Here’s what the team at Fort Pitt hand-picked for the last round of monthly reads before 2015! Happy New Year!
First up is a New York Times piece by Keith Bradsher, titled “China’s housing resists efforts to spur market.” China’s housing market is under serious pressure, with prices for newly constructed housing falling from one to nine percent in recent months in all 70 mainland cities. While the property market slump is alarming, a crisis does not appear imminent. “There are always going to be cycles – in this country, more than others, the government controls those cycles,” says chief executive of Silverstein Properties. “Over time, it’s going to be a winner because of the growth of China.”
Next is a piece by Mark Chediak of Bloomberg, “Why Elon Musk’s batteries scare the hell out of the electric company.” Tesla Motors Inc. is building a $5 billion battery factory in the Nevada desert, projected to be the world’s largest. The facility is a key step in CEO Elon Musk’s plans for making electric cars affordable for the masses. At the same time, Musk’s objectives may represent an existential threat to the 100-year-old electric utility industry. “Electric vehicles can be the best thing to ever happen to our industry or the worst thing to ever happen to our industry,” says one source.
Mark Brandly of the Mises Institute wrote a piece titled “More DC lies on debts and spending,” regarding federal borrowing and intragovernmental debt. A recent U.S. Treasury report stated that the fiscal deficit for 2014 came in at $483 billion. Yet total federal borrowing from the public for the same period totaled $798 billion! Why did Federal borrowing during 2014 grow by 65% more than the deficit? Brandly reveals that total borrowing includes intragovernmental debt – the money that the Feds lend to themselves from sources such as the Social Security Trust Fund.
Lastly, Mish Shedlock of Global Economic Trend Analysis sounds off on the Spanish debt crisis. In “Reply from Pettis on Spain; Prisoner’s dilemma in reverse; EMU end game,”, Mish echoes Petti’s thought that the only way to settle the debt crisis is if Spain decides democratically to protect European banks in return for years of economic pain.