rents Archives - The Automatic Earth

The U.S. stopped short of branding China a currency manipulator, but urged the world’s second-largest economy to let the yuan rise with market forces and embrace more trade. No major trading partner is manipulating its currency for an unfair trade advantage, according to the first foreign-currency report released by the Treasury Department under President Donald Trump on Friday. It kept China, South Korea, Japan, Taiwan, Germany and Switzerland on its foreign-exchange monitoring list. “China currently has an extremely large and persistent bilateral trade surplus with the United States, which underscores the need for further opening of the Chinese economy to American goods and services,” as well as quicker reforms to boost household consumption, according to the Treasury report.

Trump declared on Wednesday that he’ll back away from a campaign promise to name China a currency manipulator, a move that would have created friction between the world’s largest economies as they try to boost trade cooperation and address North Korea’s nuclear threat. Trump, in a Wall Street Journal interview, said China hasn’t manipulated the yuan for months, while accusing nations that he didn’t identify of devaluing their currencies and saying the dollar is getting too strong.

Germany must increase domestic demand? How? Housing bubble?

• US: China, Germany Must Do More To Cut Trade Surpluses (AFP)

Even though China has not moved to keep its currency weak in the past three years, the country “has a long track record of engaging in persistent, large-scale, one-way foreign exchange intervention, doing so for roughly a decade,” the Treasury Department said. That “distortion in the global trading system… imposed significant and long-lasting hardship on American workers and companies.” With a trade surplus in goods with the United States of $347 billion last year, and continued policies that restrict free trade and foreign investment, “Treasury will be scrutinizing China’s trade and currency practices very closely.” The large goods surplus “underscores the need for further opening of the Chinese economy to American goods and services, as well as faster reform to rebalance the Chinese economy toward greater household consumption.” Beijing also will need to prove that the recent stance of not trying to weaken the currency is “a durable policy shift,” even if the renminbi begins to appreciate again.

The Treasury Department said Germany should take steps, notably spending policies, “to encourage stronger domestic demand growth,” something the country’s trading partners and the IMF have been urging for some time. Increased demand “would place upward pressure on the euro… and help reduce its large external imbalances,” increasing domestic consumption, including of imported goods. Those imbalances include its $65 billion goods trade surplus with the United States last year, and what the department calls “the world?s largest current account surplus at close to $300 billion.” The report also called on Japan to do more “to revive domestic demand and combat low inflation while avoiding a return to export-led growth.” This would include more “flexible” government spending policies, and continued reforms to boost the labor market and increase productivity of the Japanese economy.

“Social financing”. Sure. Sounds good, right? But it‘s all shadows.

• China Shadow Banking Rebounds In March, Household Loans Surge (R.)

China’s banks unexpectedly extended less credit in March than in the previous month as the government tries to contain the risks from an explosive build-up in debt and an overheating housing market. But aggregate financing, which includes bank loans as well as off-balance sheet lending, surged in March and was a record in the first quarter, raising doubts about the effectiveness of official efforts so far to clamp down on risks in the financial system. A surge in household lending in March also added to worries about whether authorities will be able to get the frenzied property market under control, even as cities roll out increasingly stringent curbs on home buying.

The central bank has raised interest rates on money market instruments and special short- and mid-term loans several times in recent months, most recently in mid-March, to contain debt risks and discourage speculation, though it is treading cautiously to avoid hurting economic growth. Outstanding bank loans grew at the slowest pace since July 2002 in March at 12.4%, while M2 money supply growth hit a more than 6-month low, reflecting the moderately tighter policy stance by the People’s Bank of China (PBOC). On the surface, the level of March new loans fell, also suggesting authorities are making some headway in weaning borrowers off endless cheap credit and coaxing debt-laden companies to deleverage.

China’s banks made 1.02 trillion yuan ($148.15 billion) in new loans in March, data showed on Friday, down from 1.17 trillion yuan in February and well below the 1.25 trillion yuan that analysts had predicted in a Reuters poll. However, banks still extended the third highest loans on record for a single quarter, totaling 4.22 trillion yuan in January-March. The first quarter is usually the busiest of the year for Chinese banks, when they have a fresh annual quota and look to lock up key clients. Loans to households surged to 797.7 billion yuan in March, according to Reuters calculations using PBOC data, accounting for 78% of all new loans in the month. That was much higher than either January or February and even the 50% of new loans in 2016.

