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The Gall Of Lockdowners Who Support China’s Anti-Lockdown Protests

The Gall Of Lockdowners Who Support China’s Anti-Lockdown Protests

Authored by Michael Senger via ‘The New Normal’ Substack,

If the intent…

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The Gall Of Lockdowners Who Support China's Anti-Lockdown Protests

Authored by Michael Senger via 'The New Normal' Substack,

If the intent was to get western elites to simultaneously support totalitarianism in their own countries while pretending to oppose it in China, then Xi Jinping has certainly made his point...

Across the political spectrum, voices have risen up in support of the Chinese people who’ve launched protests of unprecedented scale against the Chinese Communist Party’s indefinite Covid lockdown measures.

As well they should. Even by Chinese standards, the lockdowns that Xi Jinping pioneered with the onset of Covid are horrific in terms of their scale, their duration, their depravity, and the new totalitarian surveillance measures to which they’ve led. Anyone who participates in a protest in China runs a risk of being subject to cruel and arbitrary punishment. For ordinary Chinese people to brave that risk in defiance of this new form of inhuman medical tyranny is an act of courage worthy of admiration.

There are notable exceptions to the otherwise widespread support the protesters have received. Apple has been silent about the protests, and had the gall to limit the protesters’ use of a communication service called AirDrop in compliance with the CCP’s demands, even as it threatens to remove Twitter from its app store over Elon Musk’s free speech policy. This comes even after Apple has long ignored requests by FCC officials to remove the Chinese-owned app TikTok from its app store over unprecedented national security concerns. So Apple complies with requests by the Chinese government, but not the United States government. Let that sink in…

Apple is, unfortunately, far from alone in its CCP apologism. Anthony Fauci told CNN that China’s totalitarian lockdowns would be fully justified so long as the purpose was to “get all the people vaccinated.”

This kind of apologism for the CCP’s grisly bastardization of “public health” is horrific, especially coming from the man most widely seen as the leader of America’s response to Covid.

But what may be even more galling than this apologism is the widespread support China’s anti-lockdown protesters have received even among those who demonized anti-lockdown protesters in their home countries and wished their lockdowns were more like China’s.

In 2020, the New York Times denounced anti-lockdown protesters as “Anti-Vaxxers, Anticapitalists, Neo-Nazis” and urged the United States to be more like China.

But in 2022, the New York Times admired the bravery of China’s anti-lockdown protesters fighting Xi Jinping’s “unbending approach to the pandemic” that has “hurt businesses and strangled growth.”

In 2020, CNN published an open letter from “over 1,000 health professionals” denouncing anti-lockdown protests as “rooted in white nationalism” while admiring “China’s Covid success compared to Europe.”

But in 2022, CNN admired China’s anti-lockdown protesters as “young people” who “cry for freedom”

In 2020, the Washington Post denounced anti-lockdown protesters as “angry” populists who “deeply distrust elites,” and wished the United States was more like China.

But in 2022, the Washington Post celebrated global “demonstrations of solidarity” with China’s anti-lockdown protests.

In 2020, the New Yorker denounced anti-lockdown protesters as “militias against masks” while marveling at how “China controlled the coronavirus.”

But in 2022, the New Yorker admired the protesters standing up to Xi Jinping.

Earlier this year, Amnesty International issued a statement of concern about Canada’s anti-lockdown Freedom Convoy protests being affiliated with “overtly racist, white supremacist groups,” even as Justin Trudeau invoked the Emergencies Act to crush the protests.

But now, Amnesty International has issued a statement urging the Chinese government not to detain peaceful protesters.

These headlines are, of course, in addition to the hundreds of other commentators, influencers, and health officials, such as NYT journalist Zeynep Tufekci, who used their platforms in 2020 to urge for lockdowns that were even stricter than those their governments imposed, but now join in support for those in China protesting the same policies they were urging their own countries to emulate.

Etymologically, Zeynep’s latter comment makes no sense. Lockdowns had no history in western public health policy and weren’t part of any democratic country’s pandemic plan prior to Xi Jinping’s lockdown of Wuhan in 2020. Though some countries, such as Italy, imposed lockdowns shortly before the United States, their officials too had simply taken the policy from China. Thus, because no other precedent existed, any call for a “real lockdown” or a “full lockdown” in spring 2020 was inherently a call for a Chinese-style lockdown.

Though by “full lockdown” Zeynep may have intended somewhere in between the strictness of lockdowns in the United States and China, there was no way for any reader to know what that medium was; it existed only in her own head. Thus, the reader is left only with a call for a “full lockdown,” and the only example of a “successful” “full lockdown” that then existed was a full Chinese lockdown.

Zeynep’s latter comment further illustrates the efficacy of what was arguably some of the CCP’s most effective lockdown propaganda in early 2020: The ridiculous viral videos of CCP cadres “welding doors shut” so poor Wuhan residents couldn’t escape.

