Tag: Unemployment

April 5, 2018

Perspective

The Verge – South Korean millennials are reeling from the Bitcoin bust – Rachel Premack 4/3

  • “From the outside, the Korean economy appears to be flourishing: the country is home to major industry leaders such as Samsung, Hyundai, and Kia. It’s the 11th-largest economy in the world, with semiconductors, car LCDs, and other high-tech products dominating its exports. The overall unemployment rate is just 4.6%.”
  • “Still, young people can’t find jobs. Youth unemployment has hovered around 10% in Korea for the past five years. The underemployment rate — defined by those involuntarily working jobs they’re overqualified for or are part-time — is even higher as of this year: it hovered at 38% in 2016, according to Dongseo University professor Justin Fendos.”
  • “In this highly educated economy, it can be hard for young Koreans to distinguish themselves from their peers. Nearly 70% of all Koreans ages 25–34 have a post-secondary degree, the highest of all Organization for Economic Co-operation and Development (OECD) countries, and a high school degree is nearly universal. Entire neighborhoods in Seoul are full of college graduates studying to pass hiring exams in order to get in at Korea’s biggest companies or the enviable public sector.”
  • “’The design of Korean society is a big reason why the cryptocurrency became so popular,’ says Yohan Yun, a 25-year-old assistant reporter in Seoul who invested around $400 in Ethereum. ‘People here are generally unhappy with their current status in society.’”
  • “Even employed young people are pessimistic about their economic prospects: a survey conducted in 2015 showed that half of young Koreans don’t believe that they will do better than their parents’ generation, compared to 29% in 2006.”
  • “For young Koreans, cryptocurrency seems like a rare shot at prosperity. Months after last year’s bubble started to implode in February, the Korean won remains the third most traded currency for Bitcoin. The country of 52 million comprises 17% of all Ethereum trading, and it was the location of two-thirds of world’s biggest exchanges this winter, Korea Expose reported in February.”
  • “An estimated three in 10 salaried workers in Korea had invested in e-currencies by December 2017, according to a survey by Korean recruiting firm Saramin. Eighty percent of those people were in their 20s and 30s.”
  • “But now that the prices of cryptocurrency coins like Bitcoin, Ethereum, and Ripple have tanked, many Korean youths are dealing with the mental and financial aftermath of their losses. Korean psychologists have reported an uptick of patients from the so-called ‘Bitcoin blues,’ divorce counselors say marriages are splitting from failed investments, and even the country’s prime minister said that virtual currencies are on track to cause ‘serious distortion or pathological social phenomena’ among Korea’s young population.”
  • “Real estate used to be the traditional way to grow one’s fortune in Korea, but prices have become exceedingly expensive for even upper-middle-class people. And interest rates for savings accounts are rarely more than a few percentage points a year.” 
  • “Koreans’ hyperconnectivity helped spur Bitcoin’s popularity. Teens and young adults spend around four hours a day using mobile phones in Korea. Nearly every Korean home has internet access, and 88% have smartphones, the highest percentage globally. Such an abundance of connectivity allowed potential traders of all ages to learn about the craze and hear about the insane amounts of money one could make on trading. Cryptotrading clubs, where people can meet like-minded traders and share tips, popped up at many Korean universities.”
  • “Thanks in part to the frenzy, some coins cost up to 51% more in Korean markets than anywhere else. Bitcoin’s price was up nearly $8,000 in January, Bloomberg reported. The ‘kimchi premium’ drew foreign traders to buy their coins abroad and trade them in the Korean market.”
  • “But then came the crash. From January 6th to January 16th, 2018 the price of Bitcoin to Korean won tumbled from a high of a US-equivalent $25,065 to $13,503, according to Korbit. It continued to fall to $7,410 by February 5th, and as of April 2nd, the price of a bitcoin sits at $7,241.”
  • “In total, the Bitcoin crash wiped out $44 billion of value in January, or more than Ford’s entire market capitalization, according to Bloomberg. New regulations against cryptocurrency trading, particularly ones from a worried South Korean government, helped usher the fall.”

