Twilight of the Neoliberals

ZH: Germans Are Leaving Germany 'In Droves'
More than 1.5 million Germans, many of them highly educated, left Germany during the past decade. — Die Welt.

Germany is facing a spike in migrant crime, including an epidemic of rapes and sexual assaults. Mass migration is also accelerating the Islamization of Germany. Many Germans appear to be losing hope about the future direction of their country.

"We refugees... do not want to live in the same country with you. You can, and I think you should, leave Germany. And please take Saxony and the Alternative for Germany (AfD) with you.... Why do you not go to another country? We are sick of you!" — Aras Bacho an 18-year-old Syrian migrant, in Der Freitag, October 2016.

A real estate agent in a town near Lake Balaton, a popular tourist destination in western Hungary, said that 80% of the Germans relocating there cite the migration crisis as the main reason for their desire to leave Germany.

"I believe that Islam does not belong to Germany. I regard it as a foreign entity which has brought the West more problems than benefits. In my opinion, many followers of this religion are rude, demanding and despise Germany." — A German citizen who emigrated from Germany, in an "Open Letter to the German Government."

"I believe that immigration is producing major and irreversible changes in German society. I am angry that this is happening without the direct approval of German citizens. ... I believe that it is a shame that in Germany Jews must again be afraid to be Jews." — A German citizen who emigrated from Germany, in an "Open Letter to the German Government."

"My husband sometimes says he has the feeling that we are now the largest minority with no lobby. For each group there is an institution, a location, a public interest, but for us, a heterosexual married couple with two children, not unemployed, neither handicapped nor Islamic, for people like us there is no longer any interest." — "Anna," in a letter to the Mayor of Munich about her decision to move her family out of the city because migrants were making her life there impossible.
It is amazing how quickly Germany changed, like flipping a switch. Merkel's migrant policy was never going to be positive for Germany, but if it ends up pushing out more native Germans in the process it will rapidly accelerate the collapse of the welfare state. Furthermore, it has rapidly shifted social mood, from one of acceptance of migrants to Germans now believing their own government is their enemy.

It is hard to over emphasize how destructive Merkel has been for Europe. Germany was likely to be the least radical power during the shift towards authoritarian, anti-immigration government in Europe. Now, Germany appears as if it might shift further right than National Front in France. Meanwhile in France, FN is riding the same wave as Mr. Trump in the United States.

FT: How France’s National Front is winning working-class voters
After deindustrialisation came the FN’s victory in 2014, when Hayange became one of 11 towns captured by the far-right party, prefiguring the populist wave that has shaken the continent, notably with Britain’s June vote to leave the EU.

Today Hayange, which in its heyday lured in immigrants from Italy and elsewhere, has become staunchly Eurosceptic.

The FN has built much of its success over the past two years on an effort to gain the support of working class voters. Whether Ms Le Pen can defy the pollsters who predict she will ultimately lose the presidential contest, or at least do better than expected, will largely depend on whether she can mobilise disenchanted blue-collar voters, whose turnout has tended to be low.

“The FN has become the party of the working class,” says Bruno Cautrès, a political sciences researcher at Paris-based Sciences Po Cevipof. “The party offers a double explanation for their malaise: Europe has failed to protect their jobs from globalisation and failed to protect their way of life from Muslim immigrants.”
Bloomberg: Nationalists and Populists Poised to Dominate European Balloting
In the coming 12 months, four of Europe’s five largest economies have votes that will almost certainly mean serious gains for right-wing populists and nationalists. Once seen as fringe groups, France’s National Front, Italy’s Five Star Movement, and the Freedom Party in the Netherlands have attracted legions of followers by tapping discontent over immigration, terrorism, and feeble economic performance. “The Netherlands should again become a country of and for the Dutch people,” says Evert Davelaar, a Freedom Party backer who says immigrants don’t share “Western and Christian values.”

