Tag: finance

While the eyes of the world were focused on the now infamous "Credit Equals Gold #1" Chinese wealth management product – it's imminent default and last-minute bailout by 'investors' unknown – the coal industry in China continued to collapse (as we noted here). We noted at the time how bailing out current high-yield product investors would merely amplify the problems down the line and it seems that Chinese authorities have heard that message. As Reuters reports, a high-yield investment product backed by a loan to a debt-ridden coal company failed to repay investors when it matured last Friday, state media reported on Wednesday.

Via Reuters,

A high-yield investment product backed by a loan to a debt-ridden coal company failed to repay investors when it matured last Friday, state media reported on Wednesday, in the latest sign of financial stress in China's shadow bank sector.

 

…

 

"It matured on Feb. 7, but CCB passed on an announcement from Jilin Trust saying 'We currently can't be certain when (Liansheng) funds will be returned,'" the official Shanghai Securities News quoted an unnamed investor in the trust product as saying.

 

Though the maturity date has already passed, producing a technical default, Jilin Trust appears to be working to recover investor funds.

 

"Restructuring isn't bankruptcy. As far as we know, there is no problem with the firm's assets. The firm is in negotiations with investors," the paper quoted an unnamed Jilin Trust official as saying.

Backed by China's 2nd largest lender China Construction Bank (note we discussed the largest shadow-bank here), the product is as follows:

The fourth tranche of Jilin Trust's product is name "Songhua River #77 Shanxi Opulent Blessing Project" raised 289 million yuan from investors in February 2012, promising a 9.8% yield – we will see if this technical default results in actual losses for investors.

backed by a coal-industry loan to Shanxi Liansheng Energy Co Ltd…

Shares of China’s biggest listed coal producers have dropped to their lowest valuations on record as falling fuel prices make it harder to repay debt.

 

China’s coal industry is “dead,” said Laban Yu, a Jefferies Group LLC analyst in Hong Kong with an underperform rating on all three stocks. “There are 10,000 producers in China. A lot of them are taking on debt. It gets harder and harder to service debts when coal prices keep falling.

and the risk of more defaults is not going away – in fact will onkly get worse in the next 3 months!!

 

 

For those who have forgotten, below is a quick schematic of what a WMP looks like:

As Michael Pettis, Jim Chanos, Zero Hedge (numerous times), and now George Soros have explained. Simply put –

"There is an unresolved self-contradiction in China’s current policies: restarting the furnaces also reignites exponential debt growth, which cannot be sustained for much longer than a couple of years."

The "eerie resemblances" – as Soros previously noted – to the US in 2008 have profound consequences for China and the world – nowhere is that more dangerously exposed (just as in the US) than in the Chinese shadow banking sector as explained above.

 

The bottom-line is that China seems to be testing the reaction of markets to small 'technical' defaults (such as this one)…

Technical defaults caused by repayment delays have occurred before, but market watchers say that China's shadow bank sector is still waiting for a precedent-setting default in which investors are forced to absorb substantial losses.

 

Such an event could shatter the widespread assumption that even high-yielding investments carry an implicit guarantee from state banks. But Jilin Trust is apparently still looking for ways to recover investors' funds.  

The question is – doe s the PBOC really think that desparate borrowers will stop borrowing – and contract the size of the shadow-banking system reining in the out of control credit creation (and its subprime-like consequences)…

As we previously noted,

…borrowers are facing rising pressures for loan repayments in an environment of overcapacity and unprofitable investments. Unable to generate cash to service their loans, they have to turn to the shadow-banking sector for credit and avoid default. The result is an explosive growth of the size of the shadow-banking sector (now conservatively estimated to account for 20-30 percent of GDP).

 

Understandably, the PBOC does not look upon the shadow banking sector favorably. Since shadow-banking sector gets its short-term liquidity mainly through interbanking loans, the PBOC thought that it could put a painful squeeze on this sector through reducing liquidity. Apparently, the PBOC underestimated the effects of its measure. Largely because Chinese borrowers tend to cross-guarantee each other’s debt, squeezing even a relatively small number of borrowers could produce a cascade of default. The reaction in the credit market was thus almost instant and frightening. Borrowers facing imminent default are willing to borrow at any rate while banks with money are unwilling to loan it out no matter how attractive the terms are.

 

Should this situation continue, China’s real economy would suffer a nasty shock. Chain default would produce a paralyzing effect on economic activities even though there is no run on the banks. Clearly, this is not a prospect the CCP’s top leadership relishes.

