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Why Is Europe Courting Revolution?

Why Is Europe Courting Revolution?

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Why Is Europe Courting Revolution? Tyler Durden Tue, 11/03/2020 - 03:30

Authored by Alastair Crooke via The Strategic Culture Foundation,

All eyes remain on the U.S. election, and on fathoming its consequences. But in the shadow of ‘The Election’, there are other ‘moving parts’: Germany just offered Washington ‘a sweetheart deal’ in which, Europe – with Germany leading – accepts to leverage America’s full-spectrum strategy of isolating and weakening Russia and China. And in return it is asking the U.S. to acquiesce to German leadership of a ‘power-political’, European entity that is raised to parity with the U.S. That, bluntly, is to say, Germany is angling for ‘superpower’ status, atop an EU ‘empire’ for the new era. Putin recognised such a possibility (Germany aspiring to be a superpower) during his recent speech to Valdai.

But the other ‘moving parts’ to this bid are very much in motion, too: Firstly, Germany’s ploy is contingent on their hopes for a Biden win, which may, or may not, occur. And then, too, President Macron seeks for himself, and for France, the leadership of Europe – with this latter – to an extent – being contingent on a ‘no deal’ Brexit taking place at the end of the year, that would further weaken a dis-animated and fading Merkel. France rather, plots the ‘Great Reset’ of Europe: A regulatory and values enforced ‘space’, underpinned by a common fiscal and debt regime that would rebuild France’s economic infrastructure.

All this raises many questions: Should Trump win, he can be expected to puncture any German (or French) aspiration to drain away some of America’s power, however nicely the German FM wraps it, as the U.S. not so much losing power, but as gaining “a strong partner on equal terms”. Huh!

The idea that Europe can leverage this partnership through sweet-talking Germany’s commitment “to the West as a system of values”, which is “at risk in its entirety”, and which, only Germany and the U.S. together can keep strong – does seem a bit of a daydream. Even when sugar-wrapped with “defending against the unmistakable Russian thirst for power, and Chinese ambitions for global supremacy”. Firstly, there is still Trump, and secondly —

China and Russia clearly see the game. Yet European leaders seem to expect that the former will continue as if nothing is awry. Annegret Kramp-Karrenbauer seems to think so (she is both Defence Minister, and Chair of the CDU, Merkel’s own party). In terms of containing “China’s aggressively controlled state capitalism”, she suggests creating a European trade sphere that is open only to those who want to strengthen and support the liberal, rules-based order – and to which other states must ‘submit’ (Macron’s words). These are the bones to how Brussels proposes to achieve ‘strategic autonomy’ (Charles Michel’s term).

Here are some extracts of Annegret Kramp-Karrenbauer’s ‘deal’ given in a 23 October speech:

“… Most of all, America has given us what we call ‘Westbindung’ … Westbindung, to me, is and remains, a clear rejection of the historic temptation of equidistance. Westbindung anchors us firmly in NATO and the EU and ties us closely to Washington, Brussels, Paris and London. It clearly and rightly positions us against a romantic fixation on Russia – and also against an illiberal corporative state that rejects parties and parliaments [i.e. China] … Westbindung is the answer to the famous “German question”, the question of what Germany stands for … Only America and Europe together can keep the West strong, defending it against the unmistakable Russian thirst for power and Chinese ambitions for global supremacy … To be the giver [in a process of ‘give and take with the U.S.] would require us to take a firm power-political stance. To ambitiously play the geopolitical game. But even looking at all this, there are still some Americans who are not convinced that they need NATO. I understand that. Because there is one thing still missing: That is for the Europeans to take powerful action themselves, when push comes to shove. So that the United States can see Europe as a strong partner on equal terms, not as a damsel in distress. As you can see: the German dilemma is a European dilemma as well. We stay dependent [on the U.S.], but at the same time, we must come into our own. In strengthening Europe like this, Germany must play a key role … enabling it to operate more independently of, and more closely with, the United States at the same time …”.

