oil price is not stopping that at all. And why? reckless lending and credit standard deterioration. That is another symptom of the debt bubble that is growing and growing fast.