So the PBOC's efforts are merely exacerbating the situation for the worst companies…

However, this just hit the wire…

• *CHINA BANS BOND TRADE BETWEEN PROPRIETARY, WMP ACCOUNTS

Which sounds ominously like the PBOC won;t allow banks to bail their own WMP investors out and take the risky crap back on their off-balance-sheet books… i.e. The PBOC wants real defaults… not 'technical' defaults

via Zero Hedge http://ift.tt/1kDkQBg Tyler Durden

At first we thought Reuters had been punk’d in its article titled “EU executive sees personal savings used to plug long-term financing gap” which disclosed the latest leaked proposal by the European Commission, but after several hours without a retraction, we realized that the story is sadly true. Sadly, because everything that we warned about in “There May Be Only Painful Ways Out Of The Crisis” back in September of 2011, and everything that the depositors and citizens of Cyprus had to live through, seems on the verge of going continental. In a nutshell, and in Reuters’ own words, “the savings of the European Union’s 500 million citizens could be used to fund long-term investments to boost the economy and help plug the gap left by banks since the financial crisis, an EU document says.” What is left unsaid is that the “usage” will be on a purely involuntary basis, at the discretion of the “union”, and can thus best be described as confiscation.

The source of this stunner is a document seen be Reuters, which describes how the EU is looking for ways to “wean” the 28-country bloc from its heavy reliance on bank financing and find other means of funding small companies, infrastructure projects and other investment. So as Europe finally admits that the ECB has failed to unclog its broken monetary pipelines for the past five years – something we highlight every month (most recently in No Waking From Draghi’s Monetary Nightmare: Eurozone Credit Creation Tumbles To New All Time Low), the commissions report finally admits that “the economic and financial crisis has impaired the ability of the financial sector to channel funds to the real economy, in particular long-term investment.”

The solution? “The Commission will ask the bloc’s insurance watchdog in the second half of this year for advice on a possible draft law “to mobilize more personal pension savings for long-term financing“, the document said.”

Mobilize, once again, is a more palatable word than, say, confiscate.

And yet this is precisely what Europe is contemplating:

Banks have complained they are hindered from lending to the economy by post-crisis rules forcing them to hold much larger safety cushions of capital and liquidity.

 

The document said the “appropriateness” of the EU capital and liquidity rules for long-term financing will be reviewed over the next two years, a process likely to be scrutinized in the United States and elsewhere to head off any risk of EU banks gaining an unfair advantage.

But wait: there’s more!

Inspired by the recently introduced “no risk, guaranteed return” collectivized savings instrument in the US better known as MyRA, Europe will also complete a study by the end of this year on the feasibility of introducing an EU savings account, open to individuals whose funds could be pooled and invested in small companies.

Because when corporations refuse to invest money in Capex, who will invest? Why you, dear Europeans. Whether you like it or not.

But wait, there is still more!

Additionally, Europe is seeking to restore the primary reason why Europe’s banks are as insolvent as they are: securitizations, which the persuasive salesmen and sexy saleswomen of Goldman et al sold to idiot European bankers, who in turn invested the money or widows and orphans only to see all of it disappear.

It is also seeking to revive the securitization market, which pools loans like mortgages into bonds that banks can sell to raise funding for themselves or companies. The market was tarnished by the financial crisis when bonds linked to U.S. home loans began defaulting in 2007, sparking the broader global markets meltdown over the ensuing two years.

 

The document says the Commission will “take into account possible future increases in the liquidity of a number of securitization products” when it comes to finalizing a new rule on what assets banks can place in their new liquidity buffers. This signals a possible loosening of the definition of eligible assets from the bloc’s banking watchdog.

Because there is nothing quite like securitizing feta cheese-backed securities and selling it to a whole new batch of widows and orphans.

And topping it all off is a proposal to address a global change in accounting principles that will make sure that an accurate representation of any bank’s balance sheet becomes a distant memory:

More controversially, the Commission will consider whether the use of fair value or pricing assets at the going rate in a new globally agreed accounting rule “is appropriate, in particular regarding long-term investing business models”.

To summarize: forced savings “mobilization”, the introduction of a collective and involuntary CapEx funding “savings” account, the return and expansion of securitization, and finally, tying it all together, is a change to accounting rules that will make the entire inevitable catastrophe smells like roses until it all comes crashing down.

So, aside from all this, Europe is “fixed.”