Three major geo-political issues here are intersecting: Firstly, Germany is metamorphosing politically, in a way that holds disturbing parallels with its transition in the pre-WW1, European setting. In short, the ‘German Question’ is surfacing again (but not in AKK’s way): When the Berlin Wall fell, Russia supported the reunification of Germany and pinned hopes on Germany being a partner for the wider unification project: the construction of a ‘Greater Europe’.

It proved to be a chimaera: Germany, far from supporting Russia’s inclusion, instead, favoured the expansion of Europe and NATO to Russia’s borders. The EU – under U.S. pressure – was forming a Greater Europe that would eventually include all the states of Europe, except Russia.

But in so doing, West Europe absorbed into the EU the tumour of East European neuralgia on Russia. Berlin, all the while, has played on America’s visceral hostility towards Russia – more as a tool to build out its European space up to the Russian border. Germany thus has prioritised assuaging Eastern European ancient antipathies, above any real attempt at a relationship with Russia. Now Germany wants to ‘play it again’: In a July interview, Annegret Kramp-Karrenbauer said that the Russian leadership must be “confronted with a clear position: We are well-fortified, and in case of doubt, ready to defend ourselves. We see what Russia is doing, and we will not let the Russian leadership get away with it”.

Well: Fool me once … but fool me twice …? The Navalny episode was the last straw. It was a blatant lie. Merkel and Macron knew it to be a lie. And they knew that Moscow knew it, too. Yet they both preferred to toss the Russophobes another ‘bone’. Moscow gave up with them.

The real puzzle is why Moscow put up with this play for so long. The answer perhaps, lies with the Russian two-headed eagle, whose heads face in opposite directions: one toward Europe, and the other toward Asia. Merkel’s obvious deceit is stretching and testing social trust in Russia, just too far. The Russian élites may lean towards Europe, but their base looks East. Navalny was the humiliating straw that broke the camel’s back

Now Macron – still energised, but himself politically weakened – hopes to drain further Merkel’s strength (in mercantilist terms), through engineering a UK no-deal Brexit that would damage Germany’s huge trade surplus with Britain, at the very moment that Germany is losing markets in Russia (and now possibly in China); and when America, if Trump is re-elected, would likely embark on a trade war with Europe.

Weakening Merkel’s hand – that is – in opposing an European joint debt instrument, together with a common fiscal policies, is the aim, so that France might draw down on German fiscal resources placed within a ‘common pot’, and then deployed to revamp the French economy.

The Brussels plan for a ‘Great Reset’ – transforming the European economy, and the social sphere – through automation and technology is, as Tom Luongo has noted delusional: “[W]hat’s been pretty clear to me is Europe’s delusions that it can subjugate the world under its rubric, forcing its rules and standards on the rest of us, including China, [whilst] again allowing the U.S. to act as its proxy – [as Europe] tries to maintain its [‘power-political’] standing is delusional”.

Why?

‘Delusional’, as although China may be an “aggressively controlled state capitalism” in Euro-speak, it is also a major ‘civilisational state’, with its own distinct values. Brussels may call their regulatory space ‘open’, but it is clearly exclusionary, and not multilateral. The action of this politics is only pushing the world towards a separation of distinct regulatory spheres – and toward deeper recession.

On the practical plane, whereas first phase Covid tended to provide support to Europe’s incumbent governments, this present infection spike is shredding support for incumbents. Protests and riots are increasingly taking place across Europe. Episodes of violence have been met with horror by the authorities, which suspect that organized crime and radical groups are at work to spark a political wildfire. And that potential is very much there.

To the structural unemployment already incurred in phase one, now must be added another wave of possibly irreversible unemployment, (again) in the services sector. For small businesses and the self-employed, it is a nightmare. Not surprisingly, the anger grows as those losing their means of living observe that civil servants and the middle classes more generally, are passing through this episode, virtually unscathed.

