Soros: China's Shadow Banking Has Disturbing Similarities to US Subprime; KEITH JUROW: The US Housing Recovery Is A Mirage And A Serious Delinquency Crisis Is Coming; HUSSMAN: The Economys Lousy And Earnings Are Going To Tank; Marc Faber: Stock Crash Likely If Rally Continues

InvestmentWatch

Soros: China’s Shadow Banking Has ‘Disturbing Similarities’ to US Subprime

Billionaire investor George Soros said China has a “couple of years” to control risks from nontraditional financing whose expansion has parallels with the cause of the global financial crisis.

“The rapid growth of shadow banking has some disturbing similarities with the subprime-mortgage market in the U.S. that caused the financial crisis of 2007-2008,” Soros said in a speech at the Boao Forum for Asia in China. “I’m sure the authorities are aware of the dangers. They have both the skills and the resources to deflate an incipient bubble gradually.”

The comments add to concerns that the increase in credit risks triggering turmoil that would cause an economic downturn. Aggregate financing, an indicator started by the central bank in 2011 to provide a broader gauge of funding, more than doubled to a record in January from a year earlier.

“If the American experience is any guide, the authorities have a couple of years to bring shadow banking under control,” said Soros, 82. “It’s of utmost importance that the authorities should succeed. Not only for China, but also, for the world.”

China can keep its current economic growth model “for another year or two, but not for another decade,” as household savings are no longer sufficient to subsidize the majority of the economy, Soros said. The transition won’t be easy, because less investment may result in slower growth and increase the chances of a so-called “hard landing,” he said.

KEITH JUROW: The US Housing Recovery Is A Mirage And A Serious Delinquency Crisis Is Coming

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A few weeks earlier, Zillow had released its latest survey of 118 economists, strategists and other experts on the expected direction of home prices over the next five years. Every one expected higher prices with the most pessimistic prediction showing an average annual increase of 3%.

Clearly, there is a very broad consensus that the housing market has bottomed. In the article below, I review much of their analysis. For those of you who have never read any article of mine, I have been consistently asserting that there is no convincing data to support the view that housing markets have turned the corner.

Because my view is so out-of-sync with the consensus, it is worth taking an in-depth look at what my latest research has uncovered.

My conclusion is that the much-vaunted housing recovery is actually a mirage and that a new delinquency crisis is coming.

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Housing’s Big Challenge: $1 Trillion in Student Debt

Total student loan balances nearly tripled between 2004 and 2012, according to a new survey from the Federal Reserve Bank of New York.

How the Student Loan Crisis Drags Down Home Prices

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