CCP apologists have argued that these videos prove the CCP was not trying to influence the international response to Covid, because they make the CCP look so bad. But on the contrary, the over-the-top inhumanity of the idea of welding residents’ doors shut was precisely the purpose of this propaganda campaign. The idea had to be so absurd that no decent government would ever actually try it. It thus gave the CCP and its apologists an infinite excuse for why lockdowns “worked” in China and nowhere else—because only China had ever had a “real lockdown” in which residents were welded into their homes.

When those with a decent knowledge of geopolitics or a bit of common sense see a graph like this, which looks nothing like that of any other country in the world, from a regime with a long history of faking its data on virtually every topic, the conclusion is obvious: China’s results are fraudulent. But to simple minds, a weld is a strong, durable bond capable of incredible feats, from supporting skyscrapers to spaceships. Surely, if a weld can do all that, then it must be able to stop a ubiquitous respiratory virus?

The entire concept is, of course, utterly asinine. You cannot stop a respiratory virus by indefinitely suspending everyone’s rights. But this idea that lockdowns had worked in China because the CCP had gone so far as to weld people into their homes was invoked over and over again during Covid, creating a limitless “No-True-Scotsman” out for lockdown apologists as to why lockdowns weren’t “working” anywhere except China. Whether COVID-19 cases went up, down, or sideways, the solution would always be the same: “Be more like China.”

The use of this darkly humorous propaganda campaign of welding residents into their homes speaks to two key points as to how Xi Jinping and CCP hawks like him view China’s relationship with the west. The first is that westerners will never respect the CCP; thus, you can make westerners believe anything so long as it confirms westerners’ prior belief that the CCP is barbaric.

Second, Xi Jinping sees the concepts of democracy and human rights as mere propaganda that western elites use to further their own self-interest. So long as they approve of a policy, then it’s not a human rights violation, but if they oppose it, then it is. It remains to be seen whether the response to Covid will, in the long run, ultimately advance Xi’s goal of making the world China. But insofar as the intent was to get western elites to simultaneously support totalitarianism in their own countries while pretending to oppose it in China, then he’s certainly made his point.

*  *  *

Michael P Senger is an attorney and author of Snake Oil: How Xi Jinping Shut Down the World. Want to support my work? Get the book

Tyler Durden Mon, 12/05/2022 - 15:53

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Week Ahead Alchemy: Can Powell Turn a Quarter-Point Move into a Hawkish Hike?

The new year is still young, but the week ahead may be one of the most important weeks of the year. The divergence that the market has been anticipating…

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The new year is still young, but the week ahead may be one of the most important weeks of the year. The divergence that the market has been anticipating will materialize. The Federal Reserve will most likely hike by 25 bp on Wednesday, followed by half-point moves by the European Central Bank and the Bank of England the following day. On Friday, February 3, the US will report its January employment situation. It could be the slowest job creation since the end of 2020. The Bureau of Labor Statistics also will release the preliminary estimate of its annual benchmark revisions. 

The markets' reaction may be less a function of what is done than what is communicated. The challenge for Fed Chair Powell is to slow the pace of hiking while pushing against the premature easing of financial conditions. In December, ECB President Lagarde pre-committed to a 50 bp hike in February and hinted that another half-point move was possible in March. With the hawks showing their talons in recent days, will she pre-commit again? Amid a historic cost-of-living squeeze that has already kneecapped households, can Bank of England Governor Bailey deliver another 50 bp rate hike and sell the idea that it is for the good of Britain, for which the central bank does not expect growth to return until next year?

United States: The Federal Reserve has a nuanced message to convey. It wants to slow the pace of hikes, as even the hawkish Governor Waller endorsed, but at the same time, persuade the market that tighter financial conditions are necessary to ensure a times convergence of price pressures to the target. Indeed, Fed Chair Powell may warn investors that if it continues to undo the Fed's work, more tightening may be necessary. The market has heard this essentially before and is not impressed. Financial conditions have eased. Consider that the 2-year yield is down 20 bp this year, and the 10-year yield has fallen twice as much. The trade-weighted dollar is off by more than 1.5%. The S&P 500 is up 4.6% after a 7% rally in Q4 22. The Russell 200 has gained nearly 7% this month, on top of the 5.8% in the last three months of 2022.  

Last year, Powell drew attention to the 18-month forward of the three-month T-bill yield compared to the cash 3-month bill as a recession tell. It has been inverted for over two months and traded below -100 bp last week, the most inverted since the tech bubble popped over two decades ago. The market seems more convinced that inflation will fall sharply in the coming months. The monetary variables and real economy data, including retail sales, industrial production, and the leading economic indicators, suggest a dramatic weakening of the economy. Yet just like most looked through the contraction in H1 22, seeing it as primarily a quirk of inventory and trade, the 2.9% growth reported in Q4 22 does not change many minds that the US economy is still headed for weaker growth, leaving aside the fuzzy definition of a recession.

The median forecast in Bloomberg's survey is for a 188k rise in January nonfarm payrolls. If accurate, it would be seen as concrete evidence that the jobs market is slowing. This is also clear by looking at averages for this volatile series. For example, in the last three months of 2022, the US created an average of 247k jobs a month. In the first nine months of the year, nonfarm payrolls rose by an average of 418k a month. Average hourly earnings growth also is moderating. A 0.3% rise on the month will see the year-over-year pace slow to 4.3%. That matches the slowest since June 2021. The decline in the work week in December to 34.3 hours spurred narratives about how businesses, hoarding labor, would cut hours before headcount. Yet, we suspect it was partly weather-related, and that the average work week returned to 34.4 hours, which is around where it was pre-Covid. 