European governments have been caught off-guard. There is absolute confusion as governments try to square keeping the economy alive, with containing the infected from overwhelming hospitals – achieving neither. This represents the cost of the ‘summer opening’ to save the tourist season. No one is on their balcony these evenings banging cooking pots in communal solidarity. Today, protests and riots have taken their place.

Into this mounting anger is inserted dark suspicion. Some may view Covid as pure conspiracy; others will not. Yet it is not ‘conspiracy’ to believe that European governments may knowingly have used the pandemic to increase their tools of social control, (despite ‘distancing’ being a genuine medical containment strategy). Was this concerted in anticipation of the changes implicit to the ‘Great Reset’? We do not know. Yet, from the outset, western governments couched their measures as ‘war’ – and as war that required war-time state-directed economics, and war-time public compliance.

Rightly or wrongly, it is becoming a culture war. Overtones of the anger on U.S. streets. Again, dark suspicions that cultural life is being closed down in order to prepare Europeans for the drowning of their cultural identities into a big Brussels-made, melting-pot. These fears may be misplaced, but they are ‘out there’, and viral.

It is Europe’s political fabric and societal cohesion that is in play – and its leaders are not just confused: They fear.

It would indeed be hubristic delusion then, were European leaders to proceed with the automation ‘Great Reset’, and add yet more structural unemployment to a pile, already threatening to topple, under its growing weight (into mass protest). Do they want revolution?

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EyePoint poaches medical chief from Apellis; Sandoz CFO, longtime BioNTech exec to retire

Ramiro Ribeiro
After six years as head of clinical development at Apellis Pharmaceuticals, Ramiro Ribeiro is joining EyePoint Pharmaceuticals as CMO.
“The…

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Ramiro Ribeiro

After six years as head of clinical development at Apellis Pharmaceuticals, Ramiro Ribeiro is joining EyePoint Pharmaceuticals as CMO.

“The retinal community is relatively small, so everybody knows each other,” Ribeiro told Endpoints News in an interview. “As soon as I started to talk about EyePoint, I got really good feedback from KOLs and physicians on its scientific standards and quality of work.”

Ribeiro kicked off his career as a clinician in Brazil, earning a doctorate in stem cell therapy for retinal diseases. He previously held roles at Alcon and Ophthotech Corporation, now known as Astellas’ M&A prize Iveric Bio.

At Apellis, Ribeiro oversaw the Phase III development, filing and approval of Syfovre, the first drug for geographic atrophy secondary to age-related macular degeneration (AMD). The complement C3 inhibitor went on to make $275 million in 2023 despite reports of a rare side effect that only emerged after commercialization.

Now, Ribeiro is hoping to replicate that success with EyePoint’s lead candidate, EYP-1901 for wet AMD, which is set to enter the Phase III LUGANO trial in the second half of the year after passing a Phase II test in December.

Ribeiro told Endpoints he was optimistic about the company’s intraocular sustained-delivery tech, which he said could help address treatment burden and compliance issues seen with injectables. He also has plans to expand the EyePoint team.

“My goal is not just execution of the Phase III study — of course that’s a priority — but also looking at the pipeline and which different assets we can bring in to leverage the strength of the team that we have,” Ribeiro said.

— Ayisha Sharma

Remco Steenbergen

→ Sandoz CFO Colin Bond will retire on June 30 and board member Remco Steenbergen will replace him. Steenbergen, who will step down from the board when he takes over on July 1, had a 20-year career with Philips and has held the group CFO post at Deutsche Lufthansa since January 2021. Bond joined Sandoz nearly two years ago and is the former finance chief at Evotec and Vifor Pharma. Investors didn’t react warmly to Wednesday’s news as shares fell by almost 4%.

The Swiss generics and biosimilars company, which finally split from Novartis in October 2023, has also nominated FogPharma CEO Mathai Mammen to the board of directors. The ex-R&D chief at J&J will be joined by two other new faces, Swisscom chairman Michael Rechsteiner and former Unilever CFO Graeme Pitkethly.