The only remaining question is: why leak this now? Perhaps it’s simply because the reallocation of “cash on the savings account sidelines” in the aftermath of the Cyprus deposit confiscation, into risk assets was not foreceful enough? What better way to give it a much needed boost than to leak that everyone’s cash savings are suddenly fair game in Europe’s next great wealth redistribution strategy.

via Zero Hedge http://ift.tt/1jzpIqA Tyler Durden

The Canadian economy is rolling over and their recent jobs situation is worse than the US (and it's always cold weather-y up there?!) but the last great pillar of the 'recovery' in Canada is perhaps about to get crushed. As the WSJ noted recently, Canada's housing market is the most expensive in the world (60% over-valued by historical standards) and one simple reason explains it – Canada has been very open to foreign investors, which means that in an age of unprecedented global liquidity cash-rich wealthy individuals who are looking for places to park their excess funds can do so in its housing market. Until now… As SCMP reports, Canada’s government has announced that it is scrapping its controversial investor visa scheme, which has allowed waves of rich Hongkongers and mainland Chinese to immigrate since 1986. Soft landing?

 

Deutsche Banks's house-price-to-rent index says Canada has the most expensive housing market in the world – 60% over-valued…

 

"Canada, for example, is very open to foreign investors, which means that in an age of unprecedented global liquidity cash-rich wealthy individuals who are looking for places to park their excess funds can do so in its housing market far more easily than in Japan, with its closed system. "

 

As it's home price index hardly missed a beat while the US plunged… (different scales but point is to illustrate drastic difference when financial crisis started – and where the liquidity went…)

 

Via The South China Morning Post,

Canada’s government has announced that it is scrapping its controversial investor visa scheme, which has allowed waves of rich Hongkongers and mainland Chinese to immigrate since 1986.

 

The surprise announcement was made in Finance Minister Jim Flaherty’s budget, which was delivered to parliament in Ottawa on Tuesday afternoon local time. Tens of thousands of Chinese millionaires in the queue will reportedly have their applications scrapped and their application fees returned.

 

The decision came less than a week after the South China Morning Post published a series of investigative reports into the controversial 28-year-old scheme.

 

The Post revealed how the scheme spun out of control when Canada’s Hong Kong consulate was overwhelmed by a massive influx of applications from mainland millionaires. Applications to the scheme were frozen in 2012 as a result, as immigration staff struggled to clear the backlog.

 

“In recent years, significant progress has been made to better align the immigration system with Canada’s economic needs. The current immigrant investor program stands out as an exception to this success,” Flaherty’s budget papers said.

 

“For decades, it has significantly undervalued Canadian permanent residence, providing a pathway to Canadian citizenship in exchange for a guaranteed loan that is significantly less than our peer countries require,” it read.

 

Under the scheme, would-be migrants worth a minimum of C$1.6 million (HK$11.3 million) loaned the government C$800,000 interest free for a period of five years. The simplicity and low relative cost of the risk-free scheme made it the world’s most popular wealth migration program.

 

A parallel investor migration scheme run by Quebec still remains open. Many Chinese migrants use the alternative scheme to get into Canada via the French-speaking province and then move elsewhere in Canada. The federal government has previously pledged to crack down on what it said was a fraudulent practice.

 

Flaherty also announced yesterday the scrapping of a smaller economic migration scheme for entrepreneurs.

 

All told, 59,000 investor applicants and 7,000 entrepreneurs will have their applications returned, Postmedia News reported. Seventy per cent of the backlog, as of last January, was Chinese, suggesting more than 46,000 mainlanders will be affected by yesterday’s announcements.

 

The Immigrant Investor Program, which has brought about 185,000 migrants to Canada, was instrumental in facilitating an exodus of rich Hongkongers in the wake of the 1989 Tiananmen massacre and in the run-up to the handover. More than 30,000 Hongkongers immigrated using the scheme, though SAR applications have dwindled since 1997.

So, the Canadian government is looking a liquidity-splooging gift-horse in the mouth and saying "no, thanks" – an impressive decision to take given the potential weakness in the real economy… we'll see how long it takes for the decision to be unwound or altered…

via Zero Hedge http://ift.tt/1ettERK Tyler Durden

The Canadian economy is rolling over and their recent jobs situation is worse than the US (and it's always cold weather-y up there?!) but the last great pillar of the 'recovery' in Canada is perhaps about to get crushed. As the WSJ noted recently, Canada's housing market is the most expensive in the world (60% over-valued by historical standards) and one simple reason explains it – Canada has been very open to foreign investors, which means that in an age of unprecedented global liquidity cash-rich wealthy individuals who are looking for places to park their excess funds can do so in its housing market. Until now… As SCMP reports, Canada’s government has announced that it is scrapping its controversial investor visa scheme, which has allowed waves of rich Hongkongers and mainland Chinese to immigrate since 1986. Soft landing?

