Recently we put this photo on our desktop.
It shows a traffic policeman in a southern city in China upright on his podium, frozen in a state of direction.
In the background, people sitting on the curb or standing are waiting in expectation of change. It will come. When, they do not know.
The traffic cop and his audience are waiting. What are they waiting for?
They are waiting for an automobile to pass by.
A man frozen and a crowd watching. The photo was taken thirty years ago when a passing car in China was a noteable event.
Was the crowd unemployed? Did they admire the traffic cop’s discipline, did they take pride or were they jealous that here was one person, at least, who had a regular salary?
Or did they just want to tell their family at home, that they had seen a moving car?
We don’t know, but in a way this morning’s news was a companion piece: Ford Motor Company posted its worst year in the company’s 103 year history.
From the time of this picture—thirty years ago—China is now the world’s second largest market for automobiles. It is also the largest owner of US debt.
What is stranger is that China’s central government buys US Treasury bonds with the full understanding that US dollars it owns may not become more valuable as time goes by.
The idea that the asset you own will decrease in value and that is the plan, is foreign to US consumers.
In the past decade, the US economy has hummed along on the wings of two successive bubbles fueled by the Federal Reserve: the first bubble in equity markets ended badly, the second, in real estate, has just started to end.
The Miami Herald reports today that in 2006 single-family home sales were down 21 percent and condo sales, 24 percent, but points to “steady prices”.
But we point out, as others have, that the numbers do not reflect home sellers whose deals have been cancelled or home owners who are simply not putting their asset on the market because they are not willing to take a loss on its value.
We expect the value of our homes to go up and we won't sell them if they go down, until we have to.
US central bankers are holding their breath about that assumption, and in 2007 Miami housing markets will be a bellweather.
In a week or so, television networks are going to beam signs of a boomtown across the world, when Miami hosts the Superbowl. But outside the lines of the playing field, viewers will probably not understand what they are seeing.
The Miami Herald quotes one real estate analyst on the dismal real estate market, “It is important to say that there is a market.”
How well our economy adjusts to real estate markets that decline in value remains to be seen.
In the meantime US consumers are pushing the Chinese economy like a manual transmission car downhill until there is enough forward motion to engage the clutch and the engine kicks in and the car drives off on its own.
Ford’s auto sales in China nearly doubled last year, but it still lost $12.7 billion last year.
Where does that leave us?
4 comments:
ah. I am gonna need another cup of coffee and a piece of toast to understand this one. Too early for deep thoughts...
Did you see the commissioners decide that Mayor should be at all their meetings? Like he is gonna sit there and take orders for reports to be produced. They made sure there is a dais chair available so they can point out that he is never in chambers. He may not want to breath the same air they do, for a good reason.
Gimleteye said:
home owners who are simply not putting their asset on the market because they are not willing to take a loss on its value.
I said:
I owned two properties after the last hurricane and I took a big loss on one property but had to dump it and I am glad I did - I had to bite the bullet.
For my Homestead, I took it off the market because I could not do the Property Tax increase. When I crunched the numbers it was better to stay put. I think the tax is a big issue, the Homestead Exemption has made us prisoners in our homes if we want to keep our fixed expenses down.
Sadly, that's all too common. There are a lot of people who would move, but can't, due to the property tax change. Until we make some changes to our property tax structure, people who already live in South Florida will have a hard time relocating within the area.
Ever heard the the mantra "I was an internet millionaire" at dinner parties in San Francisco well here and now it will be "I was a Miami-Condo millionaire."
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