On Monday, Sandoz said it completed its $70 million purchase of Coherus BioSciences’ Lucentis biosimilar Cimerli sooner than expected. The FDA then approved its first two biosimilars of Amgen’s denosumab the next day, in a move that could whittle away at the pharma giant’s market share for Prolia and Xgeva.

Sean Marett

→ BioNTech’s chief business and commercial officer Sean Marett will retire on July 1 and will have an advisory role “until the end of the year,” the German drugmaker said in a release. Legal chief James Ryan will assume CBO responsibilities and BioNTech plans to name a new chief commercial officer by the end of the month. Marett was hired as BioNTech’s COO in 2012 after gigs at GSK, Evotec and Next Pharma, and led its commercial efforts as the Pfizer-partnered Comirnaty received the first FDA approval for a Covid-19 vaccine. BioNTech has also built a cancer portfolio that TD Cowen’s Yaron Werber described as “one of the most extensive” in biotech, from antibody-drug conjugates to CAR-T therapies.

Chris Austin

→ GSK has plucked Chris Austin from Flagship and he’ll start his new gig as the pharma giant’s SVP, research technologies on April 1. After a long career at NIH in which he was director of the National Center for Advancing Translational Sciences (NCATS), Austin became CEO of Flagship’s Vesalius Therapeutics, which debuted with a $75 million Series A two years ago this week but made job cuts that affected 43% of its employees six months into the life of the company. In response to Austin’s departure, John Mendlein — who chairs the board at Sail Biomedicines and has board seats at a few other Flagship biotechs — will become chairman and interim CEO at Vesalius “later this month.”

→ BioMarin has lined up Cristin Hubbard to replace Jeff Ajer as chief commercial officer on May 20. Hubbard worked for new BioMarin chief Alexander Hardy as Genentech’s SVP, global product strategy, immunology, infectious diseases and ophthalmology, and they had been colleagues for years before Hardy was named Genentech CEO in 2019. She shifted to Roche Diagnostics as global head of partnering in 2021 and had been head of global product strategy for Roche’s pharmaceutical division since last May. Sales of the hemophilia A gene therapy Roctavian have fallen well short of expectations, but Hardy insisted in a recent investor call that BioMarin is “still very much at the early stage” in the launch.

Pilar de la Rocha

→ BeiGene has promoted Pilar de la Rocha to head of Europe, global clinical operations. After 13 years in a variety of roles at Novartis, de la Rocha was named global head of global clinical operations excellence at the Brukinsa maker in the summer of 2022. A short time ago, BeiGene ended its natural killer cell therapy alliance with Shoreline Biosciences, saying that it was “a result of BeiGene’s internal prioritization decisions and does not reflect any deficit in Shoreline’s platform technology.”

Andy Crockett

→ Andy Crockett has resigned as CEO of KalVista Pharmaceuticals. Crockett had been running the company since its launch in 2011 and will hand the keys to president Ben Palleiko, who joined KalVista in 2016 as CFO. Serious safety issues ended a Phase II study of its hereditary angioedema drug KVD824, but KalVista is mounting a comeback with positive Phase III results for sebetralstat in the same indication and could compete with Takeda’s injectable Firazyr. “If approved, sebetralstat may offer a compelling treatment option for patients and their caregivers given the long-standing preference for an effective and safe oral therapy that provides rapid symptom relief for HAE attacks,” Crockett said last month.

Steven Lo

→ Vaxart has tapped Steven Lo as its permanent president and CEO, while interim chief Michael Finney will stay on as chairman. Endpoints News last caught up with Lo when he became CEO at Valitor, the UC Berkeley spinout that raised a $28 million Series B round in October 2022. The ex-Zosano Pharma CEO had a handful of roles in his 13 years at Genentech before his appointments as chief commercial officer of Corcept Therapeutics and Puma Biotechnology. Andrei Floroiu resigned as Vaxart’s CEO in mid-January.

