News
China’s Regulators to Bailout Doomed Property Sector
Regulators in China have unveiled sweeping measures to bolster the country’s struggling real estate sector, as regulators seek to offset years of China’s harsh pandemic curbs and a real estate clampdown that have stalled the world’s second-largest economy.
Banking regulators and China’s central bank issued a 16-point set of directives to promote China’s industry’s “stable and healthy development,” which were confirmed by Chinese media on Monday.
Credit assistance for China’s debt-ridden housing developers, financial assistance to ensure project completion and handover to homeowners, and assistance for deferred-payment loans for homebuyers are among the measures.
On the same day, China’s National Health Commission issued 20 rules for “optimizing” Beijing’s zero-Covid policy, in which certain restrictions were relaxed to limit the policy’s social and economic impact.
“We see this as the most critical turning point since Beijing significantly tightened property financing,” wrote Ting Lu, a chief China economist.
“We believe these actions show that Beijing is willing to reverse most of its financial tightening measures.”
Following the announcement of the measures, Hong Kong stocks rose more than 3% on Monday, extending Friday’s more than 7% gain.
In 2020, Beijing imposed widespread lending restrictions on property developers, hampering liquidity problems and causing several of the largest property developers to default on bond payments.
The repercussions on China’s massive real estate sector were severe. Cash-strapped developer Evergrande – China’s largest – failed to compete for projects, sparking mortgage boycotts and homebuyer protests.
According to a copy circulating online, the measures emphasized “guaranteeing a handover of buildings” and ordered central development banks to provide “special loans”.
The document required financial institutions to treat both state-owned and private real estate enterprises equally and “actively collaborate with distressed real estate enterprises in risk management.”
In addition, the measures included “extending the transition period of real estate loans” for China’s distressed developers and assistance for “high-quality real estate enterprises in China to issue bond financing.”
“The plan includes financial stability measures to prevent massive defaults and thus provide a soft landing,” said ANZ analysts.
Analysts, however, warned that these changes, along with the limited loosening of zero-Covid measures, would not result in an immediate recovery for the ailing sector.
New home prices in China have been crashing for over a year, while demand has struggled to recover due to ongoing strict pandemic controls that have dampened consumer confidence.
What Doomed China’s Property Market
Following the structural crisis in the real estate sector in 2021, reforming the property market appears unavoidable, and implementing a better property tax system in China is the first step toward property market reform.
According to the Diplomat, the Chinese Communist Party’s official theoretical journal, top leader Xi Jinping identified a property tax system in China as the flagship project for property sector reform and a critical component of his “Common Prosperity” campaign.
The National People’s Congress drafted and authorized a proclamation to expand the property tax experiment in response to Xi’s essay.
Liu Kun, Minister of Finance, stated that the Ministry must “prepare for property tax experiments.” As a result, a Chinese government insider predicted confidently that the central government would implement a property tax in China during the 2022 National People’s Congress.
In Xi’s opinion, the property estate market is the epitome of China’s unsustainable growth model. It accounts for nearly 25% of China’s GDP, a rate higher than that of Spain and Ireland before the Eurozone crisis.
Since the late 1990s housing market reform, Chinese housing prices have risen so rapidly that an apartment in Beijing costs 25 times the annual wage. As a result, high housing prices significantly burden the Chinese people, stifling consumption and innovation.
Furthermore, the collapse of Evergrande Group, one of China’s largest real estate developers, demonstrated that the Chinese real estate sector could become a ticking time bomb.
As a result, Xi has declared that “homes are for the living, not for investor speculation” and has made reforming the property sector his primary goal for the Common Prosperity campaign.
There are two root causes of China’s distorted real estate markets. On the supply side, the fiscal system reform of 1994 shifted tax money to the central government while not reducing the burden on local governments.
As a result, local Chinese governments cover more than 80% of total government expenditures while receiving only half of the tax revenue. Faced with local opposition, then-Premier Zhu Rongji, the architect of this reform, struck an agreement that allowed them to raise their government budget by any means necessary.
China’s artificial property prices
Thus, with Beijing’s approval, local governments throughout China use land sales as their primary source of revenue, artificially keeping property prices high.
A financial repression policy benefiting banks and state-owned enterprises deprives China’s households of viable investment options.