Benchmark revisions are usually of more interest to economists than the market, but last month's report by the Philadelphia Fed raised the stakes.  It looked more closely at the April-June 2022 jobs data. After adjusting for updated data from the Quarterly Census on Employment and Wages, it concluded that job growth was nearly flat in Q2 22. It estimated that only 10,500 net new jobs were created, a far cry from the 1.05 mln jobs estimated by the Bureau of Labor Statistics. The Business Employment Dynamics Summary (released last week) was starker still. It points to a job loss of nearly 290k. Lastly, we note that US auto sales are expected to have recovered from the unexpected almost 6% decline (SAAR) in December. However, the 14.1 mln unit pace would still represent a 6% decline from January 2022, when sales spiked to 15.04 mln.  

The Dollar Index continues to hover around 102, corresponding to the (50%) retracement of the rally recorded from January 2021 through September 2022. It has not closed above the 20-day moving average (now ~102.80) since January 3. It remains in the range set on January 18, when it was reported that December retail sales and manufacturing output fell by more than 1%. That range was about 101.50-102.90. Although we are more inclined to see it as a base, the prolonged sideways movement last month saw new lows this month. That said, the next retracement target (61.8%) is near 99.00.

Eurozone:  The ECB rarely pre-commits to a policy move, precisely what ECB President Lagarde did last month. Apparently, as part of the compromise with members who at first advocated another 75 bp hike in December, an agreement to raise rates by 50 bp was accompanied by an agreement to hike by another 50 on February 2 and explicitly not rule out another half-point move in March. There was a weak effort to soften the March forward guidance, but the hawks pushed back firmly. The swaps market has about a 70% chance of a 50 bp hike in March rather than a 25 bp move. 

The ECB's deposit rate stands at 2.00%, and the swaps market is pricing 125 bp of hikes in the first half of the year. In contrast, the Fed is expected to raise the Fed funds target range by 50 bp. This has been reflected in the two-year interest rate differential between the US and Germany, falling from about 275 bp last August to around 160 bp now. We had anticipated the US premium would peak before the dollar, and there is a lag of almost two months. The direction and change of the interest rate differential often seem more important than the level. In late 2019, before Covid struck, the US premium was near 220 bp, and the euro was a little below $1.12.

There has been a significant shift in sentiment toward the eurozone. The downside risks that seemed so dominant have been reduced. A milder-than-anticipated winter, the drop in natural gas prices, and successful conservation and conversion (to other energy sources) lifted the outlook. Some hopeful economists now think that the recession that seemed inevitable may be avoided. The preliminary January CPI will be published a day before the ECB meets. The monthly pace fell in both November and December. The year-over-year rate is expected to ease to 5.1% from 5.2%, while the core rate slips to 5.1% from 5.2%. The base effect suggests a sharp decline is likely here in Q1, but divergences may become more evident in the euro area. This could see a reversal of the narrowing of core-periphery interest rate spreads. 

The EU's ban on refined Russian oil products (e.g., diesel and fuel oil) will be implemented on February 5. It is considering imposing a price cap as it did with crude oil. Diesel trades at a premium to crude, while fuel oil sells at a discount. There have been reports of European utilities boosting purchases from Russia ahead of the embargo. Separately, reports suggest that the EU was still the largest importer of Russian oil in December when pipeline and oil products were included. However, at the end of December, Germany stopped importing Russia's oil delivered through pipelines. This does not count oil and refined producers that first go to a third country, such as India, before being shipped to Europe.  

Pullbacks in the euro have been shallow and brief. Most pullbacks since the low was recorded last September, except the first, have mostly been less than two cents. That would suggest a pullback toward the $1.0730 area, but buyers may re-emerge in front of that, maybe around $1.0775. On the top side, the $1.0940 is the (50%) retracement of the euro's losses since January 2021. The euro rose marginally last week, even though it slipped by around 0.2% in the last two session. It has risen in eight of the past 10 weeks.   

UK: Without some forward guidance that stopped short of a pre-commitment, the market is nearly as confident that the Bank of England will deliver another half-point hike in the cycle to lift the base rate to 4.0%. The BOE was among the first of the G10 countries to begin the interest rate normalization process and raised the base rate in December 2021 from the 0.10% it had been reduced to during the pandemic. The swaps market projects the peak between 4.25% and 4.50%, with the lower rate seen as slightly more likely.

High inflation readings and strong wage growth appear to outweigh the economic slump. The BOE's forecasts see the economy contracting 1.5% year-over-year this year and output falling another 1% in 2024. The market is not as pessimistic. The monthly Bloomberg survey (51 economists) founds a median forecast for a 0.9% contraction this year and an expansion of the same magnitude next year. The survey now sees only a 0.2% quarterly contraction in Q4 22 rather than -0.4% in the previous survey. The median forecast for the current quarter was unchanged at -0.4%. 