[..] China’s total social financing (TSF), a broad measure of credit and liquidity in the economy, rocketed to 2.12 trillion yuan in March from 1.15 trillion yuan in February. For the first quarter, TSF reached a record 6.93 trillion yuan – roughly equivalent to the size of Mexico’s economy – and well above last year’s first quarter total. For analysts, that suggests a surge in off-balance sheet lending, likely in the less regulated shadow banking system, despite repeated attempts by authorities to target riskier lending in past years. Loans to companies totaled 368.6 billion yuan in March, less than half the amount of household lending, PBOC data showed. That could be an ominous signal for the economy, unless firms were finding other sources of funding.

Bubble dynamics.

• Record High US Multi-Family Construction Set To Wreak Havoc On Rents (ZH)

Softening apartment rents, particularly in the massively over-priced, millennial safe-spaces of New York City and San Francisco, have been a frequent topic of conversation for us over the past several quarters…Now, a new report from Goldman’s Credit Strategy Team, led by Marty Young, helps to highlight some of the key data points that suggest that sinking rent will likely not be just an ephemeral problem. To start, an just like almost any bubble, sinking rents are the symptom of a massive, multi-year supply bubble in multi-family housing units sparked by, among other things, cheap borrowing costs for commercial builders. Per the chart below, multi-family units under construction is now at record highs and have eclipsed the previous bubble peak by nearly 40%.

Rents have already started to rollover but we suspect the correction has only just begun.

Consumer spending falls = money velocity goes down = deflation.

• Falling US Retail Sales Cast Doubt On Further Fed Interest Rate Rise (G.)

Falling retail sales and lower inflation in the US have added to signs that the world’s biggest economy has lost momentum in recent months, casting doubt over how many more times the Federal Reserve will raise interest rates this year. Stronger takings at clothing and electronics stores in March were not enough to offset a continued drop in demand for cars, according to figures from the US government (pdf). As a result, retail sales fell for the second month running. The 0.2% drop was deeper than forecasts in a Reuters poll of economists and followed a bigger than previously reported decline of 0.3% in February. Sales were also hurt by lower demand for building materials in March, chiming with a sharp slowdown in construction hiring as parts of the US were hit by severe snowstorms. Petrol station takings also dipped in March as fuel prices fell.

The few bright spots were a 2.6% rise in takings at electronics and appliance stores and a 1% rise in clothing sales. The drop in fuel prices in March echoed a pattern seen in the UK following a fall in global oil prices last month. Cheaper pump prices were also a key factor in softer US inflation. A measure of prices in the US fell for the first time in more than a year, dipping 0.3% in March, according to figures from the Labor Department. It said falling fuel prices and mobile phone charges drove the decline in the consumer price index (CPI) and were only partially offset by rising food prices. As a result, inflation – or the pace of price changes over a year – eased to 2.4% in March from 2.7% in February. Core inflation, which strips out volatile food and energy prices, eased to 2% from 2.2% in February and was the weakest since November 2015.

The retail sales and inflation data follow news of a sharp slowdown in job creation in the US in March as the poor weather, a government hiring freeze and a faltering retail sector all appeared to put a chill on President Donald Trump’s promise to boost hiring. But the unemployment rate declined to 4.5%, the lowest rate in a decade. The latest indications that the economy slowed in the opening months of the year will give policymakers at the US central bank more to debate as they decide when to next raise interest rates.

“Hacker Fantastic @hackerfantastic: This is really bad, in about an hour or so any attacker can download simple toolkit to hack into Microsoft based computers around the globe.”

• Leaked NSA Malware Threatens Windows Users Around The World (IC)

The ShadowBrokers, an entity previously confirmed by The Intercept to have leaked authentic malware used by the NSA to attack computers around the world, today released another cache of what appears to be extremely potent (and previously unknown) software capable of breaking into systems running Windows. The software could give nearly anyone with sufficient technical knowledge the ability to wreak havoc on millions of Microsoft users. The leak includes a litany of typically codenamed software “implants” with names like ODDJOB, ZIPPYBEER, and ESTEEMAUDIT, capable of breaking into — and in some cases seizing control of — computers running version of the Windows operating system earlier than the most recent Windows 10.

The vulnerable Windows versions ran more than 65% of desktop computers surfing the web last month, according to estimates from the tracking firm Net Market Share. The crown jewel of the implant collection appears to be a program named FUZZBUNCH, which essentially automates the deployment of NSA malware, and would allow a member of agency’s Tailored Access Operations group to more easily infect a target from their desk. According to security researcher and hacker Matthew Hickey, co-founder of Hacker House, the significance of what’s now publicly available, including “zero day” attacks on previously undisclosed vulnerabilities, cannot be overstated:

“I don’t think I have ever seen so much exploits and 0day [exploits] released at one time in my entire life,” he told The Intercept via Twitter DM, “and I have been involved in computer hacking and security for 20 years.” Affected computers will remain vulnerable until Microsoft releases patches for the zero-day vulnerabilities and, more crucially, until their owners then apply those patches. “This is as big as it gets,” Hickey said. “Nation-state attack tools are now in the hands of anyone who cares to download them…it’s literally a cyberweapon for hacking into computers…people will be using these attacks for years to come.”