The Chinese middle class considers the ever-expanding housing market the most profitable investment opportunity. According to one Chinese observer, only the housing market consistently generates positive returns for investors.
A property tax is an ideal solution for correcting market distortion. It both discourages people from considering real estate as an investment vehicle and increases budgets for local governments.
As a result, Xi delegated the task of implementing a comprehensive property tax plan to Han Zheng, the executive vice premier and potential successor to Premier Li Keqiang after the 20th Party Congress.
Xi’s property tax plan, on the other hand, drew criticism from the communist party elites and rank-and-file members; even retired senior CCP party leaders petitioned against the new tax.
They argue that because many party members own multiple properties, the tax will be an unnecessary burden and a threat to social stability.
Furthermore, Xi’s ambitious goal of taming the property market is at odds with the interests of local officials, who prioritize generating economic growth, securing local government budgets, and preventing chaos.
Shanghai Cadres highlighted “stability” as the most important goal of their economic work for 2022. According to them, the Shanghai government will bail out property developers to prevent a housing market crash.
“The real estate price in Shanghai will never fall, just like the housing price in New York,” an official said. Another economic planning official stated that the Shanghai administration must also increase infrastructure investment by 14% to offset the shrinking housing market.
New Five-Year Plan
However, because most infrastructure has already been built, Shanghai is unlikely to meet this increased infrastructure investment target.
As a result, the government will support the housing market by removing restrictions on real estate developers receiving bank loans, selling houses, and issuing bonds.
What is the rationale behind this plan, which effectively undoes the five-year deleveraging campaign? After all, Xi has stated that GDP growth is no longer the only metric used to evaluate cadres.
In addition, the new Five-Year Plan eliminated the annual GDP growth target in favour of slower but more balanced “high-quality” economic growth.
The Shanghai administration official admitted that the city did not receive a central government economic growth target. However, the cadre also stated that the importance of economic performance is ingrained in officials’ minds due to comparisons with other local leaders.
Relaxing the “three red lines.”
Higher GDP growth remains the best way for ambitious officials to outperform their peers and secure promotion.
This is especially true for Li Qiang, a rising star in China’s politics who hopes to run for vice premier or a seat on the Politburo Standing Committee at the 20th Party Congress this fall.
Furthermore, the importance of stability trumped the importance of reform. At the end of 2021, the Central Government Work Meeting on Economic Affairs shifted away from Xi’s unwillingness to create a moral hazard by bailing out property titans.
The meeting emphasized the importance of stability and directed local governments to avoid economic crises. Following the meeting, Chinese banks are prepared to relax the “three red lines” to facilitate a soft landing for several real estate companies.
Another challenge Xi must face will be the complexities of China’s property market problem, which has accumulated over decades. The current institutions are so intertwined that incremental reform, which Beijing prefers over drastic and all-encompassing “shock therapy” reform, becomes impossible.
Construction employs 16% of the urban workforce. According to MacroPolo, the Paulson Institute’s in-house think tank, a construction industry collapse following a property market recession would put 15 million people out of work.
Unemployment would undoubtedly have an impact on social stability. Furthermore, Chinese banks made 30% of their loans for housing construction, and 60% of bank loans were collateralized by property. As a result, if the property market collapses, China will face a financial crisis.
As a result, a property tax will clash with other major social programs, causing unintended civil instability. It will increase rather than decrease civil inequality unless accompanied by hukou (household registration) reform.
The hukou system institutionally divides city dwellers from migrant workers, who remain officially registered as residents of their rural hometowns.
As a result, migrant workers cannot access city social welfare programs such as pensions, health care, and education for their children.
Property tax through higher rent
A property tax is intended to provide an alternative source of funding for social welfare programs, allowing local governments to move away from the traditional land-sale-for-funding scheme. 376 million urban migrant workers will contribute significantly to any property tax.
Even those who cannot afford to buy a home in a city will pay the property tax through higher rent.
Without hukou reform, migrant workers will be forced to pay for social services they cannot use. It may exacerbate tensions between newcomers to cities and long-term residents.
The failure of Xi to reform the property market exemplifies the difficulties that his Common Prosperity campaign faces. This campaign, according to Xi, is necessary not only to improve social equality but also to rebuild the Chinese economy.