Sterling continues to encounter resistance in front of $1.2450, which it first approached in mid-December. Although marginal new highs have been recorded, like the euro, it has been mainly confined to the range set on January 18 (~$1.2255-$1.2435). We are inclined to see this sideways movement as a topping pattern rather than a base, but it likely requires a break of the 1.2225 area to confirm.

Japan:  After contracting in Q3 22, the Japanese economy is expected to have rebounded in Q4 (~3.0% annualized pace). Reports on last month's labor market, retail sales, and industrial production will help fine-tune expectations. This month's rise in the flash composite PMI moved back above 50, pointing to some momentum. Still, Tokyo's higher-than-expected January CPI warns of upside risk to the national figure due offers good insight into the national figure, which may draw the most attention. We expect Japanese inflation to peak soon. The combination of government subsidies, the decline in energy prices, including the natural gas it gets from Russia, and the stronger yen (which bottomed in October) will help dampen price pressures. We look for a peak here in Q1 23. 

Last week, the dollar moved broadly sideways against the yen as it continued to straddle the JPY130 area. It repeatedly toyed with the 20-day moving average (~130.40) last week but has yet to close above this moving average for more than two months. Rising US and European yields may encourage the market to challenge the 50 bp cap on Japan's 10-year bond. A break of the JPY128.80 area may spur a test on the JPY128.00 area. However, the market seems to lack near-term conviction.

China:   Mainland markets re-open after the week-long Lunar New Year holiday. There may be two drivers. The first is catch-up. Equity markets in the region rose. The MSCI Asia Pacific Index rose every session last week and moved higher for the fifth consecutive week. The JP Morgan Emerging Market Currency Index rose about 0.40% last week and is trading near its best level since mid-2022. The euro and yen were little changed last week (+/- <0.20%). The second driver is new news--about Covid and holiday consumption. The PMI is due on January 31, and the median forecast in the Bloomberg survey is for improvement. It has the manufacturing PMI rising to 49.9 from 47.0 and the service PMI jumping to 51.5 from 41.6.  The offshore yuan edged up 0.3% last week, suggesting an upside bias to the onshore yuan, against which the dollar settled at CNY6.7845 ahead of the holiday. 

Canada:  After the Bank of Canada's decision last week, the FOMC meeting, and US employment data in the days ahead, Canada is out of the limelight. It reports November GDP figures and the January manufacturing PMI. Neither are likely to be market movers. The Bank of Canada is the first of the G7 central banks to announce a pause (conditional on the economy evolving like the central bank anticipates) with a target rate of 4.50%. The central bank sees the economy expanding by 1% this year and 1.8% next. It suggests that the underlying inflation rate has peaked and, by the end of the year, may slow to around 2.6%. The swaps market has 50 bp of cut discounted in the second half of the year. 

The Canadian dollar held its own last week, rising by about 0.5%, which was second only to the high-flying Australian dollar. The greenback approached CAD1.3300, its lowest level since last November when it traded around CAD1.3225. Quietly, the Canadian dollar has strung together a six-week advance, and since its start in mid-December, it has been the third-best performer in the G10 behind the yen (~6.2%) and the Australian dollar (~6.1%). We are more inclined to see the greenback bounce toward CAD1.3400 before those November lows are re-tested. 

Australia:  The market's optimism about China recovering from the Covid surge, with the help of government support and attempts to help the property market, has been reflected in the strength of the Australian dollar, which leads the G10 currencies with around a 4.4% gain this year. Yet, changes in the exchange rate and Chinese stocks are not highly correlated in the short- or medium-term. The surge of inflation at the end of last year, reported last week, lent greater credence to our view that the Reserve Bank of Australia will lift the cash target rate by 25 bp when it meets on February 7. In the week ahead, Australia reports December retail sales, private sector credit, and some housing sector data, along with the final PMI readings. The momentum indicators are stretched after a 2.5-cent rally from the low on January 19. It is at risk of a pullback and suggests a break of $0.7080 may be the first indication that it is at hand. We see potential initially toward $0.7000-$0.7040.

Mexico:  After falling by nearly 5.25% in the first part of the month against the Mexican peso, the dollar is consolidating. The underlying case for peso exposure remains, but there are two mitigating conditions. First, surveys of real money accounts suggest many are already overweight. Second, the dollar met key target levels in it late-2019 (~MXN18.80), even if not to the February 2020 low (slightly below MXN18.53). On January 31, Mexico reports Q4 GDP. The economy is expected to have expanded by 0.5% after 0.9% quarter-over-quarter growth in Q3 22. Growth is expected to slow further in Q1 23 before grinding to a halt in the middle two quarters. The following day, Mexico reports December worker remittances. These have been a strong source of capital inflows in Mexico. Remittances have a strong seasonal pattern of rising in December from November, which sees remittances slow. However, after surging for the last couple of years, they appear to have begun stabilizing. Also, the optimism around China is understood to be more supportive of Brazil and Chile, for example, than Mexico.  