 

Deutsche Banks's house-price-to-rent index says Canada has the most expensive housing market in the world – 60% over-valued…

 

"Canada, for example, is very open to foreign investors, which means that in an age of unprecedented global liquidity cash-rich wealthy individuals who are looking for places to park their excess funds can do so in its housing market far more easily than in Japan, with its closed system. "

 

As it's home price index hardly missed a beat while the US plunged… (different scales but point is to illustrate drastic difference when financial crisis started – and where the liquidity went…)

 

Via The South China Morning Post,

Canada’s government has announced that it is scrapping its controversial investor visa scheme, which has allowed waves of rich Hongkongers and mainland Chinese to immigrate since 1986.

 

The surprise announcement was made in Finance Minister Jim Flaherty’s budget, which was delivered to parliament in Ottawa on Tuesday afternoon local time. Tens of thousands of Chinese millionaires in the queue will reportedly have their applications scrapped and their application fees returned.

 

The decision came less than a week after the South China Morning Post published a series of investigative reports into the controversial 28-year-old scheme.

 

The Post revealed how the scheme spun out of control when Canada’s Hong Kong consulate was overwhelmed by a massive influx of applications from mainland millionaires. Applications to the scheme were frozen in 2012 as a result, as immigration staff struggled to clear the backlog.

 

“In recent years, significant progress has been made to better align the immigration system with Canada’s economic needs. The current immigrant investor program stands out as an exception to this success,” Flaherty’s budget papers said.

 

“For decades, it has significantly undervalued Canadian permanent residence, providing a pathway to Canadian citizenship in exchange for a guaranteed loan that is significantly less than our peer countries require,” it read.

 

Under the scheme, would-be migrants worth a minimum of C$1.6 million (HK$11.3 million) loaned the government C$800,000 interest free for a period of five years. The simplicity and low relative cost of the risk-free scheme made it the world’s most popular wealth migration program.

 

A parallel investor migration scheme run by Quebec still remains open. Many Chinese migrants use the alternative scheme to get into Canada via the French-speaking province and then move elsewhere in Canada. The federal government has previously pledged to crack down on what it said was a fraudulent practice.

 

Flaherty also announced yesterday the scrapping of a smaller economic migration scheme for entrepreneurs.

 

All told, 59,000 investor applicants and 7,000 entrepreneurs will have their applications returned, Postmedia News reported. Seventy per cent of the backlog, as of last January, was Chinese, suggesting more than 46,000 mainlanders will be affected by yesterday’s announcements.

 

The Immigrant Investor Program, which has brought about 185,000 migrants to Canada, was instrumental in facilitating an exodus of rich Hongkongers in the wake of the 1989 Tiananmen massacre and in the run-up to the handover. More than 30,000 Hongkongers immigrated using the scheme, though SAR applications have dwindled since 1997.

So, the Canadian government is looking a liquidity-splooging gift-horse in the mouth and saying "no, thanks" – an impressive decision to take given the potential weakness in the real economy… we'll see how long it takes for the decision to be unwound or altered…

via Zero Hedge http://ift.tt/1ettERK Tyler Durden

Take a long, hard look, Janet," warns Grant Williams, "the landscape over which you cast your eyes when you accepted the poisoned chalice prestigious role of Fed Chair changed last week." Just two days before you were confirmed in a rather lovely ceremony, in an interview in Mumbai, Raghuram Rajan (one-time Chief Economist at the IMF and current Governor of the Reserve Bank of India) rather UNceremoniously dropped something of a bombshell that went largely unreported (perish the thought, in this era of dogged journalism) but that most definitely queers your pitch in a major way:

(Bloomberg): India central bank Governor Raghuram Rajan warned of a breakdown in global policy coordination after the Federal Reserve further cut stimulus, weakening emerging-market currencies from the rupee to the Turkish lira.

 

Rajan, a former chief economist at the International Monetary Fund, called for greater cooperation among policy makers weeks before finance chiefs from the world's top developed and emerging markets gather in Sydney. The Fed's Jan. 29 statement made no mention of developing economies. "International monetary cooperation has broken down," Rajan, 50, said yesterday in an interview in Mumbai with Bloomberg TV India, noting how emerging markets helped pull the global economy out of crisis starting in late 2008. "Industrial countries have to play a part in restoring that, and they can't at this point wash their hands off and say we'll do what we need to and you do the adjustment."

Now this is going to be a problem, Janet.

Potentially, a BIG one.

The standout feature of central bank policy over the last five years has been the spirit of cooperation amongst the men ("And women!" — Sorry, Janet, "and women") in charge of the world's central banks.

Whilst this spirit of cooperation has been somewhat unwilling in a few cases (yes, Glenn, I'm talking about you), it has been vital to establish a unified message that would give investors the sense that these guys ("And girls!" — Sorry, Janet, "and girls") were talking (a) to each other and (b) to us from a common perspective, that perspective being low rates and free money forever.

Then came The Taper.