Russia and China are close to launching their own competitor to SWIFT. Good timing. This is nuts.

• Hackers Release Files Indicating NSA Hacked SWIFT, Global Bank Transfers (R.)

Hackers released documents and files on Friday that cybersecurity experts said indicated the U.S. National Security Agency had accessed the SWIFT interbank messaging system, allowing it to monitor money flows among some Middle Eastern and Latin American banks. The release included computer code that could be adapted by criminals to break into SWIFT servers and monitor messaging activity, said Shane Shook, a cyber security consultant who has helped banks investigate breaches of their SWIFT systems. The documents and files were released by a group calling themselves The Shadow Brokers. Some of the records bear NSA seals, but Reuters could not confirm their authenticity. Also published were many programs for attacking various versions of the Windows operating system, at least some of which still work, researchers said.

In a statement to Reuters, Microsoft, maker of Windows, said it had not been warned by any part of the U.S. government that such files existed or had been stolen. “Other than reporters, no individual or organization has contacted us in relation to the materials released by Shadow Brokers,” the company said. The absence of warning is significant because the NSA knew for months about the Shadow Brokers breach, officials previously told Reuters. Under a White House process established by former President Barack Obama’s staff, companies were usually warned about dangerous flaws. Shook said criminal hackers could use the information released on Friday to hack into banks and steal money in operations mimicking a heist last year of $81 million from the Bangladesh central bank. “The release of these capabilities could enable fraud like we saw at Bangladesh Bank,” Shook said. The SWIFT messaging system is used by banks to transfer trillions of dollars each day.

“..if those analysts were properly consulted about the claims in the White House document they would have not approved the document going forward.”

• The ‘Smoking-Gun’ Quote On The Recent Syrian Gas-Attack (Zuesse)

After detailed decimation of President Trump’s ‘intelligence’ ‘justifying’ his invasion of Syria, the MIT specialist on such intelligence-analysis, Dr. Theodore Postol, concludes:

“I have worked with the intelligence community in the past, and I have grave concerns about the politicization of intelligence that seems to be occurring with more frequency in recent times – but I know that the intelligence community has highly capable analysts in it. And if those analysts were properly consulted about the claims in the White House document they would have not approved the document going forward. I am available to expand on these comments substantially. I have only had a few hours to quickly review the alleged White House intelligence report.

But a quick perusal shows without a lot of analysis that this report cannot be correct, and it also appears that this report was not properly vetted by the intelligence community. This is a very serious matter. President Obama was initially misinformed about supposed intelligence evidence that Syria was the perpetrator of the August 21, 2013 nerve agent attack in Damascus. This is a matter of public record. President Obama stated that his initially false understanding was that the intelligence clearly showed that Syria was the source of the nerve agent attack.

This false information was corrected when the then Director of National Intelligence, James Clapper, interrupted the President while he was in an intelligence briefing. According to President Obama, Mr. Clapper told the President that the intelligence that Syria was the perpetrator of the attack was “not a slamdunk.” The question that needs to be answered by our nation is how was the president initially misled about such a profoundly important intelligence finding?

The U.S. ‘news’media hid from the public Dr. Postol’s disproof of the Obama regime’s still-continuing assertions that the 21 August 2013 sarin attack was from Syria’s government instead of from the ‘moderate rebels’ (jihadists) whom the U.S. supported. Will they hide from the U.S. public his disproof of the U.S. regime’s latest such scam backing the actual perpetrators of a war-crime — will they do now as they did then?

This issue presents a challenge to the U.S. ‘news’ media, to finally show some integrity, some honor, and expose the operations of the gang at the U.S. government’s top, instead of simply continuing to pump that gang’s propaganda. Without the continuing cooperation of America’s ‘news’media, we would not now be heading toward World War III — global nuclear war. What would be the time when these ‘news’media will do their job, instead of do what they’re being paid to do, if that time is not now.

Even more lobbyists needed?!

