2017-02-27

Fake Science

The West is rotten to the core and will continue to rot as long as Narrative and religious belief (the variety of things that are considered politically correct) substitute for hard science and truth. Society doesn't fall apart immediately, but by drips and drabs. It can run on fumes for a while, but then the deficit catches up and progress suddenly grinds to a halt, then reverses. Things break and never get fixed.

BBC: Most scientists 'can't replicate studies by their peers'
Science is facing a "reproducibility crisis" where more than two-thirds of researchers have tried and failed to reproduce another scientist's experiments, research suggests.

This is frustrating clinicians and drug developers who want solid foundations of pre-clinical research to build upon.

From his lab at the University of Virginia's Centre for Open Science, immunologist Dr Tim Errington runs The Reproducibility Project, which attempted to repeat the findings reported in five landmark cancer studies.

"The idea here is to take a bunch of experiments and to try and do the exact same thing to see if we can get the same results."

People's Daily: Should the Govt Rescue Housing Market?

Home prices have barely dipped, but already there's some expectation of a rescue, enough to have the People's Daily warn it isn't coming. The People's Daily focuses on one of the hottest cities in 2016: Hefei.

iFeng: 人民日报:房价降了,政府就得出手“救市”吗?
Spring came, all things recovery, soaring all the way last year, booming Hefei, the property market is more chill. Existing homeowners cut prices 4,000 yuan per square meter and nobody cares, existing housing fell more than 10% are not a few. There are also insiders said that before and after the Spring Festival this is the property market sales off-season, part of the second-hand housing listing price decline can not represent the overall situation of Hefei property market, the so-called "crash" is actually artificially created illusion. In any case, there are indeed individual owners "sit still", and even put forward the hope that the government "shot rescue".

Owners of the "sit still" can understand. Did not buy a house, no one wants the price is low, once bought the hand, no one wants to preserve and increase value. House prices drop, the most important family wealth saw shrink water, put who are not happy. The healthy and stable development of the real estate market is both beneficial to the ordinary people and an important goal of the government administration. Housing prices rose too fast, the Government has to take control measures to stabilize the market's responsibility; then, house prices down, the government also had to "rescue" it?

Careful observation of this round of Hefei property market cooling, regardless of the degree to judge, or from the principle of analysis, are really difficult to find the reasons for government intervention.
The People's Daily sends two messages. One: the government should prepare for an eventual bear market and be ready to respond before it arrives. Two: for now let the speculators burn.
Remove all possible after it is not difficult to find, the existing home prices fell the most sensitive, the most "sad" group is likely to have bought at last year 's high, the next few years intend to "go hand in hand" owners. And they, often do not belong to "immediate housing need", because the short term to buy, sell is actually "house flipping", and "houses should not be flipped." Since these people are mainly investment speculation, then, and other market transactions, please rationally deal with the normal price fluctuations. House prices down, some people go bust, but for real homebuyers, their dream of homeownership comes closer.

Hefei probably will not be the only city to adjust this year. That being the case, those cities where prices rose too fast in the early stage, should also be expected to bring down the consequences of falling prices, a rainy day, carefully screened, effective response.

Yangtze River Delta Land Sales Still Strong

Eleven cities nationally have combined sales of more than 10 billion yuan to start the year of the chicken. Seven are in the Yangtze River Delta.

iFeng: 房企拼抢长三角:11个城市卖地收入已超过百亿
Centaline Property Research Center statistics show that as of February 20 this year, 30 large housing prices to get the total amount of more than 233.19 billion yuan, the control of the hot market in the background of the land market is still hot.

Up to now, 11 cities have sold more than 10 billion land, including: Wuhan, Nanjing, Zhengzhou, Hefei, Suzhou, Hangzhou, Shanghai, Wenzhou, Beijing, Shenzhen, Guangzhou, seven of which are Yangtze River Delta cities.