We do not have a very satisfying explanation for the two-day jump in the dollar from about MXN18.5670 to MXN19.11 (January 18-19) outside of market positioning and the possibility of some large hedge working its way through. Still, it seemed like a transaction-related flow rather than a change in the underlying situation. The greenback has trended lower since then and has fallen in five of the last six sessions. It fell to nearly MXN18.7165 ahead of the weekend. Latam currencies, in general, did well, with the top two emerging market currencies coming from there (Brazil and Chile). The Mexican peso rose about 0.4% last week.   Last week, the Argentine peso's loss of almost 1.2% gave it the dubious honor of the worst performer among emerging market currencies. It is now off nearly 4.6% for this month. Mexican stocks and bonds extended their rallies. A firmer dollar ahead of the February 1 conclusion of the FOMC meeting may see the peso consolidate its recent gains.

 


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How far could UK property prices drop and should investors be concerned?

The more pessimistic analysts believe that UK house prices could drop by as much as 30% over the next couple of years.…
The post How far could UK property…

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The more pessimistic analysts believe that UK house prices could drop by as much as 30% over the next couple of years. Property prices leapt alongside most other asset classes over the long bull market that ran relatively uninterrupted over the 13 year period from the start of the recovery from the international financial crisis in 2009 and last year.

Average prices across the country almost doubled from £154,500 in March 2009 to just under £296,000 in October last year, when the market hit its most recent record high. Global stock markets had been in a downward spiral for almost a year while property prices kept climbing.

Source: PropertyData

However, a combination of rising interest rates, up from 0.1% in late 2021 to 3.5% in January 2023 and further hikes expected this year, soaring inflation putting pressure on household budgets and nerves around a recession has seen house prices ease. There still not far off their record highs of late 2022 but the trend is downward.

chart

Source: BankofEngland

The big question for homeowners and property investors is just how far could UK residential property prices drop over the next couple of years? How long prices might take to recover from a drop is another important unknown.

First time buyers struggling to get onto the property ladder may welcome a significant drop in UK house prices. Even if higher interest rates mean monthly mortgage costs don’t change much, lower sales prices should reduce the minimum deposits required to secure a mortgage.

However, for anyone who currently owns a home, especially if purchased in the past couple of years towards the top of the market, a significant drop in valuation would be extremely unwelcome. That is particularly the case for home owners at risk of falling into negative equity, which means the market value of their property is lower than the outstanding sum due on the mortgage.

Falling house prices, if the decline is steep, could also create a wider economic crisis and spill over into other parts of the economy and financial markets.

But not everyone agrees UK house prices will drop by anywhere near 30%. Let’s explore the factors that would affect the residential property market over 2023 and beyond and different opinions on how serious a market slump could be. As well as the wider potential consequences that could result if the dive in home valuations turns out to be in line with more negative forecasts.

How much will UK house prices fall by?

The short answer to that question is that we don’t know but the most pessimistic outlook is for drops of up to 30% over the next couple of years. However, there are a number of factors that mean there is a high chance valuations will slide by less. But let’s look at the negative scenario first.

A 30% drop in home valuations sounds like a lot and it is. However, against the backdrop of the last couple of years that kind of fall looks a little less extreme. Prices are up 28% since April 2019 and a 30% fall would take the average price of a home in the UK to around £210,000, where it was in 2016. A less severe 20% drop in prices would see the average price settle at around £235,000, where it was just before the onset of the Covid-19 pandemic and the Bank of England dropping interest rates to just 0.1%.

Mid-term interest rates are likely to have the biggest influence on house prices. At the BoE’s current 3.5% base rate, the best mortgage deals available are 2 years fixed at 4.8% compared to 1% deals available until recently. At an LTV of 60% on a £400,000 mortgage, that would push the monthly rate up to £2300 a month from £1500 a month.

For some borrowers, that is likely to prove problematic. It is also likely to mean lower demand for properties from buyers who might have otherwise decided to move up the property ladder and first time buyers. A drop in demand at higher price brackets due to affordability thresholds being passed will see property prices fall.

Will demand drop enough to lead to a 30% fall? That depends on factors that are currently unknown. How high interest rates go will have a huge influence and that will depend on inflation. There are signs inflation is easing and today the Fed’s preferred gauge for inflation, the personal consumption expenditures (PCE) price index, rose 5.0% in December from a year earlier. That was slower than the 5.5% 12-month gain as of November and the lowest level since September 2021.

In the UK, inflation has also eased from 11.1% year-on-year in October to 10.5% in December. It’s still much higher than in the USA but will hopefully now maintain a consistent downward trend helped by easing energy prices.

There are hopes the Fed will pull back on further interest rate rises from March and that would set a tone that the Bank of England may well follow with a slight delay. The Fed’s base rate is also already higher than in the UK at 4.25% to 4.5%.

If interest rates and, more importantly, mortgage rates do not rise by more than 1% from where they are today it is unlikely valuation drops of as much as 30% eventuate. But if they did what would the consequences be?

What happens if UK house prices fall 30%?