Worthy Insights / Opinion Pieces / Advice

Business Insider – People have stopped paying their mobile-home loans, and it’s a warning sign of the economy – Matt Turner 4/3

  • “The mobile-home market is showing signs of stress.”
  • “The delinquency rate on mobile-home loans has increased by 200 basis points, or 2 percentage points, over the past year, according to research cited by UBS. The 30-day-plus delinquency level is now about 5%, the highest level since 2005.”
  • “The increase in the number of struggling mobile-home borrowers suggests that a large chunk of these people haven’t benefitted from the economic growth of the past few years, despite the low unemployment level.”
  • “This data represents a piece of a jigsaw puzzle of the condition of consumer finances in the US. And the picture that’s emerging, according to UBS, is of a two-speed economy, with lower-income consumers and younger borrowers with substantial student debt moving at a slower pace than more affluent and established participants.”
  • “‘We believe weakness in these two groups (lower-income consumers and younger borrowers) will drive higher credit losses at some stage over the next few years — particularly in credit card, installment, and student loans — with macroeconomic inflection from job growth to job loss as a likely catalyst,’ UBS said.”

NYT – How Dr. King Lived Is Why He Died – Jesse Jackson 4/3

WSJ – Telsa’s Model 3 Is No Model T – Charley Grant 4/3

  • “First-quarter production is not as rosy as the electric-car maker believes.”

Markets / Economy

WSJ – Daily Shot: Deutsche Bank – US Actual vs Potential GDP 4/4

WSJ – Iowa’s Employment Problem: Too Many Jobs, Not Enough People – Shayndi Raice and Eric Morath 4/1

Real Estate

John Burns RE Consulting – California Has Density Solutions, but Not Enough New Housing – Pete Reeb 4/3

Finance

WSJ – Daily Shot: Deutsche Bank – European Bond Issuance v ECB Purchases 4/4

WSJ – Daily Shot: Deutsche Bank – Emerging Market USD & EUR Debt Issuance 4/4

China

WSJ – Daily Shot: Deutsche Bank – Credit Expansion in BRIC Countries 4/4

WSJ – Daily Shot: Hong Kong Retail Sales 4/4

  • “Hong Kong’s retail sales jumped by most in eight years as wealthy shoppers from the mainland return.”

Japan

WSJ – Daily Shot: Deutsche Bank – Declining Service Quality in Japan 4/4

  • “Instead of inflation, Japan’s extremely tight labor markets are translating into reduced-quality services for consumers. The US is starting to experience this trend as well.”

Puerto Rico

Bloomberg – Stunned Investors Reap 95% Gains on Defaulted Puerto Rico Bonds – Michelle Kaske 4/3

  • “Not only are Puerto Rico’s bonds the top performer in the $3.9 trillion municipal market, they’ve gained more than any other dollar-denominated debt in the world, according to data compiled by Bloomberg.”

WSJ – Daily Shot: Puerto Rico General Obligation Bonds 4/4

February 7, 2018

Perspective

AEIdeas – Price changes 1997 to 2017 – Mark Perry 2/2

Howmuch.net – How Much Debt Americans Have in Every State – Raul 12/26/17

Top 10 States Where People Have the Most Debt

  1. Hawaii: $869,250
  2. Maryland: $284,851
  3. Texas: $185,584
  4. Oklahoma: $174,839
  5. Indiana: $166,844
  6. Nevada: $165,740
  7. Minnesota: $113,455
  8. Illinois: $98,309
  9. Maine: $91,183
  10. Virginia: $81,194
  • “All of this suggests that average debt depends more on an individual’s choices than where he or she lives. People can achieve extremely low debt levels if they are in expensive urban areas or rural towns. If both the bureaucrats in Washington, DC and frontiersmen in Alaska can do it, then we bet you can too.”
  • Unless of course you live in Hawaii where the incomes are low and the cost of housing is high…

WSJ – How Fast Are Prices Skyrocketing in Venezuela? See Exhibit A: the Egg – Kejal Vyas 2/5

  • “With hyperinflation at 13,000%, eggs become essential to bartering.”

