Tag Archives: credit

Moody’s downgrades Cyprus bonds


Another one "to bite the dust?"

Moody's decision to lower Cyprus' debt rating to just above junk status is the latest sign the island nation may become the fourth eurozone country heading towards a bail-out

Moody's downgrades Cyprus bonds

By Peter Spiegel in Brussels

The rating agency's decision is the latest sign the island nation may become the fourth eurozone country heading towards a bail-out

Read the full article at: http://on.ft.com/r3wlk1

Sent from my iPad

Are investors the real cause of Israel’s high housing prices? – Haaretz


Are investors the real cause of high housing prices?

One possible avenue for holding down house prices is for the state to further rein in the profitability of investments in second or multiple homes.

Published 02:13 25.07.11
Latest update 02:13 25.07.11

By Ram Ozeri Tags: Israel real estate Israel housing protest Israel protest Israel strike

32,000 people have bought 3 to 10 homes since 2003

High housing prices have brought tens of thousands out to protest in Tel Aviv, complaining that they have been priced out of affordable homes. But for plenty of Israelis, the skyrocketing prices are a blessing.

Between 2003 and this year, 218,000 residences have been bought for investment purposes, a study by TheMarker shows. An investment home is defined as one bought by someone who already owns a home.

Most investment homes, 60%, have been bought by small investors. That is, more than 131,000 people have taken their savings and put it into housing as an investment, taking advantage of the low interest rates of recent years to finance some of the deal.

The other 40% have been bought by more serious investors. Some 32,000 people own three or more homes. Between 2003 and 2011, around 21,000 people have bought two additional homes for investment, and almost 8,000 have bought three or four.

About 2,600 have bought more than five homes over the past eight years. Some 256 people have purchased at least 10, with the average number for this group being 15.

But not all these people are necessarily in the property investment business. Some, for example, are lawyers who act as trustees for clients wishing to remain anonymous. This seems to have become quite common in recent months as many foreign residents, or Israelis with dual citizenship, have looked for ways around new and stricter tax rules for U.S. citizens.

Israelis have always bought apartments as investments, but an analysis of data from the State Revenues Administration shows that such investments have grown significantly over the past decade. In 2002, 22.4% of all housing purchases were for investment, and in 2010-2011 the figure was 30%.

The economic recovery since the second intifada and low interest rates have created a strong recovery in the housing industry – and in investment homes in particular. Housing sales reached 104,000 in 2010, up from 64,000 in 2002, a 60% increase. At the same time, purchases of investment homes surged by 120%.

The peak has passed

But it seems the peak is behind us. At the end of 2010, the Finance Ministry increased purchase taxes on investment homes by between 1.5% and 2%. This translates into NIS 15,000 more in taxes on the purchase of a residence worth NIS 1 million. This may not seem like much, but plenty more costs are involved, and in the first quarter of 2011 the percentage of homes bought for investment purposes fell to 25.8%, the lowest level since 2004.

The treasury’s figures for the first three months of the year show not only a slowdown in purchases for investment purposes, but a jump in the number of homes sold that were originally bought as investments. Preliminary indicators for the second quarter show that this trend is is picking up.

One possible avenue for holding down prices is for the state to further rein in the profitability of investments in second or multiple homes. Tax increases have a big advantage over the alternatives – they can be done almost immediately, and the results will be felt quickly.

A major problem with reducing the number of investment homes is that most of them are rented out, so a reduction would lead to higher rental prices.

    This story is by: Ram Ozeri

Are investors the real cause of high housing prices? – Haaretz Daily Newspaper | Israel News

The MasterFeeds

China complains of U.S. debt, but has too much at stake to dump dollars


It is the ultimate ”too big to fail” global relationship, said Andy Rothman, an analyst in Shanghai for the investment bank CLSA. If Beijing even hinted that it might try to sell part of its U.S. debt, ”other countries might sell their dollar assets,” Mr. Rothman said, noting that this would drive down the value of China’s holdings. ”It would be financial suicide for China.”

From The International Herald Tribune:

China complains of U.S. debt, but has too much at stake to dump dollars
BY DAVID BARBOZA

SHANGHAI — However grim Washington’s debt and deficit negotiations may seem to U.S. citizens, the impasse is nearly as disturbing for China.

As the United States’ biggest foreign creditor — holding an estimated $1.5 trillion in Treasury securities and other U.S. government debt — China has been a vocal critic of what it considers Washington’s politicized profligacy.

”We hope that the U.S. government adopts responsible policies and measures to guarantee the interests of investors,” Hong Lei, a Foreign Ministry spokesman, said at a news conference last week.

Beijing might prefer to respond by starting to dump some of its U.S. debt. But in this financial version of the Cold War, analysts say, both sides fear mutually assured destruction. One reason America would want to avoid defaulting on its debt is that such a move could alienate China, which is a steady purchaser of Treasury securities. Beijing, meanwhile, already has too much invested in U.S. debt to do much more but continue to buy, hold and grumble.

It is the ultimate ”too big to fail” global relationship, said Andy Rothman, an analyst in Shanghai for the investment bank CLSA. If Beijing even hinted that it might try to sell part of its U.S. debt, ”other countries might sell their dollar assets,” Mr. Rothman said, noting that this would drive down the value of China’s holdings. ”It would be financial suicide for China.”

http://www.nytimes.com/2011/07/19/business/china-largest-holder-of-us-debt-remains-tied-to-treasuries.html

Get the best global news and analysis direct to your device – download the IHT apps for free today!
For iPad: http://itunes.apple.com/us/app/international-herald-tribune/id404757420?mt=8
For iPhone: http://itunes.apple.com/us/app/international-herald-tribune/id404764212?mt=8

Sent from my iPad