Even Europe’s most powerful politician, German Chancellor Angela Merkel, is under assault. The anti-immigrant Alternative for Germany (AfD) party has drained support from Mrs Merkel’s Christian Democrats in recent state and local elections, capitalizing on discontent over Germany’s refugee crisis. In Austria the far-right Freedom Party has a shot at winning the presidency in balloting set for Dec. 4, after an election in May that the Freedom Party narrowly lost was annulled because of irregularities in vote counting. The populists are deeply skeptical of European integration, and those in France and the Netherlands want to follow Britain’s lead and quit the European Union. “Political risk in Europe is now far more significant than in the United States,” says Ajay Rajadhyaksha, head of macro research at Barclays.
Nick Rowe sums up the inherent problem for the neoliberal order in the West. As their economic models ignore debt and thus lead to massive debt crises, the neoliberals also believe in the Blank Slate and treat people as widgets, assuming no change in social, cultural and political institutions from mass migration. As with debt, it leads to a total system collapse.

Importing people is not like importing apples

Worthwhile Canadian Initiative:
Importing people is not like importing apples.

It's not just "labour services" and "consumer demand" that crosses the border; it's people. And there's a lot more to people than just bundles of labour services and consumer demands, where tariffs and transport costs make the only difference to whether they are inside or outside the borders.

"Total Factor Productivity" is not some geological feature like the Canadian shield. There has to be a reason why some countries are rich and other countries are basket cases, and unless you are lucky enough to find yourselves sitting on great reservoirs of oil that someone else will pay you to pump out of the ground, that reason seems to have something to do with social/economic institutions, and social/economic institutions seem to have something to do with people.

If you have a model which treats Total Factor Productivity as exogenous, then yes, if "resources" flow from places with low TFP to places with high TFP, as they will if the invisible hand is allowed to operate, that would be a Good Thing. But you need to stop and ask: "Hang on. I wonder why TFP is higher in some places than in others?" Which should lead you to the next question: "I wonder if TFP really would be exogenous to the sort of policy experiment I'm using my model for?". Which should lead you to the next question: "I wonder if social/economic institutions really would be exogenous to the sort of policy experiment I'm using my model for?"

How exactly will social/economic institutions change when we import people? God only knows. They might change for the better; they might change for the worse. It depends on them; it depends on us. But they almost certainly will change. And if you can't even see that question, and wonder about it, then you really are missing something that even the great unwashed uneducated rabble can see. And the great unwashed uneducated rabble are going to put even less credence on what you intellectual elites are telling them they ought to think.
There will be no moderation. The behavior of the establishment across the West shows it will only increase current policies to punish the unruly electorates, and the electorate will respond by picking ever more radical candidates. The West is about to descend into civil conflict once more.

USDCNY Slides to 6.76, 1pc Away From Red Line

Markets are about to break out of their four-month calm if USDCNY takes out 6.83, only a 1 percent move is needed.

Crackdown on Illegal Housing Practices Could Cut Developer Profit in Half

Some real estate developers invented various fees and charges for home buyers that may have doubled profits. With the government now cracking down on housing violations, these developers could see their profits halved.

Recently, a series of media exposure of some of the alleged violations charged "buy rate", "electricity supplier charges" and other real estate funds.

According to the "Daily Economic News" reporter investigation, these additional fees for developers can save 3% to 5% of the marketing costs, but additional costs of such a violation is canceled, the developer or sales profits will shrink.
One example:
Housing prices listed in a Property located in Shanghai Sijing example. The real estate unit price of 40,000 yuan / square meter (decoration), 8% of the net profit margin is calculated, priced at 3200 yuan net profit. It broke the news to the media buyers, the real estate on the basis of first Fuwu Cheng additional 400,000 yuam renovation costs. According to a rough calculation of 100 square meters of housing, the developer sold a suite per square meter can be overcharged 4,000 yuan, deduct 10% tax per square meter can be little more 3600 yuan. Profit from the unit price visible, surcharges a close, the project profit nearly doubled.
iFeng: 房价真相:去了“苛捐杂费” 楼盘利润腰斩!

Lower-Tier Cities Begin De-Urbanizing

Rural households are digesting housing inventory in some third- and fourth-tier cities, but they aren't changing their household registration. Top first- and second-tier cities remain the preferred destination for those switching from rural to urban hukous. The result is some cities are beginning to see de-urbanization as the rural population fails to supplement urban outflows.
iFeng: 三四线城市去库存背后:农民买房但不一定落户
21st Century Business Herald was informed that, to encourage farmers to respect the people of Hubei Xiangyang, Meishan, Sichuan and other four-tier cities has made great achievements, buy subsidies, farmers can fund loans, these regions housing inventory to digest quickly.

