Prelude to Economic Disaster: Billionaire Liquidates All Real Estate Ahead of Crash

economy-rip

If you were to contact a real estate agent in any major market today they’d likely advise you the market is so “hot” that if you intend on purchasing property you’d better be prepared to act fast. They’ll adamantly point out, contrary to reality, that the housing market has recovered, available inventory is dropping, prices are rising, and they can only go higher from here.

But if you’re paying attention to what’s happening around us, and not just with our own economy here in the United States, then you’d likely have noticed that while many Americans are flying high on hopes of change and recovery, there is an economic disaster of unprecedented scale in the making.

First, we know that the third largest economy in the world, China, is going through a massive credit crunch as bad loans there have soared to near all time highs, meaning that loans are quickly becoming non-existent and credit markets are now frozen. This means that no one is going to be building ghost cities and empty malls in the Peoples’ Republic again any time soon. Moreover, it means no more easy cash. We know what happened in the United States and the rest of the world when the last credit crunch hit.

Second, as Sovereign Man points out, the richest man in Asia Li Ka-Shing (their version of Warren Buffet or Bill Gates with a reported net worth of $ 30 billion) has rapidly liquidated his real estate holdings and is existing the market as quickly as possible.

Here’s a guy you want to bet on– Li Ka-Shing.

Li is reportedly the richest person in Asia with a net worth well in excess of $ 30 billion, much of which he made being a shrewd property investor.

Li Ka-Shing was investing in mainland China back in the early 90s, way back before it became the trendy thing to do. Now, Li wants out of China. All of it.

Since August of last year, he’s dumped billions of dollars worth of his Chinese holdings. The latest is the $ 928 million sale of the Pacific Place shopping center in Beijing– this deal was inked just days ago.

Once the deal concludes, Li will no longer have any major property investments in mainland China.

This isn’t a person who became wealthy by being flippant and scared. So what does he see that nobody else seems to be paying much attention to?

Simple. China’s credit crunch.

But Li Ka-Shing isn’t the only one bailing. Luxury real estate investors are unloading their real estate assets as well in an effort to raise cash and not be the last one holding a dead asset. For all intents and purposes, the music in China has stopped:

Cash-strapped Chinese are scrambling to sell their luxury homes in Hong Kong, and some are knocking up to a fifth off the price for a quick sale, as a liquidity crunch looms on the mainland.

On the domestic front we’ve seen stock markets drop a fairly significant level in recent weeks. So much so that company’s hoping to launch new IPO initiatives have chosen to just sit this one out as they are worried that investors are running out of money to help fund their operations.

You wouldn’t know that, of course, because mainstream media pundits like Dennis Kneale continue to sell Americans on the notion that we’re in a robust recovery:

Yet the economy, both locally and globally, is in vastly better shape than it was when we took that terrible tumble, down to Dow 6,800 in March 2009.

Americans have cut back on debt, and so have companies.

Karl Denninger of the Market Ticker calls this one what it is – a complete lie – and points out that we are nowhere near cutting back on our debt.

I Despise Liars

US debt to present

“Cut back”?  Really?  Worse, ex mortgages this is not true at any level; there is $ 3,733.5 billion in non-mortgage consumer debt outstanding.  That is an all-time high; in Q4/2006 (just before the crash, remember?) that stood at $ 3,047.2 billion or nearly $ 700 billion less.

An awful lot of that increase since 2007, incidentally, is student loans — exactly where it cannot be for sustainable economic progress since the younger generation has to eventually take the reins from us older folks.  This is nothing more than an economic Ponzi scheme with its cheering section led by people like Dennis who refuse to look at and argue from facts.

As for corporate debt it never decreased at all.

Something is amiss, and the fact that no one in the mainstream, which is where tens of millions of Americans get their “facts,” is really talking about it should be a blaring alarm.

There are, however, some Americans paying attention. As in China, it’s the billionaires and elite who have direct access to the puppeteers pulling the strings, and like Li Ka-shing, they have been quietly and rapidly dumping millions of shares of stock:

Despite the 6.5% stock market rally over the last three months, a handful ofbillionaires are quietly dumping their American stocks . . . and fast.

In the latest filing for Buffett’s holding company Berkshire Hathaway, Buffett has been drastically reducing his exposure to stocks that depend on consumer purchasing habits. Berkshire sold roughly 19 million shares of Johnson & Johnson, and reduced his overall stake in “consumer product stocks” by 21%. Berkshire Hathaway also sold its entire stake in California-based computer parts supplier Intel.

Fellow billionaire John Paulson, who made a fortune betting on the subprime mortgage meltdown, is clearing out of U.S. stocks too. During the second quarter of the year, Paulson’s hedge fund, Paulson & Co., dumped 14 million shares of JPMorgan Chase. The fund also dumped its entire position in discount retailer Family Dollar and consumer-goods maker Sara Lee.