The good news is that even a house price fall as extreme as 30% would be unlikely to lead to systematic issues in the UK’s financial services sector. More people own their homes outright than have a mortgage – 8.8 million to 6.8 million homes. Lloyds Bank, one of the UK’s biggest mortgage lenders recently reported the average LTV of its mortgage portfolio is just 40%.

Even if average LTV is a little higher for other banks, a wave of defaults is unlikely to threaten their stability and infect other areas of financial markets or the wider economy. Mortgage lenders are also reluctant to repossess homes they’ve lent against as it’s an expensive process for them. They will do as much as they can to work with borrowers who are struggling to meet increased mortgage payments.

What does falling property prices mean for investors?

For property investors, it’s really a case of if rental income will continue to cover mortgage payments, or get close enough to mean the investment still adds up. If mortgage payments are likely to exceed realistic rental income over the next few years investors may consider selling up. Unless the property was purchased in the last 2-3 years, that could still mean walking away with a reasonable return.

For investors in the wider financial markets, it seems unlikely that falling property prices, even if up to 30% is knocked off valuations, will see serious contagion spread and spark a crisis.

It’s not impossible that UK property prices could fall by as much as 30% over the next couple of years as a result of higher interest rates and tighter household budgets but the likelihood is the average drop will be less. And in the worst case scenario, wider fallout should be limited. A repeat of the systemic crash that led to the 2008 financial crisis does not seem like a real prospect. Lenders are well capitalised and the system looks strong enough to cope.

The post How far could UK property prices drop and should investors be concerned? first appeared on Trading and Investment News.

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Visualizing Remittance Flows & GDP Impact By Country

Visualizing Remittance Flows &amp; GDP Impact By Country

The COVID-19 pandemic slowed down the flow of global immigration by 27%.

And,…

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Visualizing Remittance Flows & GDP Impact By Country

The COVID-19 pandemic slowed down the flow of global immigration by 27%.

And, as Visual Capitalist's Richie Lionell details below, alongside it, travel restrictions, job losses, and mounting health concerns meant that many migrant workers couldn’t send money in the form of remittances back to families in their home countries.

This flow of remittances received by countries dropped by 1.5% to $711 billion globally in 2020. But over the next two years, things quickly turned back around.

As visa approvals restarted and international borders opened, so did international migration and global remittance flows.

In 2021, total global remittances were estimated at $781 billion and have further risen to $794 billion in 2022.

In these images, Richie Lionell uses the World Bank’s KNOMAD data to visualize this increasing flow of money across international borders in 176 countries.

Why Do Remittances Matter?

Remittances contribute to the economy of nations worldwide, especially low and middle-income countries (LMICs). 

They have been shown to help alleviate poverty, improve nutrition, and even increase school enrollment rates in these nations. Research has also found that these inflows of income can help recipient households become resilient, especially in the face of disasters.

At the same time, it’s worth noting that these transfers aren’t a silver bullet for recipient nations. In fact, some research shows that overreliance on remittances can cause a vicious cycle that doesn’t translate to consistent economic growth over time.

Countries Receiving the Highest Remittances

For the past 15 years, India has consistently topped the chart of the largest remittance beneficiaries.

With an estimated $100 billion in remittances received, India is said to have reached an all-time high in 2022.

This increasing flow of remittances can be partially attributed to migrant Indians switching to high-skilled jobs in high-income countries—including the U.S., the UK, and Singapore—from low-skilled and low-paying jobs in Gulf countries.