…

The emerging-market countries that have seen strong inflows as the Fed's QE program sent billions of dollars their way in search of returns, are now in a bit of a fix, as the chart below demonstrates:

…

Yes, folks, central bankers lie. The job demands it. That means that they join politicians in the category marked "cannot be trusted," and yet investors the world over are not only relying on the promises made by these individuals but also trusting them to be both transparent and honest when the job demands they be neither.

Given that they lie to us, and given that they are making two key representations to us, should we not perhaps take a moment to think about the two inputs to this particular equation?

Politicians across the globe are assuring us that (amongst other lies things):

1) The "recovery" is either here or right around the corner.
In fact, it is neither.

2) Remaining in the EU is the best option for Greece, Spain, Italy (and France).
It is not.

3) Soaking the rich is the answer to a multitude of problems.
It isn't.

4) Raising taxes will generate the necessary revenue without having a negative effect on the economy.
It won't.

5) Future promises of entitlement payments are solid.
They aren't. Defaults are inevitable.

Meanwhile, the central bankers of the world are promising us that:

1) Interest rates will remain low for a very long time.
In the end, it's not central bankers' choice to make.

2) Quantitative easing has no ill effects and can be withdrawn at will without causing any problems.
It can't be.

3) Printing money will not translate into higher inflation.
It will. It just hasn't yet.

4) They will do "whatever it takes," and that will be enough.
There is a limit to what they can do, and it will ultimately not be enough.

5) They are all in this together.
They're not. It is every man for himself now, and the Fed will screw them all.

So here we are.

Having established that, like politicians, central bankers are required to lie to us in order to be able to do their jobs, we are left facing a couple of crucial questions. First, IS tapering tightening, or not? Secondly, what does all this chaos in emerging markets in the wake of The Tighten Taper mean, and where does it take us from here?

Fortunately, the great Albert Edwards of Soc Gen fame took the words right out of my mouth this week:

(Albert Edwards): Tapering is tightening, which inevitably ends in recession, bailout and tears.

 

Our warnings throughout last year that an unraveling of emerging markets (EM) was the final tweet of the canary in the coal mine have still not been taken on board. The ongoing EM debacle will be less contained than sub-prime ultimately proved to be.

 

The simple fact is that US and global profits growth has now reached a tipping point and the unfolding EM crisis will push global profits and thereafter the global economy back into deep recession. Our thesis on how EM would be pushed to crisis was simple, especially as we saw close parallels with the 1997 Emerging Asia currency crisis.

 

We saw yen weakness further undermining an already weak balance of payments situation in the emerging world as a direct replay of 1997. A strong dollar/weak yen environment is typically an incendiary combination for EM, and so it has proved once again. Having reached tipping point the yen will often rally strongly as it has now and as it did in May 1997. This may or may not delay the impending EM implosion for a few weeks. Indeed the Thai Baht, the first domino to fall in the Asian crisis, briefly rallied strongly (vs the US$) in early June 1997, reassuring investors just ahead of its ultimate collapse.

 

There has never been any shadow of doubt in my mind that tapering = tightening, and I marvel that the Fed convinced anyone otherwise. A Fed tightening cycle inevitably plays a key role in triggering the next crisis (see below). Plus ça change, hey?

 

1970 Recession/Penn Central Railroad
1974 Recession/Franklin National Bank
1980 Recession/First Penn/Latin America
1984 Continental Illinois Bank
1987 Black Monday
1990 Recession/S&L and banking crisis
1997 Asian currency collapse/Russian default/LTCM
2007 The Great Recession/Collapse of almost the entire global financial system
2014 Emerging Market collapse/deflation/recession/another banking collapse etc.

Albert is right, of course.

Not only is tapering most definitely tightening (don't listen to what they say, watch the results), but we have likely seen just the beginning of the fallout from the Fed's new course.

Will they stick to it? No. They won't be able to. They MAY taper another $10 bn in March when Janet Yellen's first rate decision is announced, but I suspect that by then markets will be in such a state of disrepair that excuses will be made as to why the taper has been suspended. You can bet your bottom dollar that there will be some frantic calls put in to Ms. Yellen's office by her peers around the world between now and March 20, all of which will be begging calling for an end to The Taper.

Ultimately, QE will continue to be expanded until it implodes in a fireball the like of which has never been seen before. There's no choice, I am afraid, because the alternative would involve the telling of some very harsh truths by politicians and central bankers and the bestowing of some serious pain on an electorate that already holds them in contempt.

Think those truths are going to be volunteered?

Me neither.

The splintering of central bank policy is just the beginning.

This is the end of the innocence.