His primary goal is to shift the Chinese economy away from its current investment-driven, export-oriented growth model and toward a more sustainable development model.
The campaign will almost certainly face opposition from vested interests concerned that the reforms will harm them. The desire for social stability, a recurring theme in Xi’s administration, will also counteract the desire for reform.
Xi once compared the current stage of Chinese reform to “cracking the bone after eating meat,” implying that his predecessors completed the easier parts of the reform while leaving him with the difficult parts. Xi will undoubtedly face tremendous opposition and challenge, as have reformers throughout Chinese history.
News
Trudeau’s Gun Grab Could Cost Taxpayers a Whopping $7 Billion
A recent report indicates that since Trudeau’s announcement of his gun buyback program four years ago, almost none of the banned firearms have been surrendered.
The federal government plans to purchase 2,063 firearm models from retailers following the enactment of Bill C-21, which amends various Acts and introduces certain consequential changes related to firearms. It was granted royal assent on December 15 of last year.
This ban immediately criminalized the actions of federally-licensed firearms owners regarding the purchase, sale, transportation, importation, exportation, or use of hundreds of thousands of rifles and shotguns that were previously legal.
The gun ban focused on what it termed ‘assault-style weapons,’ which are, in reality, traditional semi-automatic rifles and shotguns that have enjoyed popularity among hunters and sport shooters for over a century.
In May 2020, the federal government enacted an Order-in-Council that prohibited 1,500 types of “assault-style” firearms and outlined specific components of the newly banned firearms. Property owners must adhere to the law by October 2023.
Trudeau’s Buyback Hasn’t Happened
“In the announcement regarding the ban, the prime minister stated that the government would seize the prohibited firearms, assuring that their lawful owners would be ‘grandfathered’ or compensated fairly.” “That hasn’t happened,” criminologist Gary Mauser told Rebel News.
Mauser projected expenses ranging from $2.6 billion to $6.7 billion. The figure reflects the compensation costs amounting to $756 million, as outlined by the Parliamentary Budget Office (PBO).
“The projected expenses for gathering the illegal firearms are estimated to range from $1.6 billion to $7 billion.” “This range estimate increases to between $2.647 billion and $7 billion when compensation costs to owners are factored in,” Mauser stated.
Figures requested by Conservative MP Shannon Stubbs concerning firearms prohibited due to the May 1, 2020 Order In Council reveal that $72 million has been allocated to the firearm “buyback” program, yet not a single firearm has been confiscated to date.
In a recent revelation, Public Safety Canada disclosed that the federal government allocated a staggering $41,094,556, as prompted by an order paper question from Conservative Senator Don Plett last September, yet yielded no tangible outcomes.
An internal memo from late 2019 revealed that the Liberals projected their politically motivated harassment would incur a cost of $1.8 billion.
Enforcement efforts Questioned
By December 2023, estimates from TheGunBlog.ca indicate that the Liberals and RCMP had incurred or were responsible for approximately $30 million in personnel expenses related to the enforcement efforts. The union representing the police service previously stated that the effort to confiscate firearms is a “misdirected effort” aimed at ensuring public safety.
“This action diverts crucial personnel, resources, and funding from tackling the more pressing and escalating issue of criminal use of illegal firearms,” stated the National Police Federation (NPF).
The Canadian Sporting Arms & Ammunition Association (CSAAA), representing firearms retailers, has stated it will have “zero involvement” in the confiscation of these firearms. Even Canada Post held back from providing assistance due to safety concerns.
The consultant previously assessed that retailers are sitting on almost $1 billion worth of inventory that cannot be sold or returned to suppliers because of the Order-In-Council.
“Despite the ongoing confusion surrounding the ban, after four years, we ought to be able to address one crucial question.” Has the prohibition enhanced safety for Canadians? Mauser asks.
Illegally Obtained Firearms are the Problem
Statistics Canada reports a 10% increase in firearm-related violent crime between 2020 and 2022, rising from 12,614 incidents to 13,937 incidents. In that timeframe, the incidence of firearm-related violent crime increased from 33.7 incidents per 100,000 population in 2021 to 36.7 incidents the subsequent year.