Rank Remittance Inflows by Country 2022 (USD)
1 India

$100,000M

2 Mexico $60,300M
3 China $51,000M
4 Philippines $38,000M
5 Egypt, Arab Rep. $32,337M
6 Pakistan $29,000M
7 France $28,520M
8 Bangladesh $21,000M
9 Nigeria $20,945M
10 Vietnam $19,000M
11 Ukraine $18,421M
12 Guatemala $18,112M
13 Germany $18,000M
14 Belgium $13,500M
15 Uzbekistan $13,500M
16 Morocco $11,401M
17 Romania $11,064M
18 Dominican Republic $9,920M
19 Indonesia $9,700M
20 Thailand $9,500M
21 Colombia $9,133M
22 Italy $9,000M
23 Nepal $8,500M
24 Spain $8,500M
25 Honduras $8,284M
26 Poland $8,000M
27 Korea, Rep. $7,877M
28 El Salvador $7,620M
29 Lebanon $6,841M
30 Israel $6,143M
31 United States $6,097M
32 Russian Federation $6,000M
33 Serbia $5,400M
34 Brazil $5,045M
35 Japan $5,000M
36 Portugal $4,694M
37 Ghana $4,664M
38 Jordan $4,646M
39 Czech Republic $4,539M
40 Haiti $4,532M
41 Ecuador $4,468M
42 Georgia $4,100M
43 Kenya $4,091M
44 Croatia $3,701M
45 Peru $3,699M
46 Sri Lanka $3,600M
47 West Bank and Gaza $3,495M
48 Jamaica $3,419M
49 Armenia $3,350M
50 Tajikistan $3,200M
51 Nicaragua $3,126M
52 Kyrgyz Republic $3,050M
53 Senegal $2,711M
54 Austria $2,700M
55 Switzerland $2,631M
56 Sweden $2,565M
57 United Kingdom $2,501M
58 Hungary $2,404M
59 Bosnia and Herzegovina $2,400M
60 Slovak Republic $2,300M
61 Moldova $2,170M
62 Azerbaijan $2,150M
63 Tunisia $2,085M
64 Zimbabwe $2,047M
65 Luxembourg $2,000M
66 Netherlands $2,000M
67 Myanmar $1,900M
68 Algeria $1,829M
69 Albania $1,800M
70 Somalia $1735M
71 Congo, Dem. Rep. $1,664M
72 Malaysia $1,620M
73 Kosovo $1,600M
74 Denmark $1,517M
75 Latvia $1,500M
76 Bolivia $1,403M
77 Belarus $1,350M
78 Cambodia $1,250M
79 Bermuda $1,200M
80 South Sudan $1,187M
81 Uganda $1,131M
82 Mali $1,094M
83 South Africa $1,019M
84 Sudan $1,013M
85 Argentina $966M
86 Montenegro $920M
87 Finland $880M
88 Bulgaria $850M
89 Slovenia $800M
90 Australia $737M
91 Madagascar $718M
92 Turkey $710M
93 Canada $700M
94 Lithuania $700M
95 Togo $668M
96 Greece $665M
97 Costa Rica $654M
98 Estonia $626M
99 Qatar $624M
100 Iraq $624M
101 Gambia, The $615M
102 Tanzania $609M
103 Norway $600M
104 Panama $596M
105 Burkina Faso $589M
106 Hong Kong SAR, China $571M
107 Paraguay $554M
108 Mozambique $545M
109 Niger $534M
110 Cyprus $527M
111 Lesotho $527M
112 Mongolia $500M
113 Rwanda $469M
114 Fiji $450M
115 North Macedonia $450M
116 Guyana $400M
117 Cabo Verde $375M
118 Kazakhstan $370M
119 Cameroon $365M
120 Cote d'Ivoire $360M
121 Liberia $351M
122 Afghanistan $350M
123 Ethiopia $327M
124 Samoa $280M
125 Mauritius $279M
126 Saudi Arabia $273M
127 Malta $271M
128 Malawi $267M
129 Zambia $260M
130 Tonga $250M
131 Comoros $250M
132 Ireland $249M
133 Suriname $221M
134 Benin $209M
135 Lao PDR $200M
136 Timor-Leste $185M
137 Sierra Leone $179M
138 Guinea-Bissau $178M
139 Trinidad and Tobago $172M
140 Mauritania $168M
141 Iceland $164M
142 Eswatini $148M
143 Belize $142M
144 Curacao $131M
145 Uruguay $127M
146 Chile $78M
147 Vanuatu $75M
148 St. Vincent and the Grenadines $70M
149 Grenada $69M
150 Botswana $56M
151 St. Lucia $55M
152 Bhutan $55M
153 Djibouti $55M
154 Dominica $52M
155 Burundi $50M
156 Aruba $44M
157 Namibia $44M
158 Guinea $41M
159 Solomon Islands $40M
160 Oman $39M
161 Antigua and Barbuda $35M
162 St. Kitts and Nevis $33M
163 Marshall Islands $30M
164 Kuwait $27M
165 New Zealand $25M
166 Macao SAR, China $17M
167 Angola $16M
168 Kiribati $15M
169 Cayman Islands $14M
170 Sao Tome and Principe $10M
171 Seychelles $9M
172 Maldives $5M
173 Gabon $4M
174 Palau $2M
175 Papua New Guinea $2M
176 Turkmenistan $1M
Total World $794,059M

Mexico and China round out the top three remittance-receiving nations, with estimated inbound transfers of $60 billion and $51 billion respectively in 2022.

Impact on National GDP

While India tops the list of countries benefitting from remittances, its $100 billion received amounts to only 2.9% of its 2022 GDP.

Meanwhile, low and middle-income countries around the world heavily rely on this source of income to boost their economies in a more substantive way. In 2022, for example, remittances accounted for over 15% of the GDP of 25 countries.