Full must-read Grant Williams letter below:

 

 

TTMYGH_10_Feb_2014

via Zero Hedge http://ift.tt/1ma70Yz Tyler Durden

To all those curious if Hitler is bullish or bearish into this 5% correction, the following clip may provide some answers

 

h/t @OrderFlowForex

via Zero Hedge http://ift.tt/1m9Xe8N Tyler Durden

Lured by the promise of jobs created by the oil and gas boom, unemployed people are flocking to North Dakota en masse. This is heralded by many in the mainstream media as great news – labor mobility at its best – however, there is a darker side: rents are surging and finding a place to live at any price is difficult. As Reuters reports, amid all the boomtime plenty, however, is a housing affordability crisis. North Dakota saw a 200% jump in homelessness last year, the biggest increase of any state – “people are coming because it’s widely publicized that we have jobs, but it’s not widely publicized that we don’t have housing.“

 

Via Reuters,

“Homelessness is a quickly growing problem in North Dakota, which hasn’t received the attention it deserves,” said Heitkamp in a statement.

Amid all the boomtime plenty, however, is a housing affordability crisis. North Dakota saw a 200 percent jump in homelessness last year, the biggest increase of any state. There are now 2,069 homeless people in the state of 699,628, according to data from the U.S. Department of Housing and Urban Development. That translates into 28.6 homeless people per 10,000. The national average is 19.

Williston is perhaps the most extreme example of a phenomenon that researchers say has followed frackers across the country as the shale boom draws large numbers of people to sparsely populated and remote areas of the country. As frackers move in, demands are placed on limited housing stock and rents climb, according to research from Cornell University.

Williston – not so long ago a place where a traffic jam was two people at a stop sign – saw its population more than double, to an estimated 33,547 last year from 14,716 in 2010, according to estimates from North Dakota State University. The number of homeless in the area is 986, according to official town estimates.

 

Rents have skyrocketed. One-bedroom apartments, which cost $500 per month a few years ago, command as much as $2,000 per month. It’s difficult to get a real estate agent on the phone, and waiting lists for apartment houses and RV spaces overflowing. People are renting out rooms in their homes for as much as $1,000. Starter houses cost $300,000 or more to buy.

 

There are no homeless shelters in Williston, and the city says it does not have the resources to cope with its new homeless population.

“People are coming because it’s widely publicized that we have jobs, but it’s not widely publicized that we don’t have housing,”

…

“The common scenario is that these people spent their last dollar to take a bus to come here to make a better life for their family back home,” said Captain Joshua Stansberry of the Williston Salvation Army. “But with the high cost of living, they are forced to live a transient lifestyle.”

…

“The jobs are here,” he said. “But you can be damn sure of one thing: None of us can find housing.”

It’s not just workers who are affected. Student homelessness in North Dakota increased 212 percent last year, according to the U.S. Department of Education.

…

“As early as three to four years ago, the homeless were a number that we didn’t even calculate, nor did we monitor it,” said Steve Holen, superintendent of the McKenzie County School District, which includes Watford City. “We didn’t feel the need to as we had virtually no situations in which this was occurring.”

The Salvation Army in Williston is now buying one-way bus tickets for people to go back home.

via Zero Hedge http://ift.tt/1jz3h55 Tyler Durden

Lured by the promise of jobs created by the oil and gas boom, unemployed people are flocking to North Dakota en masse. This is heralded by many in the mainstream media as great news – labor mobility at its best – however, there is a darker side: rents are surging and finding a place to live at any price is difficult. As Reuters reports, amid all the boomtime plenty, however, is a housing affordability crisis. North Dakota saw a 200% jump in homelessness last year, the biggest increase of any state – “people are coming because it’s widely publicized that we have jobs, but it’s not widely publicized that we don’t have housing.“

 

Via Reuters,

“Homelessness is a quickly growing problem in North Dakota, which hasn’t received the attention it deserves,” said Heitkamp in a statement.

Amid all the boomtime plenty, however, is a housing affordability crisis. North Dakota saw a 200 percent jump in homelessness last year, the biggest increase of any state. There are now 2,069 homeless people in the state of 699,628, according to data from the U.S. Department of Housing and Urban Development. That translates into 28.6 homeless people per 10,000. The national average is 19.

Williston is perhaps the most extreme example of a phenomenon that researchers say has followed frackers across the country as the shale boom draws large numbers of people to sparsely populated and remote areas of the country. As frackers move in, demands are placed on limited housing stock and rents climb, according to research from Cornell University.

Williston – not so long ago a place where a traffic jam was two people at a stop sign – saw its population more than double, to an estimated 33,547 last year from 14,716 in 2010, according to estimates from North Dakota State University. The number of homeless in the area is 986, according to official town estimates.