• US Insurers Sue Saudis for $4.2 Billion Over 9/11 (TAM)

Last year’s Justice Against Sponsors of Terrorism Act (JASTA), a bill which allowed Americans to sue Saudi Arabia in US court over their involvement in 9/11, has yielded another major lawsuit yesterday, a $4.2 billion suit filed by over two dozen US insurers related to losses sustained because of the 2001 attack. The lawsuit is targeting a pair of Saudi banks, and a number of Saudi companies with ties to the bin Laden family, accusing them of various activities in support of al-Qaeda in the years ahead of 9/11, and subsequently having “aided and abetted” the attack. The biggest target is the Saudi National Commercial Bank, which is majority state-owned.

The Saudi government heavily pressured the Obama Administration to block the JASTA last year, threatening to crash the US treasury market if it led to lawsuits, but overwhelming Congressional support still got it passed into law. While there were more than a few lawsuits already filed in the past several weeks related to JASTA, this is by far the biggest, and most previous lawsuits are still in limbo as the court and lawyers try to combine them into various class action groups. Historically, US sovereign immunity laws have prevented suits against the Saudi government related to overseas terrorism. With the release of the Saudi-related portions of the 9/11 Report last year, however, such suits were inevitable, and the federal government could no longer protect the Saudis from litigation.

Everybody should know this.

• Understanding Land Value Taxation (Walker)

Back in the 18th and 19th centuries, economists took a dim view of landowners. Influential theorists like Adam Smith, David Ricardo and John Stuart Mill saw them as a drag on economic activity, primarily because they reduced the value of other people’s economic activity (through rent) without any incentive to make an economic contribution themselves. In the late 1800s, American social theorist and economist Henry George started a movement arguing for a single land value tax (LVT) – on the unimproved value of land – to replace other forms of taxation. It was rooted in the idea that if economic activity (labour, trade etc.) is the source of tax revenues, tax inevitably becomes a drag on the very thing that creates it. And while productive members of society earn money to pay their taxes, landowners are unproductive earners who pay their taxes through land rent, which is paid by people who generate economic activity.

Rent and taxes are a ‘double whammy’ on productive people. While productive members of society earn money to pay their taxes, landowners are unproductive earners who pay their taxes through land rent, which is paid by people who generate economic activity. That means rent – like taxes – is a drag on the economy. But unlike taxes, which can be used to stimulate economic activity through public spending, rent disappears into landlords’ pockets. So apart from the relatively small economic impact from landlords’ spending, their rent takes value out of the economy and delivers little value back to it. Understandably, the Georgists (Henry George’s LVT supporters) are still going strong today.

The Vichy comment looks odd; why go there? But do remember: French polls are meaningless by now.

• Le Pen Ready to Be ‘Crucified’ for France (BBG)

Far-right candidate Marine Le Pen pulled all the stops to stem her slide in the polls, saying she’s willing to be “crucified” for her stance on absolving France for the wartime deportation of Jews, and pledging to protect the country from Islamic fundamentalists. In a wide-ranging interview Friday on France Info radio nine days before the first round of the presidential vote, the 48-year-old anti-immigration candidate expressed disappointment at what she said was U.S. President Donald Trump going back on campaign promises, while focusing mainly on well-worn themes that most strike a chord with her electorate: Islam, immigration, national identity and terrorism.

“I don’t want France to be damaged, to be humiliated, that it be held responsible when it is not responsible,” Le Pen said. “People can crucify me, I will not change my mind, I will always defend France.” The National Front candidate’s lead in the polls has been whittled away over the last few weeks, leaving her struggling to regain momentum. First-round support for both Le Pen and centrist Emmanuel Macron slipped 0.5 points to respectively 23.5% and 22.5%, according to a daily rolling poll by Ifop on Thursday. Le Pen was at 26.5% in mid-March. [..] In the radio interview, Le Pen maintained her contention that France had no responsibility for the 1942 roundup of Jews in and around Paris by French police at the request of the German occupying forces to be sent to concentration camps.

The candidate, who first made that comment on April 9, was reverting to the long-established party line that shuns any hint of repentance. Le Pen said she is “extremely sensitive to the martyrdom of the Jews,” adding that the only issue was “juridical,” whether the Vichy regime was France or not. “I consider that Vichy was not France. French people can commit crimes without France being criminal.” In the interview, Le Pen criticized Trump for changing his mind on the U.S.’s global role after he said on Wednesday that the North Atlantic Treaty Organization was “no longer obsolete” in fighting terrorism. “Undeniably he is in contradiction with the commitments he had made,” Le Pen said. Trump had said in January that NATO was “obsolete.” Among her key proposals is for France to quit the alliance.

9 days before an election. They’re trying to make her win?!