Kartik Krishnan

→ Kartik Krishnan has taken over for Martin Driscoll as CEO of OncoNano Medicine, and Melissa Paoloni has moved up to COO at the cancer biotech located in the Dallas-Fort Worth suburb of Southlake. The execs were colleagues at Arcus Biosciences, Gilead’s TIGIT partner: Krishnan spent two and a half years in the CMO post, while Paoloni was VP of corporate development and external alliances. In 2022, Krishnan took the CMO job at OncoNano and was just promoted to president and head of R&D last November. Paoloni came on board as OncoNano’s SVP, corporate development and strategy not long after Krishnan’s first promotion.

→ Genesis Research Group, a consultancy specializing in market access, has brought in David Miller as chairman and CEO, replacing co-founder Frank Corvino — who is transitioning to the role of vice chairman and senior advisor. Miller joins the New Jersey-based team with a number of roles under his belt from Biogen (SVP of global market access), Elan (VP of pharmacoeconomics) and GSK (VP of global health outcomes).

Adrian Schreyer

→ Adrian Schreyer helped build Exscientia’s AI drug discovery platform from the ground up, but he has packed his bags for Nimbus Therapeutics’ AI partner Anagenex. The new chief technology officer joined Exscientia in 2013 as head of molecular informatics and was elevated to technology chief five years later. He then held the role of VP, AI technology until January, a month before Exscientia fired CEO Andrew Hopkins.

→ Paul O’Neill has been promoted from SVP to EVP, quality & operations, specialty brands at Mallinckrodt. Before his arrival at the Irish pharma in March 2023, O’Neill was executive director of biologics operations in the second half of his 12-year career with Merck driving supply strategy for Keytruda. Mallinckrodt’s specialty brands portfolio includes its controversial Acthar Gel (a treatment for flares in a number of chronic and autoimmune indications) and the hepatorenal syndrome med Terlivaz.

David Ford

→ Staying in Ireland, Prothena has enlisted David Ford as its first chief people officer. Ford worked in human resources at Sanofi from 2002-17 and then led the HR team at Intercept, which was sold to Italian pharma Alfasigma in late September. We recently told you that Daniel Welch, the former InterMune CEO who was a board member at Intercept for six years, will succeed Lars Ekman as Prothena’s chairman.

Ben Stephens

→ Co-founded by Sanofi R&D chief Houman Ashrafian and backed by GSK, Eli Lilly partner Sitryx stapled an additional $39 million to its Series A last fall. It has now welcomed a pair of execs: Ben Stephens (COO) had been finance director for ViaNautis Bio and Rinri Therapeutics, and Gordon Dingwall (head of clinical operations) is a Roche and AstraZeneca vet who led development operations at Mission Therapeutics. Dingwall has also served as a clinical operations leader for Shionogi and Freeline Therapeutics.

Steve Alley

→ MBrace Therapeutics, an antibody-drug conjugate specialist that nabbed $85 million in Series B financing last November, has named Steve Alley as CSO. Alley spent two decades at Seagen before the $43 billion buyout by Pfizer and was the ADC maker’s executive director, translational sciences.

→ California cancer drug developer Apollomics, which has been mired in Nasdaq compliance problems nearly a year after it joined the public markets through a SPAC merger, has recruited Matthew Plunkett as CFO. Plunkett has held the same title at Nkarta as well as Imago BioSciences — leading the companies to $290 million and $155 million IPOs, respectively — and at Aeovian Pharmaceuticals since March 2022.

Heinrich Haas

→ Co-founded by Oxford professor Adrian Hill — the co-inventor of AstraZeneca’s Covid-19 vaccine — lipid nanoparticle biotech NeoVac has brought in Heinrich Haas as chief technology officer. During his nine years at BioNTech, Haas was VP of RNA formulation and drug delivery.

Kimberly Lee

→ New Jersey-based neuro biotech 4M Therapeutics is making its Peer Review debut by introducing Kimberly Lee as CBO. Lee was hired at Taysha Gene Therapies during its meteoric rise in 2020 and got promoted to chief corporate affairs officer in 2022. Earlier, she led corporate strategy and investor relations efforts for Lexicon Pharmaceuticals.