 

Rents have skyrocketed. One-bedroom apartments, which cost $500 per month a few years ago, command as much as $2,000 per month. It’s difficult to get a real estate agent on the phone, and waiting lists for apartment houses and RV spaces overflowing. People are renting out rooms in their homes for as much as $1,000. Starter houses cost $300,000 or more to buy.

 

There are no homeless shelters in Williston, and the city says it does not have the resources to cope with its new homeless population.

“People are coming because it’s widely publicized that we have jobs, but it’s not widely publicized that we don’t have housing,”

…

“The common scenario is that these people spent their last dollar to take a bus to come here to make a better life for their family back home,” said Captain Joshua Stansberry of the Williston Salvation Army. “But with the high cost of living, they are forced to live a transient lifestyle.”

…

“The jobs are here,” he said. “But you can be damn sure of one thing: None of us can find housing.”

It’s not just workers who are affected. Student homelessness in North Dakota increased 212 percent last year, according to the U.S. Department of Education.

…

“As early as three to four years ago, the homeless were a number that we didn’t even calculate, nor did we monitor it,” said Steve Holen, superintendent of the McKenzie County School District, which includes Watford City. “We didn’t feel the need to as we had virtually no situations in which this was occurring.”

The Salvation Army in Williston is now buying one-way bus tickets for people to go back home.

via Zero Hedge http://ift.tt/1jz3h55 Tyler Durden

A week ago, the Dell dude warned that it’s going to be a layoff “bloodbath” as the recently LBO-ed firm began firing 15,000. Now it’s IBM’s turn.

According to WRAL Tech Wire, the company which has underperformed Wall Street’s expectations for many quarters, has begun “cost-rationalizing” terminations in India – the country that hosts some 100,000 of IBM’s employees and where IBM reportedly employs the greatest number of workers. The unit targeted is the Systems Technology Group which is the troubled hardware group selling its low-end x86 server business to Lenovo for $2.3 billion and where Big Blue’s executives have launched “Resource Action”, also known as “rebalancing” but best known as mass, across the board terminations where by some estimates up to 13,000 of IBM’s 434,000 workers are set to be let go.

As WRAL reports, Lee Conrad, head of union efforts to unionize IBMers, has received emails from workers as well as a reporter in India. The “RA” is expected to hit IBMers in North America as early as Feb. 19, based on internal speculation. In other words, look for a notice that IBM is laying off thousands in the US in the coming days.

“Still waiting here in the U.S.” Conrad wrote.

But for now, quietly and under the radar, India is getting the pink slip Friendo treatment. And if the handling of IBM’s Indian workers is any indication of what the company’s US-based employees can expect, it ain’t much:

Below are various scribbled or detailed notes sent out by IBM’s workers upon learning they have just been made redundant. All reflect sudden notices – and quick departures, with many reportedly being quite emotional.

“Slaughter House”

“Job cuts in India STG. Announced today including managers.Asked to return laptops with in 2 hrs and leave premises.”

“STG Bangalore literally turned into a slaughter house today.

“Several employees were called to a meeting and RA’d.

“Their TPs were confiscated and they were asked to vacate premises immediately.

“Severance package was on an average 3 months basic component of salary, which is like 6 weeks full pay.

“RA per department as on today

•     SRDC 40%
•     Processors 15%
•     SRAM 80%
•     SSE Just began, final numbers not available

“RAs expected to last till friday.

“The fear is that HCM might be wiped off totally in a day or two. EDA and methodology numbers not yet available”

“People broke down after seeing the inhuman treatment.

“Laptops along with the cases were confiscated, so several employees were seen crying and exiting building carrying and balancing their personal belongings
with their two hands”

Two posts at the Alliance website also referenced layoffs at Bangalore, which is known as India’s “Silicon Valley.”

“RAs Started in Bangalore”

Three other posts give insight into what’s happening in Bangalore:

“IBM today had a massive layoff in STG bangalore more than 40% staff was let go off in a single day. Be it PBC 1 or 2 doesnot matter you are just asked to leave IBM premises by immediate effect. I fail to understand how joB cut will help management to achieve 20 EPS. The upper executives lack vision and clarity to restructure business process. Good bye to ibm hopefully will be in better place than ibm.”