2017-02-25

No Worries, Housing Isn't Crashing Like In 2008

They aren't yet comparing the real estate market to 2008, but in Shenzhen, they're saying the sudden loss of confidence and cashing out by investors isn't like 2008. This comes amid a 70 percent drop in average transaction price in Shenzhen and Shanghai, and a 33 percent drop in Beijing, plus pyramid leveraging schemes by speculators over the past couple of years.

iFeng: 深圳地产投资客开始套现 但称市场信心远未降至2008年
Azu recently sold a suite in Shenzhen Pingshan, cashed out 2.2 million, in mid-2015 he spent 2.3 million to buy two homes. "The other home has zero cost, if house prices fall then I'm not afraid." Azu told reporters that this is a 17-year experience in the real estate investment housing room brother told him the real estate speculation principle, "safety first, make money second."

..."Now is far from the depth of 2008, then the market did not have the confidence, new house prices were generally cut in half, existing home prices a big sale and no one buys, now as long as you're willing to cut the price you can certainly sell it." House brother said.
The article also has the example of Mr. Zhang, who leveraged up his housing investments and used private investment levered at 9:1 to speculate.
To Mr. Zhang, for example, in 2014 to join the real estate team, sold Longhua Century Spring City 60 square meters two rooms for 2 million yuan in principal, in May that year to buy Nanshan District habitat 88 square meters, the total price of 230 Million, a year up to 5 million yuan, through the bank to mortgage, borrow 70% or 3.5 million, minus the previous 0.7 million mortgage loan, he had 2.8 million in cash, in June 2015 and 7 million total Price to buy the second set of Kam Lu Garden 88 square meters.
A good example for all those who still believe Chinese use cash to buy homes and have low debt levels. Speculators are pyramiding up their gains via mortgage borrowing. If you look at the last house purchased, you'd see a 50 percent cash downpayment, but the cash comes from the mortgage on an existing property.
This is one of the technology is that the first to buy a house quota, the divorce when the divorce, followed by second-hand housing do not buy new homes, and then through a high valuation, as well as the lender's cash flow, pay as low as possible down payment of 20 percent, borrow 80 percent, increase the leverage.
Here they're talking about getting a divorce to get around the home buying quoatas, then getting a high estimate on the home price to drive up the amount they can borrow, thanks to the divorce qualify as a first-time homebuyer. Use every method possible to use as much bank money as possible for real estate speculation.
Today, Mr. Zhang's house has risen to 7 million yuan, the second set rose to 13 million yuan, if he does not want sell and instead wants to buy a third home, he can continue to increase the mortgage, that is 7 million - 3.5 million + 13 Million - 7 million = 9.5 million in equity, mortgage 70 percent, and can borrow 6.65 million yuan in cash.

However, Mr. Zhang due to fear of regulation, he did not increase the mortgage, the debt control rate of 50% or less. Now Mr. Zhang has 4 homes, besides two in Xi'an, the two in Shenzhen have a market value of 20 million yuan in Shenzhen, debt of 8 million, monthly mortgage payment of 50,000 yuan. He told reporters that the cash flow is more adequate, there is 2 million cash on hand, plus rental income of eight thousand per month, three or four years for no problem, he envisaged the next wave of real estate boom to sell when One or two sets, he can achieve financial freedom.

According to the official data of Shenzhen, Shenzhen last year, the proportion of investors to 40%, the proportion of loans also more than 60 percent, the country's largest real estate plus leverage, the largest cash flow test.

Now the only worry that Mr. Zhang is that he set up a special real estate real estate fund, faced with no rice for the pot.

According to Mr. Zhang, organize friends into a real estate fund is a more popular model, you can do 1 to 9 leverage, that is, 10 million yuan principal, you can get 90 million in loans, the loan interest rate is about 10% Investment 100 million yuan of the project, the sale of the old building after the renovation and then sold, one square meter gross profit to 10,000 yuan.

But since last year, Shenzhen, the introduction of intensive policies to combat real estate, such as real estate license can not be sub-card, factory change apartment has also been severely cracked, the fund can no longer invest in real estate and other initiatives, so that these fund companies difficult.

2017-02-24

Liaoning GDP Adjusted Down 23pc

FT: Chinese province’s GDP fall hints at extent of past exaggeration
Economic output in China’s northeastern industrial province of Liaoning shrank by 23 per cent in nominal terms last year, according to official statistics — showing the extent to which officials had previously exaggerated performance in China’s struggling rust-belt.