Finally, billionaire George Soros recently sold nearly all of his bank stocks, including shares of JPMorgan Chase, Citigroup, and Goldman Sachs. Between the three banks, Soros sold more than a million shares.

The big money, often referred to as the smart money, is getting out of the game and they are dumping these assets on unsuspecting investors.

They know, for example, that earnings growth has now plunged to its lowest levels since 2012.

As these in-the-know elites unload their positions, average investors depending on their financial advisers to tell them the truth are slamming money into these stocks and paying, in some cases, 500 times earnings. Real estate investors are, likewise, overpaying for homes based on the idea that markets are “hotter” than they’ve been in years.

It’s a recipe for disaster and it won’t end well – at least for 99% of people who blindly believe the opinions of their favorite “experts.”

economy-rip---tumb


SHTF Plan – When It Hits The Fan, Don’t Say We Didn’t Warn You

Prelude to Disaster: The Coming Instantaneous Collapse of Obamacare Services

free-healthcare

There is no doubt that President Obama’s health care system promises to fundamentally transform America. It’s been touted as the saving grace of the working class.

But how feasible is it really?

We know it’s essentially a wealth redistribution scheme that takes money from one group of people in the form of forced tax payments, only to shift that money into the pockets of those who didn’t earn it in the form of government subsidies to their health care premiums.

But like all universal programs, the promise of free anything only works so long as you don’t run out of other people’s money.

That being said, a basic analysis of how Obamacare premiums work across the spectrum of America’s wide ranging socio-economic population suggests that it’s dead on arrival.

Once the forced mandates take hold one of two outcomes become inevitable, as noted by The Market Ticker, whose Karl Denninger took a detailed look at the government’s county-by-county premium data.

The consequences of implementation will be disastrous.

Either the Obamacare system itself collapses under its own weight, or the U.S. economy falls apart because of the extreme burden being hoisted on those who are responsible for paying the bill.

Either way, we’re looking at an almost instantaneous collapse of one or the other.

It’s an exercise in basic arithmetic that those who failed to read the bill before passing it should have considered prior to pushing this on the American people by way of a new stealth tax… unless of course the further impoverishment of America is their ultimate goal.

There are several very interesting statistical facts that come from this.

First, if you’re “27″, the average premium is $ 266.20/month or $ 3,194.40 per year.  How many 27 year olds have an extra $ 3,200 to spend on this?  Remember, this is the price that virtually every uninsured 27 year old must be willing — and able — to cough up in order to prevent the model this system is predicated on from collapsing.

If those 27 year olds don’t show up, and they won’t, then the system collapses instantly.  If they do show up because the government threatens them with fines the economy collapses as $ 3,200 a year exceeds the average 27 year old’s disposable personal income after mandatory expenses (e.g. food, shelter, etc.)  Remember, there are always exceptions but these premiums are averages and over large pools of people the statistical averages are what matters — not the ends of the barbell.

It gets better.  The “average” 50 year old premium, again, for single coverage, is $ 452.87, or $ 5,434.44/year.  How many 50 year olds will find that attractive compared against what they’re paying now?  Probably more of them, especially if they’re already sick.  But how about the healthy ones?

Note two things as well on this account — these premiums are for non-smokers (smoker premiums are grossly surcharged with reports being 2x the above) and they do not account for anyone other than one person.  If you are a single parent with kids (rather common) the premium on average is $ 610.23/month or about $ 7,300, and if you’re a couple it’s $ 647.86 (again, $ 7,774 annually.)

Now let’s look at the government’s own claims.  First, the CPI index claims that health insurance is 0.656% of the family budget.  What percentage of couples make $ 1.185 million a year?  Why do I ask?  Because that’s the alleged median income for a couple if you believe the government’s CPI numbers.

Yeah, right.

Next, while some people will get “tax credits” to offset these costs all that does is lard it up on the federal budget, because someone else has to pay that bill.  In other words this is the true cost that will come out of your hide one way or another — either directly by paying, indirectly by taxation, or indirectly by destruction of your purchasing power.

Next, note that this is the “50 year old” premium but you have to be 65 to qualify for Medicare.  The price will rise each year after 50 that you happen to be and there are already reports that if you’re 59 these premiums are understated by half.  How many couples who are 59 and cannot qualify for Medicare yet have not $ 7,700 a year of extra money laying around but north of $ 15,000?

That’s what I thought.

Full Analysis at Market Ticker

The whole idea is predicated on the notion that you can indefinitely take from Peter to pay Paul.

But eventually Peter is going to run out of money and not be able to foot the bill, or he’ll simply refuse to buy into the scheme altogether.

Like everything else government, the new health care initiative will be a complete and utter failure.

The basic principles of mathematics will prove this to be true in coming months and years.

As Denninger notes, America will be “strangled and expire economically as a direct consequence” of the marriage of the State and Health Care industry.

The die has been cast.


SHTF Plan – When It Hits The Fan, Don’t Say We Didn’t Warn You