“RAs started in STG Bangalore, hearing that large numbers impacted. Will keep you posted on the details as i get them. the job market is reasonably good outside and the average experience here is about 6-7 years.people are not too worried. most were anyway sick of the company and its junk policies. -Bangalore RAs started-“

“People were reacting to the sale of semiconductor business news rather harshly, well wishers were asking me when was I planning to leave IBM, and the others sarcastically asked me what am I still doing here in STG. Felt very embarrassed walking in the corridor today. The general perception here is that if you are still with IBM, it is because you did not find a job elsewhere. Phew !! that just means to say IBM STG is being considered the worst place to be at this time. We all at STG India would like to express solidarity with the IBM USA work force preparing for yet another RA in the coming weeks. Rest assured we do not feel any better being employed with IBM either. The flood gates are opening and I anticipate that we will lose all our above average work force in the next 3 months. Good luck to you all, I am sure there is life outside of IBM. bye for now, time to update my resume, keep in touch. -STG INDIA-“

* * *

The good news, if only for shareholders: IBM will spend billions on stock buybacks and dividends in 2014… because paying wages is so not New Normal.

via Zero Hedge http://ift.tt/1lFd8V6 Tyler Durden

A week ago, the Dell dude warned that it’s going to be a layoff “bloodbath” as the recently LBO-ed firm began firing 15,000. Now it’s IBM’s turn.

According to WRAL Tech Wire, the company which has underperformed Wall Street’s expectations for many quarters, has begun “cost-rationalizing” terminations in India – the country that hosts some 100,000 of IBM’s employees and where IBM reportedly employs the greatest number of workers. The unit targeted is the Systems Technology Group which is the troubled hardware group selling its low-end x86 server business to Lenovo for $2.3 billion and where Big Blue’s executives have launched “Resource Action”, also known as “rebalancing” but best known as mass, across the board terminations where by some estimates up to 13,000 of IBM’s 434,000 workers are set to be let go.

As WRAL reports, Lee Conrad, head of union efforts to unionize IBMers, has received emails from workers as well as a reporter in India. The “RA” is expected to hit IBMers in North America as early as Feb. 19, based on internal speculation. In other words, look for a notice that IBM is laying off thousands in the US in the coming days.

“Still waiting here in the U.S.” Conrad wrote.

But for now, quietly and under the radar, India is getting the pink slip Friendo treatment. And if the handling of IBM’s Indian workers is any indication of what the company’s US-based employees can expect, it ain’t much:

Below are various scribbled or detailed notes sent out by IBM’s workers upon learning they have just been made redundant. All reflect sudden notices – and quick departures, with many reportedly being quite emotional.

“Slaughter House”

“Job cuts in India STG. Announced today including managers.Asked to return laptops with in 2 hrs and leave premises.”

“STG Bangalore literally turned into a slaughter house today.

“Several employees were called to a meeting and RA’d.

“Their TPs were confiscated and they were asked to vacate premises immediately.

“Severance package was on an average 3 months basic component of salary, which is like 6 weeks full pay.

“RA per department as on today

•     SRDC 40%
•     Processors 15%
•     SRAM 80%
•     SSE Just began, final numbers not available

“RAs expected to last till friday.

“The fear is that HCM might be wiped off totally in a day or two. EDA and methodology numbers not yet available”

“People broke down after seeing the inhuman treatment.

“Laptops along with the cases were confiscated, so several employees were seen crying and exiting building carrying and balancing their personal belongings
with their two hands”

Two posts at the Alliance website also referenced layoffs at Bangalore, which is known as India’s “Silicon Valley.”

“RAs Started in Bangalore”

Three other posts give insight into what’s happening in Bangalore:

“IBM today had a massive layoff in STG bangalore more than 40% staff was let go off in a single day. Be it PBC 1 or 2 doesnot matter you are just asked to leave IBM premises by immediate effect. I fail to understand how joB cut will help management to achieve 20 EPS. The upper executives lack vision and clarity to restructure business process. Good bye to ibm hopefully will be in better place than ibm.”

“RAs started in STG Bangalore, hearing that large numbers impacted. Will keep you posted on the details as i get them. the job market is reasonably good outside and the average experience here is about 6-7 years.people are not too worried. most were anyway sick of the company and its junk policies. -Bangalore RAs started-“

“People were reacting to the sale of semiconductor business news rather harshly, well wishers were asking me when was I planning to leave IBM, and the others sarcastically asked me what am I still doing here in STG. Felt very embarrassed walking in the corridor today. The general perception here is that if you are still with IBM, it is because you did not find a job elsewhere. Phew !! that just means to say IBM STG is being considered the worst place to be at this time. We all at STG India would like to express solidarity with the IBM USA work force preparing for yet another RA in the coming weeks. Rest assured we do not feel any better being employed with IBM either. The flood gates are opening and I anticipate that we will lose all our above average work force in the next 3 months. Good luck to you all, I am sure there is life outside of IBM. bye for now, time to update my resume, keep in touch. -STG INDIA-“

* * *

The good news, if only for shareholders: IBM will spend billions on stock buybacks and dividends in 2014… because paying wages is so not New Normal.

via Zero Hedge http://ift.tt/1lFd8V6 Tyler Durden