This is the first installment of Clippings, a new feature from Youngresearch.com. In Clippings we’ll periodically post articles on markets, economics, finance, investments, and anything else we find of interest.
What U.S. Banks Can Learn from Canada
By Derek DeCloet – BusinessWeek
“Canadian banks did not fail because they mostly avoided the big mistakes with mortgages. They didn’t lend to people who couldn’t prove a sufficient income. They did give no-money-down mortgages, but not many—and the practice was effectively banned. They made scant use of teaser rates. They do these things largely because they didn’t have to. Domestic banks own 80% of the mortgage business, and most of that is in the hands of the Big Six. Refinancing is expensive and a hassle. Canadian tax law also plays a role. Mortgage interest isn’t tax-deductible, creating a disincentive to borrow. And heaven help the defaulter; banks can go after assets other than the home to make themselves whole.”
By Michael Forsythe and Kevin Hamlin – BusinessWeek
“Much of the $1.4 trillion in loans made by Chinese banks last year—with considerable encouragement from officials aiming to boost growth—was spent on skyscrapers and other commercial property. Now empty buildings are sprouting across the mainland. Beijing had an office vacancy rate of 22.4% in the third quarter, the ninth-highest of 103 markets tracked by broker CB Richard Ellis (CBRE) (CBG). That figure doesn’t include projects about to open, such as the 74-story China World Tower 3, Beijing’s tallest building. “There’s a monumental property bubble and fixed-asset investment bubble under way,” says James Chanos, founder of New York hedge fund Kynikos Associates.”
Jeremy Jones, CFA
Latest posts by Jeremy Jones, CFA (see all)
- Surprise: Battery Powered Cars Don’t Work Well in Extreme Temperatures - February 20, 2019
- What Do You Need to Do Before You Retire? - February 19, 2019
- After Long Declines, Branded Consumer Companies Comfortable Raising Prices - February 15, 2019