• French Prosecutors Seek To Lift Le Pen Immunity Over Expenses Inquiry (AFP)

French prosecutors have asked the European parliament to lift the immunity of the far-right presidential candidate Marine Le Pen over an expenses scandal, deepening her legal woes on the eve of the election. The move comes just nine days before France heads to the polls for a highly unpredictable vote, with Le Pen – who heads the Eurosceptic Front National (FN) – one of the frontrunners in the 23 April first round. The request was made at the end of last month after Le Pen, who is a member of the European parliament, invoked her parliamentary immunity in refusing to attend questioning by investigating magistrates. The prosecutors also made a similar request regarding another MEP from Le Pen’s party, Marie-Christine Boutonnet, who also avoided questioning.

Le Pen, who has denied misusing parliamentary funds, shrugged off the move. “It’s totally normal procedure, I’m not surprised,” she told France Info radio. The case was triggered by a complaint from the European parliament, which accuses the FN of defrauding it to the tune of about €340,000 (£290,000). The parliament believes the party used funds allotted for parliamentary assistants to pay FN staff for party work in France. In February, it said it would start docking Le Pen’s pay unless she paid the money back. The allegations appear to have had little impact on Le Pen’s campaign, dwarfed by the bigger scandal engulfing her conservative rival François Fillon.

A day like so many others.

• More Than 2,000 Migrants Rescued In Dramatic Day In Mediterranean (R.)

More than 2,000 migrants trying to reach Europe were plucked from the Mediterranean on Friday in a series of dramatic rescues and one person was found dead, officials and witnesses said. An Italian coast guard spokesman said 19 rescue operations by the coast guard or ships operated by non-governmental organizations had saved a total of 2,074 migrants on 16 rubber dinghies and three small wooden boats. The medical charity Medecins Sans Frontieres (MSF) said in a tweet that one teenager was found dead in a rubber boat whose passengers were rescued by its ship Aquarius. “The sea continues to be a graveyard,” MSF said in a Tweet. The coast guard spokesman confirmed that one person had died but gave no details. MSF said two of their ships, Aquarius and Prudence, had rescued about 1,000 people in nine boats.

Desperate refugees struggled to stay afloat after they slid off their rubber boat during a rescue operation by the Phoenix, a ship of the rescue group Migrant Offshore Aid Station (MOAS). Video footage showed rescuers jumping into the water off the coast of Libya to help them. “In 19 years of covering the migration story, I have never experienced anything like today,” said Reuters photographer Darrin Zammit Lupi, who was aboard the Phoenix. In one operation, the Phoenix rescued 134 people, all from sub-Saharan counties, he said. Those rescued by the MOAS and MSF ships were transferred to Italian coast guard ships, which had rescued other migrants, to be taken to Italian ports. According to the International Organisation for Migration, nearly 32,000 migrants have arrived in Europe by sea so far this year. More than 650 have died or are missing.

Debt Rattle October 25 2014

Oct 252014

October 25, 2014 Posted by Raúl Ilargi Meijer at 12:12 pm Finance Tagged with: cars, drugs, ebola, EU, hookers, housing, lenders, mortgage, property, Putin, recession, rents, UK 7 Responses »

DPC Luna Park, Coney Island 1905

• An Economy Based On Property Has Much To Fear (Independent)

• Lenders Facing Soaring Costs Shutting Out U.S. Homebuyers (Bloomberg)

• It Shouldn’t Hurt This Much to Get a Mortgage (Ritholtz)

• Paying For Bad Habits: Hookers And Drugs Lift UK’s EU Bill (Guardian)

• UK Chancellor Osborne’s Choice Of Words Is Sounding Alarm Bells (Guardian)

• A Mystery Bidder Offers $3 Million for 6,000 of Detroit’s Worst Homes (BW)

• Spanish Accuse Goldman, Blackstone Of Hiking Rent For Poor (Independent)

• EU Bank Breakup Plan Hits More Hurdles as Danes Reject Idea (Bloomberg)

• Citigroup Bets ECB Will Do QE as Morgan Stanley Sees Odds at 40% (Bloomberg)

• 50% Of American Workers Make Less Than $28,031 A Year (Snyder)

• The American Dream Is Still Possible, Just Not in the US (Daily Bell)

• Rosenberg Says No Recession Until At Least 2016 (MarketWatch)

• China Auto Market Growth To Shrink by 50% This Year: Industry Head (Reuters)

• Blood In The Water As Amazon Magic Fades (Reuters)

• Putin Accuses U.S of Blackmail, Weakening Global Order (Bloomberg)

• NPR Slashes Number Of Environment Reporters To One Part-Timer (HuffPo)

• Ebola Epidemic In Africa To Explode Without Rapid, Substantial Aid (Lancet)

• ‘Official’ Number of Ebola Cases Passes 10,000, With 5,000 Deaths (BBC)

A very smart way to look at it.