→ Another Peer Review newcomer, Osmol Therapeutics, has tapped former Exelixis clinical development chief Ron Weitzman as interim CMO. Weitzman only lasted seven months as medical chief of Tango Therapeutics after Marc Rudoltz had a similarly short stay in that position. Osmol is going after chemotherapy-induced peripheral neuropathy and chemotherapy-induced cognitive impairment with its lead asset OSM-0205.

→ Last August, cardiometabolic disease player NeuroBo Pharmaceuticals locked in Hyung Heon Kim as president and CEO. Now, the company is giving Marshall Woodworth the title of CFO and principal financial and accounting officer, after he served in the interim since last October. Before NeuroBo, Woodworth had a string of CFO roles at Nevakar, Braeburn Pharmaceuticals, Aerocrine and Fureix Pharmaceuticals.

Claire Poll

→ Claire Poll has retired after more than 17 years as Verona Pharma’s general counsel, and the company has appointed Andrew Fisher as her successor. In his own 17-year tenure at United Therapeutics that ended in 2018, Fisher was chief strategy officer and deputy general counsel. The FDA will decide on Verona’s non-cystic fibrosis bronchiectasis candidate ensifentrine by June 26.

Nancy Lurker

→ Alkermes won its proxy battle with Sarissa Capital Management and is tinkering with its board nearly nine months later. The newest director, Bristol Myers Squibb alum Nancy Lurker, ran EyePoint Pharmaceuticals from 2016-23 and still has a board seat there. For a brief period, Lurker was chief marketing officer for Novartis’ US subsidiary.

→ Chaired by former Celgene business development chief George Golumbeski, Shattuck Labs has expanded its board to nine members by bringing in ex-Seagen CEO Clay Siegall and Tempus CSO Kate Sasser. Siegall holds the top spots at Immunome and chairs the board at Tourmaline Bio, while Sasser came to Tempus from Genmab in 2022.

Scott Myers

→ Ex-AMAG Pharmaceuticals and Rainier Therapeutics chief Scott Myers has been named chairman of the board at Convergent Therapeutics, a radiopharma player that secured a $90 million Series A last May. Former Magenta exec Steve Mahoney replaced Myers as CEO of Viridian Therapeutics a few months ago.

→ Montreal-based Find Therapeutics has elected Tony Johnson to the board of directors. Johnson is in his first year as CEO of Domain Therapeutics. He is also the former chief executive at Goldfinch Bio, the kidney disease biotech that closed its doors last year.

Habib Dable

→ Former Acceleron chief Habib Dable has replaced Kala Bio CEO Mark Iwicki as chairman of the board at Aerovate Therapeutics, which is signing up patients for Phase IIb and Phase III studies of its lead drug AV-101 for pulmonary arterial hypertension. Dable joined Aerovate’s board in July and works part-time as a venture partner for RA Capital Management.

Julie Cherrington

→ In the burgeoning world of ADCs, Elevation Oncology is developing one of its own that targets Claudin 18.2. Its board is now up to eight members with the additions of Julie Cherrington and Mirati CMO Alan Sandler. Cherrington, a venture partner at Brandon Capital Partners, also chairs the boards at Actym Therapeutics and Tolremo Therapeutics. Sandler took the CMO job at Mirati in November 2022 and will stay in that position after Bristol Myers acquired the Krazati maker.

Patty Allen

→ Lonnie Moulder’s Zenas BioPharma has welcomed Patty Allen to the board of directors. Allen was a key figure in Vividion’s $2 billion sale to Bayer as the San Diego biotech’s CFO, and she’s a board member at Deciphera Pharmaceuticals, SwanBio Therapeutics and Anokion.

→ In January 2023, Y-mAbs Therapeutics cut 35% of its staff to focus on commercialization of Danyelza. This week, the company has reserved a seat on its board of directors for Nektar Therapeutics CMO Mary Tagliaferri. Tagliaferri also sits on the boards of Enzo Biochem and is a former board member of RayzeBio.