“This marks the highest rate documented since the collection of comparable data began in 2009,” the criminologist explains.
Supplementary DataData indicates that firearm homicides have risen since 2020. “The issue lies not with lawfully-held firearms,” Mauser stated.
Firearms that have been banned under the Order-in-Council continue to be securely stored in the safes of their lawful owners. The individuals underwent a thorough vetting process by the RCMP and are subject to nightly monitoring to ensure there are no infractions that could pose a risk to public safety.
“The firearms involved in homicides were seldom legally owned weapons wielded by their rightful owners,” Mauser continues. The number of offenses linked to organized crime has surged from 4,810 in 2016 to a staggering 13,056 in 2020.
“If those in power … aim to diminish crime and enhance public safety, they ought to implement strategies that effectively focus on offenders and utilize our limited tax resources judiciously to reach these objectives,” he stated.
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Google’s Search Dominance Is Unwinding, But Still Accounting 48% Search Revenue
Google is so closely associated with its key product that its name is a verb that signifies “search.” However, Google’s dominance in that sector is dwindling.
According to eMarketer, Google will lose control of the US search industry for the first time in decades next year.
Google will remain the dominant search player, accounting for 48% of American search advertising revenue. And, remarkably, Google is still increasing its sales in the field, despite being the dominating player in search since the early days of the George W. Bush administration. However, Amazon is growing at a quicker rate.
Google’s Search Dominance Is Unwinding
Amazon will hold over a quarter of US search ad dollars next year, rising to 27% by 2026, while Google will fall even more, according to eMarketer.
The Wall Street Journal was first to report on the forecast.
Lest you think you’ll have to switch to Bing or Yahoo, this isn’t the end of Google or anything really near.
Google is the fourth-most valued public firm in the world. Its market worth is $2.1 trillion, trailing just Apple, Microsoft, and the AI chip darling Nvidia. It also maintains its dominance in other industries, such as display advertisements, where it dominates alongside Facebook’s parent firm Meta, and video ads on YouTube.
To put those “other” firms in context, each is worth more than Delta Air Lines’ total market value. So, yeah, Google is not going anywhere.
Nonetheless, Google faces numerous dangers to its operations, particularly from antitrust regulators.
On Monday, a federal judge in San Francisco ruled that Google must open up its Google Play Store to competitors, dealing a significant blow to the firm in its long-running battle with Fortnite creator Epic Games. Google announced that it would appeal the verdict.
In August, a federal judge ruled that Google has an illegal monopoly on search. That verdict could lead to the dissolution of the company’s search operation. Another antitrust lawsuit filed last month accuses Google of abusing its dominance in the online advertising business.
Meanwhile, European regulators have compelled Google to follow tough new standards, which have resulted in multiple $1 billion-plus fines.
Google’s Search Dominance Is Unwinding
On top of that, the marketplace is becoming more difficult on its own.
TikTok, the fastest-growing social network, is expanding into the search market. And Amazon has accomplished something few other digital titans have done to date: it has established a habit.
When you want to buy anything, you usually go to Amazon, not Google. Amazon then buys adverts to push companies’ products to the top of your search results, increasing sales and earning Amazon a greater portion of the revenue. According to eMarketer, it is expected to generate $27.8 billion in search revenue in the United States next year, trailing only Google’s $62.9 billion total.
And then there’s AI, the technology that (supposedly) will change everything.
Why search in stilted language for “kendall jenner why bad bunny breakup” or “police moving violation driver rights no stop sign” when you can just ask OpenAI’s ChatGPT, “What’s going on with Kendall Jenner and Bad Bunny?” in “I need help fighting a moving violation involving a stop sign that wasn’t visible.” Google is working on exactly this technology with its Gemini product, but its success is far from guaranteed, especially with Apple collaborating with OpenAI and other businesses rapidly joining the market.
A Google spokeswoman referred to a blog post from last week in which the company unveiled ads in its AI overviews (the AI-generated text that appears at the top of search results). It’s Google’s way of expressing its ability to profit on a changing marketplace while retaining its business, even as its consumers steadily transition to ask-and-answer AI and away from search.