• An Economy Based On Property Has Much To Fear (Independent)

Believe it or not, the Bank of England isn’t just a bunch of bowler-hatted types stuck behind desks in Threadneedle Street. It has agents up and down the country interviewing business people on how their companies are faring: what goods are selling well, whether they’re hiring or firing, that sort of thing. The monthly bulletins that result rarely get reported, but are useful because they layer anecdotal evidence on top of the regular run of dry economic stats. Superficially, October’s feedback had much to cheer – order books are swelling in most sectors, employment is expected to increase, and access to credit has improved. But it is striking how much of this positive stuff is related, directly or indirectly, to the property market.

Business services firms – accountants, lawyers and the like – are growing because of an increase in construction deals; manufacturing and retail sales are being kept afloat by sales of kitchens, bathrooms and furniture thanks to people moving house; business investment is growing as firms spend more on doing up their premises or moving to new sites. Property, property, property. Exporters, meanwhile, were gloomy, with all, from farmers to manufacturers, complaining of eurozone weakness, Russian belligerence and war in the Middle East. That means we will be reliant on the domestic economy for years to come. With this still clearly so dominated by the world of bricks and mortar, one has to wonder, what would happen if interest rates start to rise? Disaster, that’s what. The Bank’s other document release yesterday – the minutes to the Monetary Policy Committee’s last meeting on rates – show a continuing doveish slant. Good job, too.

No, prices vs income shuts out potential buyers. So either significantly raise wages or drop prices, and stop whining.

• Lenders Facing Soaring Costs Shutting Out U.S. Homebuyers (Bloomberg)

Clem Ziroli Jr.’s mortgage firm, which has seen its costs soar to comply with new regulations, used to make about three loans a day. This year Ziroli said he’s lucky if one gets done. His First Mortgage Corp., which mostly loans to borrowers with lower FICO credit scores and thick, complicated files, must devote triple the time to ensure paperwork conforms to rules created after the housing crash. To ease the burden, Ziroli hired three executives a few months ago to also focus on lending to safe borrowers with simpler applications. “The biggest thing people are suffering from is the cost to manufacture a loan,” said Ziroli, president of the Ontario, California-based firm and a 22-year industry veteran. “If you have a high credit score, it’s easier. For deserving borrowers with lower scores, the cost for mistakes is prohibitive and is causing lenders to not want to make those loans.”

Federal regulations, enacted after the collapse of the subprime market spurred the financial crisis, are boosting mortgage costs this year. Most lenders are responding by providing home loans only to borrowers with near perfect credit, shutting out creditworthy Americans whose loan files are too expensive to review and complete. If banks commit compliance errors in issuing a loan that goes bad, they have to buy it back at a loss from Fannie Mae or Freddie Mac. During the housing boom between 2004 and 2007, lenders provided about $2 trillion in subprime loans, many to unqualified borrowers. So-called liar loans didn’t require borrowers to provide pay stubs or tax returns to document earnings. Teaser rates as low as 1% offered on mortgages soared when they reset a few years later.

The share of subprime mortgages for which borrowers either provided little documentation of their assets or none at all rose to 38% in 2007 from 32% in 2003, according to a paper published by the Federal Reserve. Almost one in four of those mortgages defaulted by 2008 compared with one in five of fully documented subprime loans. Wall Street firms securitized pools of the loans called collateralized debt obligations and sold them to investors. They also created so-called synthetic CDOs that were derivative instruments designed to mirror the performance of the loan pools. “What started the crisis were these loans that were designed to fail, loans that weren’t underwritten at all,” said Julia Gordon, director of housing finance and policy at the Washington-based Center for American Progress, which has ties to the Democratic Party. “No one quite realized that these loans were then at the bottom of this giant pyramid scheme, where the Wall Street derivative products that were based off of them would just come crashing down and take the whole economy with them.”

Sorry, Barry, but that’s as wrong as can be. It should very much be this hard, or prices will never find their ‘natural’ floor.

• It Shouldn’t Hurt This Much to Get a Mortgage (Barry Ritholtz)

Under normal circumstances, approving my mortgage application should be a no-brainer: High income, no debt, good credit score. The missus also makes a good income, has an almost-perfect credit score and has been working for the same business for 28 years. But these are not normal circumstances. Let me jump to the end: Yes, we got our mortgage. We put 20% down, bought a house that appraised for more than the purchase price and got a 3.25% rate on a mortgage that resets after seven years. We moved in last month.