However, local farmers into urban household registration is not much. It is worth pondering, like Chengdu, Chongqing and some other large cities, large urban farmer households enthusiastically, just one year alone hundreds of thousands of households. Meishan and other places housing digest quickly, the total number of urban household registration was in decline. This policy and the State to encourage farmers to three or four lines, it seems that some divergences.
One example from Meishan, Sichuan province:
However, these areas migrant workers to buy real home is not much. In Meishan, for example, at the end of 2014 registered a total population of 3.53 million, of which non-agricultural population of 1.0064 million. To the end of 2015 total household population of 3.49 million, of which non-agricultural population of 1.0035 million. This means that the total household population, and urban household population is declining.

M2 Slows in September

New loans soared last month, but M2 growth slowed to 0.36 percent mtm, the third slowed figure in 2016. Rolling 3-month growth also fell, while yoy growth increased to 11.6 percent.

Loan growth jumped, with 56.4 percent of new lending going to households, down slightly from the August share of 56.7 percent and well off the July shock number of 104 percent.

China's reserve coverage of M2 fell below 14 percent at the end of September, but the recent devaluation in the yuan has made up for the September growth in M2 and decline in reserves.

China Daily: China's new yuan loans surge in September


It's Serious: Sept Prices Explode, NBS Delivers Mid-October Update

China's NBS released September housing prices today and they show a price explosion in September. In order to counter the shocking results, NBS took the extraordinary step of delivering a mid-month update. NBS broke out several hot first- and second-tier city price changes in October to show the world the government's housing crackdown is working.
The table shows much of the September increase reversed by mid=October, with Beijing for instance seeing a 3.7 percentage point drop versus the 4.9 base index increase in September. In other words, more than 70 percent of September's price gains were gone two weeks later.

As for the prices in September, they increased 1.8 percent nationally, an almost 24 percent annualized rate. Although NBS broke out top-tier cities for the October report, the September data shows the housing boom spread beyond these cities. The 12 hot cities I've broken out in prior months accounted for about 36 percent of the national increase, with the top-tier down to about 10 percent of the national total. Meanwhile smaller cities, such as Wuyi, saw big price explosions. Wuyi prices increased 8.2 percent in September, equivalent to about 40 percent of total price gain since the end of 2014.

NBS: 2016年9月份70个大中城市及10月上半月一线和热点二线城市住宅销售价格变动情况

Back at the start of August I posted China Must Choose: Defend Real Estate Prices or Exchange Rate

As the real estate crackdown has taken effect, the renminbi has sunk to new 5-year lows and approaches the red-line at USDCNY 6.83, with the U.S. Dollar Index also exhibiting a bullish breakout.

Xinhua Calls Housing Violators a Malignant Tumor

Even though blame for the housing bubble falls squarely on government and monetary policy, Xinhua wants everyone to focus on the symptoms of shady real estate practices.

One again unto the breach goes the central planner:
Recently, the Ministry of Housing and Urban Construction another telling standardize the real estate development enterprises, clearly listing will publish false, malicious speculation, hoarding and other nine kinds of unfair business practices severely punished according to law. In many market regulation upgrade in the background, a move no doubt is a mind thunder, that the government realized that the current real estate market regulation is urgent, determined to cut off cancer disrupt the market in order to achieve long-term healthy development of the real estate market.

Including the previous round of soaring house prices, including fluctuations in the property market, real estate market disorder are exposed is an important factor in pushing up prices, some developers to reap huge profits, accustomed to spreading false news, artificially creating panic, seriously damaging the interests of consumers, affect the healthy development of the property market.

...A healthy real estate market, there must be iron-fisted rule to maintain order. The Department of Housing and 9 kinds of unfair business practices to be clearly defined. The courage to play the competent departments should strictly enforce the law, to prevent a criminal record or fail to investigate the behavior of poor accountability shield enterprises to accelerate the real estate industry credit system construction, in the whole society Jiangyoufalie guide is formed, so that housing prices become illegal behavior "across the street mouse".
iFeng: 新华时评:剪除中国楼市的毒瘤刻不容缓

Beijing Starts Filing Charges Against Developers, Brokers

Sales are down sharply in October and the city government is adding charges against 4 developers and one real estate broker. The four developers are accused of hoarding property. 我爱我家 (Homelink) has 12 separate violations filed against it, such as for unauthorized listings.

iFeng: 京上半月楼市成交涨幅降29% 4项目被停网签