News links for 18 Feb 2014
“The two most-accurate gold forecasters are holding to their bearish forecasts for 2014 even after the metal posted its best start to a year since 1983. “
“Germany’s housing rally is being driven by low borrowing costs and a shortage in big cities such as Berlin and Frankfurt, where construction lags behind demand. The Bundesbank said today that home prices in cities are about 25 percent overvalued, and the German government has proposed new laws to curb price and rent increases in an already tightly regulated market. “
“Banks are no longer just financing heavy industry. They are actually buying it up and inventing bigger, bolder and scarier scams than ever”
“The prospect of far better lives depends on how the gains are produced and distributed “
In Spain, the credit problems continue with 13.6% of loans troubled, a new record. Bad debt is at 197 billion euros, another record. Meanwhile credit is contracting, reaching 1.44 trillion euros, the lowest level since 2006
Germany’s house prices have increased 25% in the big cities since 2010 because of low rates. If one looks at price to rent and price to income, Germany still looks OK. But the concern over rising prices in cities is mounting.
“At the end of 2013, Spain’s government debt was up to 961.6 billion euros, 8.7% more than at the end of 2012.. That puts the level at 94.05% of GDP.
In Germany, the Bundesbank is warning about an increase in house prices in major cities like Hamburg, Munich and Cologne. No one is talking about a bubble yet but there is concern about sustainability. “The most important reason for the high real estate demand is the extremely low level of interest rates. The average rate for housing construction sank to 2.75% in 2013, while the policy rate at the ECB is a record low 0.25%.
Industrial production in Argentina is now down 1.5% year on year through January. A fall in auto production was the main cause of the decline
According to a recent study, Germany needs to pay 120 billion euros over the next ten years to fix aging infrastructure like bridges and streets.