But the process was surreal. Indeed, it was such a bizarre experience that I started hunting for explanations from people in the industry about why mortgage lending has gone astray. I spoke to numerous experts, many of whom spoke only on background. Today’s column is about what I learned. By just about any measure, credit is tighter today than it has been in decades. Although former Federal Reserve Chairman Ben Bernanke’s inability to refinance a mortgage is merely anecdotal, consider instead the gauge CoreLogic developed. It used 1998 as a baseline and considered six quantitative measurements to evaluate how loose or easy mortgage lending is. By those metrics, this is the tightest credit market for mortgage lending in at least 16 years.

I like my take from yesterday better: French hookers are cheaper than British ones.

• Paying For Bad Habits: Hookers And Drugs Lift UK’s EU Bill (Guardian)

Listening to EU officials describe how Britain pays its annual EU contribution brings to mind George W Bush being questioned about one of his administration’s budgets. Flicking the pages before assembled journalists he said: “There’s a lot of pages, a lot of lines and a lot of numbers.” To all but a few, the addings up and subtractings that go on in Brussels make little more sense. One of the few things that does seem clear is that Britain is paying for its bad habits. Brussels needs more cash this year to cope with overspent budgets. And while it might seem unfair to tax a country for needing a bigger crutch than others in the EU club, relatively speaking, the UK’s GDP has jumped courtesy of new estimates of the nation’s consumption of drugs and use of prostitutes. The EU applies its complex calculation of how much member states should pay into its coffers largely on GDP levels. The bigger the national income, the bigger the contribution. So far, so simple.

However, earlier this year the UK’s GDP was given a £10bn boost after officials calculated that sex work generated £5.3bn for the economy in 2013, with another £4.4bn coming from the sale of cannabis, heroin, powder cocaine, crack cocaine, ecstasy and amphetamines. Other countries have been affected too after the EU calculated how much of their hidden economies should be brought on the books. Greece faces a larger contribution despite losing a fifth of is national income since 2009. Italy is another victim, though arguably it has only included a fraction of the mafia’s business in its GDP calculations. More importantly, Britain is paying more because this year it is simply bigger than 18 months ago while other countries have stood still or contracted. Like soldiers in a lineup who find themselves volunteering for toilet duty after everyone else has taken a step back, the UK Treasury is paying for being one of the few among the EU’s 27 economies to strengthen this year.

A glitch in the posturing process?!

• UK Chancellor Osborne’s Choice Of Words Is Sounding Alarm Bells (Guardian)

George Osborne is clearly worried. Going into a pre-election war-gaming huddle with his advisers, the economic numbers that once sang a happy tune and are so crucial to victory, now sound a little discordant. It seems churlish to strain for the bum notes in the latest GDP figures. All parts of the economy are growing, with the exception of agriculture. And growing more strongly than they are in any of the major European economies. But it is the chancellor’s words that set off the alarm bells. He said: “If we want to avoid a return to the chaos and instability of the past, then we need to carry on working through our economic plan that is delivering stability and security.” Adopting the word “chaos” is at once interesting and alarming. He seems to be saying that any other path than the one he has chosen will bring with it a swirling storm of instability. Billing himself as Lord Protector, Osborne risks overstating his case, especially when the GDP numbers are so strong.

Growth is moderating, but most surveys report that businesses remain confident about the recovery and continue to hire more staff. As a result, unemployment continues to fall. So what can he be worried about? There is the three months of restrained housing market activity. If it’s true, and we don’t fully understand the link, that much of the recovery is connected to the increase in property buying, then any slowdown is a cause for concern. Except the chancellor wanted the housing market to cool. And his policies are largely the reason banks are refusing to dole out loans after he gave regulators instructions in April to clampdown on risky mortgage lending. A slowdown in housebuilding was also a logical knock-on effect, given that a majority of homes are constructed by a private building sector keen to maintain its extraordinary profit levels.

We know he is worried about the slowdown in exports, which didn’t take off four years ago, as he had expected. The eurozone’s impending recession is largely to blame, but a lack of support to exporters, particularly multimillion-pound credit insurance, has also proved a barrier. However, the crucial issue is the government’s finances, which have worsened this year despite the strong recovery. For a man with the electoral cycle stamped on his DNA, it is tragic that businesses and workers are not paying much extra tax.

What do Detroiters think of this?