→ The ex-Biogen neurodegeneration leader at the center of Aduhelm’s controversial approval is now on the scientific advisory board at Asceneuron, a Swiss-based company focused on Alzheimer’s and Parkinson’s. Samantha Budd-Haeberlein tops the list of new SAB members, which also includes Henrik Zetterberg, Rik Ossenkoppele and Christopher van Dyck.

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Biden to call for first-time homebuyer tax credit, construction of 2 million homes

The president will announce a series of housing proposals in his 2024 State of the Union address tonight.

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The White House announced that President Joe Biden will call on lawmakers in the House of Representatives and the Senate to address a series of housing issues in his State of the Union address, which will be delivered to a joint session of Congress and televised nationally on Thursday night.

In the address, the president will call for a $10,000 tax credit for both first-time homebuyers and people who sell their starter homes; the construction and renovation of more than 2 million additional homes; and cost reductions for renters.

Biden will also call for “lower homebuying and refinancing closing costs and crack down on corporate actions that rip off renters,” according to the White House announcement.

The mortgage relief credit would provide “middle-class first-time homebuyers with an annual tax credit of $5,000 a year for two years,” according to the announcement. This would act as an equivalent to reducing the mortgage rate by more than 1.5% on a median-priced home for two years, and it is estimated to “help more than 3.5 million middle-class families purchase their first home over the next two years,” the White House said.

The president will also call for a new credit to “unlock inventory of affordable starter homes, while helping middle-class families move up the housing ladder and empty nesters right size,” the White House said.

Addressing rate lock-ins

Homeowners who benefited from the post-pandemic, low-rate environment are typically more reluctant to sell and give up their rate, even if their circumstances may not fit their needs. The White House is looking to incentivize those who would benefit from a new home to sell.

“The president is calling on Congress to provide a one-year tax credit of up to $10,000 to middle-class families who sell their starter home, defined as homes below the area median home price in the county, to another owner-occupant,” the announcement explained. “This proposal is estimated to help nearly 3 million families.”

Joe Biden

The president will also reiterate a call to provide $25,000 in down payment assistance for first-generation homebuyers “whose families haven’t benefited from the generational wealth building associated with homeownership,” which is estimated to assist 400,000 families, according to the White House.

The White House also pointed out last year’s reduction to the mortgage insurance premium (MIP) for Federal Housing Administration (FHA) mortgages, which save “an estimated 850,000 homebuyers and homeowners an estimated $800 per year.”

In Thursday’s State of the Union address, the president is expected to announce “new actions to lower the closing costs associated with buying a home or refinancing a mortgage,” including a Federal Housing Finance Agency (FHFA) pilot program that would “waive the requirement for lender’s title insurance on certain refinances.”

The White House says that, if enacted, this would save thousands of homeowners up to $1,500 — or an average of $750.

Supply and rental challenges

Housing supply continues to be an issue for the broader housing market, and the president will call on Congress to pass legislation “to build and renovate more than 2 million homes, which would close the housing supply gap and lower housing costs for renters and homeowners,” the White House said.

This would be accomplished by an expansion of the Low-Income Housing Tax Credit (LIHTC) to build or preserve 1.2 million affordable rental units, as well as a new Neighborhood Homes Tax Credit that would “build or renovate affordable homes for homeownership, which would lead to the construction or preservation of over 400,000 starter homes.”

A new $20 billion, competitive grant program the president is expected to unveil during the speech would also “support the construction of affordable multifamily rental units; incentivize local actions to remove unnecessary barriers to housing development; pilot innovative models to increase the production of affordable and workforce rental housing; and spur the construction of new starter homes for middle-class families,” the White House said.

Biden will also propose that each Federal Home Loan Bank double its annual contribution to the Affordable Housing Program, raising it from 10% of prior year net income to 20%. The White House estimates that this “will raise an additional $3.79 billion for affordable housing over the next decade and assist nearly 380,0000 households.”