The sudden drop in provincial gross domestic product is only partly due to a fall in the real economy — in inflation adjusted terms, GDP fell by 2.5 per cent according to the national statistics bureau.
For everyone who likes to point out Chinese GDP is almost useless, I will reiterate that this issue was made clear at least as early as 2014 because real estate investment data (to name one data set) was not cooked.

Liaoning Sounds Warning on Chinese Economy

The yoy cumulative growth rate nationally was 12.5% as in the list above. The yoy national growth rate for the month of September alone was 8.6%. For Liaoning, it was negative 41%.

2017-02-23

China Credit Slowdown Could Slow Global Economy

ZH: UBS Calls It: "The Global Credit Impulse Suddenly Collapsed To Negative"
In the note, UBS writes that "Our global credit impulse (covering 77% of global GDP) has suddenly collapsed" and explains that "as the chart below shows the 'global' credit impulse over the last 18 months is essentially mainly China (the green shaded bit), which even now is still creating new credit at an annualized rate of around 30pp of (Chinese) GDP. But the credit impulse is the 'change in the change' in credit and even the Chinese banks could not sustain the recent extraordinary pace of credit acceleration. As a result: whereas back in Jan '16 the global credit impulse was positive to the tune of 3.8% of global GDP (of which China comprised 3.5% of global GDP) it has now fallen back to -0.1% of global GDP (China's contribution is -0.3% of global GDP).

2017-02-22

3 Years Later: Liaoning Still a Warning

Back in 2014 I wrote Liaoning Sounds Warning on Chinese Economy.

Fast forward to today in Reuters: How one Chinese region shows risks of relying on heavy borrowing
After years of investment in infrastructure, some of it encouraged by the central government, Liaoning is China's only shrinking provincial economy, its population is in decline and its debt is almost three times annual revenues.

Liaoning highlights the risks of relying on repeated borrowing to invest in infrastructure and fuel economic activity - a regular fall-back policy China has used when GDP risks missing annual targets, including in 2016.

It also points to the urgency for China to move away from a reliance on state firms, which for decades provided China’s economic backbone. Most other provinces have reduced their reliance on state-firms to a much greater extent than Liaoning and its neighbors, Heilongjiang and Jilin. But they still wield considerable influence nationwide.
In addition to its reliance on SOEs, Liaoning was also more reliant on industry, energy and industrial commodities. This was the trigger for Liaoning's troubles, but its development model is shared by most of the country to this day, evidenced by 45 trillion yuan in infrastructure plans for 2017.

The whole nation is like a giant version of Liaoning, not as fragile, but with a similar risk profile. All of China has a rising debt load and will have similar demographics soon enough. One sector's implosion won't sink China, but the global economy performed relatively well from 2011 to 2017 despite troubles in natural resources. What happens when three or four major problems manifest simultaneously?

Chinese Home Prices Plateau in January


Chinese new home prices rose 0.2 percent nationally in January. Existing home prices increased 0.4 percent. Government efforts to slow new home prices in the top and hot cities worked, but existing home prices kept rising in most cities. Some declines, such as the 0.1 percent in Shenzhen, were marginal. Shanghai saw the largest decline in existing home prices nationally, with a drop of 0.4 percent. Existing home prices rose in 51 cities versus the 45 cities with rising new home prices.

SCMP: China’s home prices continue to cool in January
China’s residential property market continued to lose heat in January, with 14 out of 15 cities under the government’s scrutiny reporting declining or unchanged prices, in the latest evidence that the state’s heavy-handed curbs on the property market are having an effect.

Guangzhou was the sole city among the 15 major cities to defy the government’s attempt to deflate the property bubble, with January prices rising 0.6 per cent from the previous month, marginally slower than the 0.7 per cent month-on-month gain in December, according to data released by the National Bureau of Statistics Wednesday.

Shanghai’s prices of new homes fell 0.1 per cent in January, compared with December, according to data by the National Statistics Bureau, while Beijing prices were unchanged.
NBS: 2017年1月份70个大中城市住宅销售价格变动情况