Rank Remittance Inflows by Country % of GDP (2022)
1 Tonga 49.9%
2 Lebanon 37.8%
3 Samoa 33.7%
4 Tajikistan 32.0%
5 Kyrgyz Republic 31.2%
6 Gambia, The 28.3%
7 Honduras 27.1%
8 South Sudan 24.8%
9 El Salvador 23.8%
10 Haiti 22.4%
11 Nepal 21.7%
12 Jamaica 21.2%
13 Lesotho 21.0%
14 Somalia 20.6%
15 Comoros 20.1%
16 Nicaragua 19.9%
17 Guatemala 19.8%
18 Armenia 18.9%
19 West Bank and Gaza 18.5%
20 Cabo Verde 18.2%
21 Kosovo 17.3%
22 Uzbekistan 17.0%
23 Georgia 16.2%
24 Moldova 15.4%
25 Montenegro 15.0%
26 Ukraine 13.8%
27 Marshall Islands 11.0%
28 Guinea-Bissau 10.9%
29 Bosnia and Herzegovina 10.1%
30 Albania 9.8%
31 Senegal 9.8%
32 Jordan 9.6%
33 Philippines 9.4%
34 Fiji 9.2%
35 Liberia 9.0%
36 Dominican Republic 8.8%
37 Dominica 8.6%
38 Serbia 8.6%
39 Togo 7.9%
40 Morocco 7.9%
41 Pakistan 7.7%
42 Vanuatu 7.6%
43 Timor-Leste 7.5%
44 Suriname 7.3%
45 St. Vincent and the Grenadines 7.3%
46 Kiribati 7.2%
47 Egypt, Arab Rep. 6.8%
48 Ghana 6.1%
49 Mali 5.9%
50 Grenada 5.8%
51 Zimbabwe 5.3%
52 Croatia 5.3%
53 Belize 5.3%
54 Sri Lanka 4.8%
55 Madagascar 4.7%
56 Vietnam 4.5%
57 Bangladesh 4.5%
58 Tunisia 4.5%
59 Cambodia 4.4%
60 Sierra Leone 4.3%
61 Mexico 4.2%
62 Nigeria 4.1%
63 Rwanda 3.8%
64 Ecuador 3.8%
65 Latvia 3.6%
66 Romania 3.6%
67 Niger 3.6%
68 Kenya 3.5%
69 Bolivia 3.2%
70 Burkina Faso 3.2%
71 Myanmar 3.1%
72 North Macedonia 3.1%
73 Mongolia 3.1%
74 Eswatini 3.1%
75 Azerbaijan 3.0%
76 Mozambique 3.0%
77 St. Kitts and Nevis 2.9%
78 India 2.8%
79 St. Lucia 2.7%
80 Guyana 2.6%
81 Colombia 2.6%
82 Congo, Dem. Rep. 2.6%
83 Solomon Islands 2.4%
84 Luxembourg 2.4%
85 Mauritius 2.4%
86 Sudan 2.3%
87 Uganda 2.3%
88 Malawi 2.3%
89 Belgium 2.2%
90 Sao Tome and Principe 2.0%
91 Afghanistan 2.0%
92 Slovak Republic 2.0%
93 Antigua and Barbuda 2.0%
94 Bhutan 2.0%
95 Cyprus 1.9%
96 Portugal 1.8%
97 Thailand 1.7%
98 Belarus 1.6%
99 Mauritania 1.6%
100 Estonia 1.6%
101 Malta 1.5%
102 Peru 1.5%
103 Czech Republic 1.5%
104 Djibouti 1.4%
105 Burundi 1.3%
106 Paraguay 1.3%
107 Hungary 1.3%
108 Slovenia 1.2%
109 Aruba 1.2%
110 Lao PDR 1.2%
111 Benin 1.1%
112 Israel 1.1%
113 Poland 1.1%
114 Lithuania 1.0%
115 France 1.0%
116 Bulgaria 0.9%
117 Algeria 0.9%
118 Zambia 0.9%
119 Costa Rica 0.9%
120 Palau 0.8%
121 Panama 0.8%
122 Cameroon 0.8%
123 Tanzania 0.7%
124 Indonesia 0.7%
125 Spain 0.6%
126 Iceland 0.5%
127 Trinidad and Tobago 0.5%
128 Austria 0.5%
129 Cote d'Ivoire 0.5%
130 Seychelles 0.4%
131 Korea, Rep. 0.4%
132 Italy 0.4%
133 Germany 0.4%
134 Sweden 0.4%
135 Denmark 0.3%
136 Malaysia 0.3%
137 Namibia 0.3%
138 Switzerland 0.3%
139 Finland 0.3%
140 Botswana 0.3%
141 Greece 0.2%
142 Ethiopia 0.2%
143 Qatar 0.2%
144 Russian Federation 0.2%
145 Brazil 0.2%
146 China 0.2%
147 South Africa 0.2%
148 Iraq 0.2%
149 Guinea 0.2%
150 Netherlands 0.2%
151 Uruguay 0.1%
152 Kazakhstan 0.1%
153 Hong Kong SAR, China 0.1%
154 Argentina 0.1%
155 Norway 0.1%
156 Japan 0.1%
157 Maldives 0.08%
158 Turkey 0.08%
159 United Kingdom 0.07%
160 Macao SAR, China 0.07%
161 Ireland 0.05%
162 Australia 0.04%
163 Oman 0.04%
164 Saudi Arabia 0.03%
165 Chile 0.02%
166 United States 0.02%
167 Gabon 0.02%
168 Kuwait 0.01%
169 Angola 0.01%
170 New Zealand 0.01%
171 Papua New Guinea 0.01%
172 Turkmenistan 0.001%

Known primarily as a tourist destination, the Polynesian country of Tonga banks on remittance inflows to support its economy. In 2022, the country’s incoming remittance flows were equal to almost 50% of its GDP.

Next on this list is Lebanon. The country received $6.8 billion in remittances in 2022, estimated to equal almost 38% of its GDP and making it a key support to the nation’s shrinking economy.

Tyler Durden Fri, 01/27/2023 - 23:25

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