Biden will propose several new provisions designed to control costs for renters, including the targeting of corporate landlords and private equity firms, which have been “accused of illegal information sharing, price fixing, and inflating rents,” the White House said.

The president will also reference the administration’s “war on junk fees,” targeting those that withstand added costs in the rental application process and throughout the duration of a lease under the guise of “convenience fees,” the White House said.

And Biden is expected to call on Congress to further expand rental assistance to more than 500,000 households, “including by providing a voucher guarantee for low-income veterans and youth aging out of foster care.”

Housing association responses

Housing associations such as the Mortgage Bankers Association (MBA) and the National Housing Conference (NHC) quickly responded to the news. The NHC lauded the development.

“This is the most consequential State of the Union address on housing in more than 50 years,” NHC President and CEO David Dworkin said. “President Biden’s call for Congress to tackle the urgent matter of housing affordability through tax credits, down payment assistance initiatives, and other measures is warranted and represents a crucial step in easing the burden of high rents and home prices.”

MBA President and CEO Bob Broeksmit explained that while the association will review all of the proposals in-depth, it welcomes the Biden administration’s focus on reforms that can expand single-family and multifamily housing supply. It is also wary of some of the proposals.

“MBA has significant concerns that some of the proposals on closing costs and title insurance could undermine consumer protections, increase risk, and reduce competition,” Broeksmit said. “Suggestions that another revamp of these rules is needed depart from the legal regime created by Congress in the Dodd-Frank Act and will only increase regulatory costs and make it untenable for smaller lenders to compete.”

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International

Deflationary pressures in China – be careful what you wish for

Until recently, China’s decelerating inflation was welcomed by the West, as it led to lower imported prices and helped reduce inflationary pressures….

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Until recently, China’s decelerating inflation was welcomed by the West, as it led to lower imported prices and helped reduce inflationary pressures. However, China’s consumer prices fell for the third consecutive month in December 2023, delaying the expected rebound in economic activity following the lifting of COVID-19 controls. For calendar year 2023, CPI growth was negligible, whilst the producer price index declined by 3.0 per cent.

China’s inflation dynamics

China’s inflation dynamics

Chinese consumers are hindered by the weaker residential property market and high youth unemployment. Several property developers have defaulted, collectively wiping out nearly all the U.S.$155 billion worth of U.S. dollar denominated-bonds. 

Meanwhile, the Shanghai Composite Index is at half of its record high, recorded in late 2007. The share prices of major developers, including Evergrande Group, Country Garden Holdings, Sunac China and Shimao Group, have declined by an average of 98 per cent over recent years. Some economists are pointing to the Japanese experience of a debt-deflation cycle in the 1990s, with economic stagnation and elevated debt levels.

Australia has certainly enjoyed the “pull-up effect” from China, particularly with the iron-ore price jumping from around U.S.$20/tonne in 2000 to an average closer to U.S.$120/tonne over the 17 years from 2007. With strong volume increases, the value of Australia’s iron ore exports has jumped 20-fold to around A$12 billion per month, accounting for approximately 35 per cent of Australia’s exports. 

For context, China takes 85 per cent of Australia’s iron ore exports, whilst Australia accounts for 65 per cent of China’s iron ore imports. China’s steel industry depends on its own domestic iron ore mines for 20 per cent of its requirement, however, these are high-cost operations and need high iron ore prices to keep them in business. To reduce its dependence on Australia’s iron ore, China has increased its use of scrap metal and invested large sums of money in Africa, including the Simandou mine in Guinea, which is forecast to export 60 million tonnes of iron ore from 2028.

The Chinese housing market has historically been the source of 40 per cent of China’s steel usage. However, the recent high iron ore prices are attributable to the growth in China’s industrial and infrastructure activity, which has offset the weakness in residential construction.

Whilst this has continued to deliver supernormal profits for Australia’s major iron ore producers (and has greatly assisted the federal budget), watch out for any sustainable downturn in the iron ore price, particularly if the deflationary pressures in China continue into the medium term.

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