Google has long used a single catchphrase to defend itself against opponents who claim it is a monopoly abusing its power: competition is only a click away. Until recently, that seemed comically obtuse. Really? We are going to switch to Bing? Or Duck Duck Go? Give me a break.
But today, it feels more like reality.
Google is in no danger of disappearing. However, every highly dominating company faces some type of reckoning over time. GE, a Dow mainstay for more than a century, was broken up last year and is now a shell of its previous dominance. Sears declared bankruptcy in 2022 and is virtually out of business. US Steel, long the foundation of American manufacturing, is attempting to sell itself to a Japanese corporation.
SOURCE | CNN
News
The Supreme Court Turns Down Biden’s Government Appeal in a Texas Emergency Abortion Matter.
(VOR News) – A ruling that prohibits emergency abortions that contravene the Supreme Court law in the state of Texas, which has one of the most stringent abortion restrictions in the country, has been upheld by the Supreme Court of the United States. The United States Supreme Court upheld this decision.
The justices did not provide any specifics regarding the underlying reasons for their decision to uphold an order from a lower court that declared hospitals cannot be legally obligated to administer abortions if doing so would violate the law in the state of Texas.
Institutions are not required to perform abortions, as stipulated in the decree. The common populace did not investigate any opposing viewpoints. The decision was made just weeks before a presidential election that brought abortion to the forefront of the political agenda.
This decision follows the 2022 Supreme Court ruling that ended abortion nationwide.
In response to a request from the administration of Vice President Joe Biden to overturn the lower court’s decision, the justices expressed their disapproval.
The government contends that hospitals are obligated to perform abortions in compliance with federal legislation when the health or life of an expectant patient is in an exceedingly precarious condition.
This is the case in regions where the procedure is prohibited. The difficulty hospitals in Texas and other states are experiencing in determining whether or not routine care could be in violation of stringent state laws that prohibit abortion has resulted in an increase in the number of complaints concerning pregnant women who are experiencing medical distress being turned away from emergency rooms.
The administration cited the Supreme Court’s ruling in a case that bore a striking resemblance to the one that was presented to it in Idaho at the beginning of the year. The justices took a limited decision in that case to allow the continuation of emergency abortions without interruption while a lawsuit was still being heard.
In contrast, Texas has been a vocal proponent of the injunction’s continued enforcement. Texas has argued that its circumstances are distinct from those of Idaho, as the state does have an exemption for situations that pose a significant hazard to the health of an expectant patient.
According to the state, the discrepancy is the result of this exemption. The state of Idaho had a provision that safeguarded a woman’s life when the issue was first broached; however, it did not include protection for her health.
Certified medical practitioners are not obligated to wait until a woman’s life is in imminent peril before they are legally permitted to perform an abortion, as determined by the state supreme court.
The state of Texas highlighted this to the Supreme Court.
Nevertheless, medical professionals have criticized the Texas statute as being perilously ambiguous, and a medical board has declined to provide a list of all the disorders that are eligible for an exception. Furthermore, the statute has been criticized for its hazardous ambiguity.
For an extended period, termination of pregnancies has been a standard procedure in medical treatment for individuals who have been experiencing significant issues. It is implemented in this manner to prevent catastrophic outcomes, such as sepsis, organ failure, and other severe scenarios.
Nevertheless, medical professionals and hospitals in Texas and other states with strict abortion laws have noted that it is uncertain whether or not these terminations could be in violation of abortion prohibitions that include the possibility of a prison sentence. This is the case in regions where abortion prohibitions are exceedingly restrictive.
Following the Supreme Court’s decision to overturn Roe v. Wade, which resulted in restrictions on the rights of women to have abortions in several Republican-ruled states, the Texas case was revisited in 2022.
As per the orders that were disclosed by the administration of Vice President Joe Biden, hospitals are still required to provide abortions in cases that are classified as dire emergency.
As stipulated in a piece of health care legislation, the majority of hospitals are obligated to provide medical assistance to patients who are experiencing medical distress. This is in accordance with the law.
The state of Texas maintained that hospitals should not be obligated to provide abortions throughout the litigation, as doing so would violate the state’s constitutional prohibition on abortions. In its January judgment, the 5th United States Circuit Court of Appeals concurred with the state and acknowledged that the administration had exceeded its authority.
SOURCE: AP
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