Markets / Economy

Reuters – A decade after recession, a jump in U.S. states with wage gains – Ann Saphir, Jonathan Spicer, and Howard Schneider 2/4

statista – Shrinking sweets – Martin Armstrong 2/5

Cryptocurrency

NYT – As Bitcoin Bubble Loses Air, Frauds and Flaws Rise to Surface – Nathaniel Popper 2/5

  • “You did not have to be a technophobe to worry that the virtual-currency boom of the past year papered over plenty of problems.”
  • “The scale of those problems is starting to become clear as digital tokens have slid more than 50% in value from their peaks in early January, with steep drops on Monday pushing the value of Bitcoin specifically below $7,000.”
  • “Hackers draining funds from online exchanges. Ponzi schemes. Government regulators unable to keep up with the rise of so-called cryptocurrencies. Signs of trouble have appeared at nearly every level of the industry, from the biggest exchanges to the news sites and chat rooms where the investment frenzy has been discussed.”
  • “’Cryptocurrencies are almost a perfect vehicle for scams,’ said Kevin Werbach, a professor at University of Pennsylvania’s Wharton School. ‘The combination of credulous buyers and low barriers for scammers were bound to lead to a high level of fraud, if and when the money involved got large. The fact that the money got huge almost overnight, before there were good regulatory or even self-regulatory models in place, made the problem acute.’”
  • “The fall from the peaks of early January has been dizzying. The value of all outstanding virtual currencies has been cut by more than half, down over $400 billion as of Monday, according to the website Coinmarketcap.com.”
  • “Government agencies in the United States have shut down a few notable frauds. Early last month, securities regulators in Texas and North Carolina issued cease-and-desist orders to BitConnect, an operation that had grown to be worth $3 billion.”
  • “But those moves only came after BitConnect had operated openly for months, collecting hundreds of millions of dollars from people around the world despite being labeled a Ponzi scheme by many prominent people in the virtual currency industry. BitConnect offered tokens on a decentralized network, similar to Bitcoin, but promised regular payouts to coin holders.”
  • “But regulators have not gotten near most of the brazen schemes that have popped up in the past year, many of which had been attacked by hackers first, or simply shut down by their operators after money had been raised.”
  • “A new virtual currency, Proof of Weak Hands Coin, whose creators referred to it as a Ponzi scheme on Twitter and use a pyramid as a website logo, raised $800,000 before hackers got into its systems last week and drained its funds.”
  • “One challenge facing regulators is that it is unclear how much of the deceptive activity they can legally control.”
  • “Some online groups openly try to manipulate the prices of digital tokens in what are known as pump-and-dump schemes. Similar schemes involving stocks are illegal, but people operating the groups recently told BuzzFeed that they did not think the same rules applied to virtual currencies.”
  • “Many schemes have been able to expand quickly because they do not use bank accounts and therefore do not have to win approval from established institutions. Instead, they are able to use virtual currency ‘wallets’ without any approvals. And virtual currency transactions cannot be reversed like normal bank or even PayPal transfers.”
  • “Traders have been particularly worried about the largest Bitcoin exchange in the world, Bitfinex, an unregulated operation that has provided few details about its operations, raising concerns about whether it is insolvent or involved in price manipulation.”
  • “But the biggest number of incidents have cropped up around so-called initial coin offerings, in which entrepreneurs sell custom virtual currencies to investors to raise money for software they are building. About 890 projects raised over $6 billion last year, a 6,000% increase over the year before, according to Icodata.io, which tracks the offerings.”
  • “The $240 million raised through one of the most successful initial coin offerings last year, Tezos, is already frozen in a dispute between the founders of the project and the board they created in Switzerland.”
  • “’It is a perfect storm for the kind of scammy activity we are seeing, and it’s not obvious to me how that is easily removed,’ said Fred Wilson, a partner at the venture capital firm Union Square Venture and one of the earliest advocates of Bitcoin in Silicon Valley. ‘Regulation, ideally prudent and informed regulation, can help. But we may also need to have a big correction to really clean things up’.”

WSJ – Daily Shot: Bitcoin 2/5