• A Mystery Bidder Offers $3 Million for 6,000 of Detroit’s Worst Homes (BW)

Three million dollars can barely buy a new townhouse in Brooklyn these days, but it could be enough to purchase a bundle of more than 6,000 foreclosures up for auction in Detroit. The cost of dealing with the many blighted buildings included in the Detroit mega-auction means a $3.2 million bid received last week—roughly the minimum allowable bid of $500 per property—will likely prove too high to turn a profit. “I can’t imagine that you are going to make money on this,” says David Szymanski, chief deputy treasurer of Wayne County, which is selling the properties. So it’s all the more mysterious that the auction, opened with little fanfare earlier this month, has attracted any bidder at all. Still, at least one unidentified party is willing to pay $3.2 million to take control—and responsibility—for scores of dilapidated homes. In fact, winning the bid could cost the lucky winner a small fortune beyond the auction price.

Finding a way to deal with Detroit’s blight is critical for the city’s future. A task force has already called for immediately tearing down 10% of all structures. The group surveyed the condition of every Detroit property and identified neighborhoods at a tipping point at which stripping them of blight could keep certain areas from slipping away entirely. “I had cancer 12 years ago, and this is exactly like cancer,” Szymanski says. “If you don’t get it all, it’s going to come back.” Wayne County has become a major owner of blighted properties, which it can seize when owners fall behind on taxes. The scale of its distressed holdings is unprecedented. When Szymanski joined the treasurer’s office four years ago, he called the treasurer of Cuyahoga County in Ohio to compare notes. His counterpart, whose domain includes Cleveland and was a bellwether during the housing crisis, asked: “Are you sitting down? We are foreclosing on 4,500 properties.” Szymanski says he replied: “I hope you’re laying down.” At the time, Wayne County had 42,000 properties in foreclosure.

Throw ’em out!

• Spanish Accuse Goldman, Blackstone Of Hiking Rent For Poor (Independent)

The London investment arms of Goldman Sachs and Blackstone were accused last night of jacking up the rents of Madrid’s poorest people after they bought thousands of the city’s council flats. Many, unable to afford their new terms, have now been threatened with eviction or moved out. During the financial crisis, the city was advised by the accountants PwC to sell off swathes of its social housing in order to raise desperately needed funds. It sold 5,000 flats to investors including Goldman and Blackstone. Nothing changed in the tenants’ rents until their leases ran out, when, in many cases, the charges shot up dramatically. Reuters interviewed over 40 households who have been thrown into difficulties by the rent rises. They include Jamila Bouzelmat, a mother of six who lives in a four-bed flat now owned by Goldman and a Spanish property firm. She said her family had been paying €58 (£46) a month rent from her husband’s €500 unemployment benefit. But in April, her new landlords suddenly took €436 from her account.

Ms Bouzelmat said she only discovered the problem when she tried to pay an electricity bill: “We went to take money out and there wasn’t a cent left in the bank,” she explained. 1 in 5 adults in Madrid are unemployed. Goldman and Blackstone are entirely within their rights to charge market-price rents. However, a number of lawsuits have now been launched by local politicians against the councils that sold the homes. The problem is particularly bad in Spain because it already had one of the smallest stocks of social housing in Europe. Now 15 per cent of it has been sold off to London banks and private equity firms, there is even less. Goldman’s properties had about 400 households on reduced rents, often negotiated individually with the council and set for up to two years. Goldman referred inquiries to Encasa Cibeles, the local firm set up to manage the flats. A spokesperson said: “Evictions occur in an extremely small number of cases.”

Blackstone’s tenants have been on longer leases but most have been paying below-market rents. As leases approach expiry, rates have risen 40%. Blackstone referred inquiries to Fidere, the local estate management company, which said “some people have lost the public subsidy they received from the council”. It is negotiating with the 2% of its tenants in that situation.

There’s always another politician to put on the payroll.

• Bank Breakup Plan Hits More EU Hurdles as Danes Reject Idea (Bloomberg)

Denmark won’t back a proposal to split Europe’s biggest banks as the region’s first country to enforce bail-in rules questions the value of more regulation. “With all the legislation now in place there really shouldn’t be more worries,” Business Minister Henrik Sass Larsen said in an interview yesterday at the parliament in Copenhagen. A proposal by Michel Barnier, the European Union’s financial services chief, to break up systemically important banks has resurfaced with local regulators trying to defend national interests, according to a document obtained by Bloomberg News. Italy, which holds the EU’s rotating presidency, said it was looking for “concrete options for the way forward” after registering “strong concerns” among member states, the document showed. “With the regulation we’ve put in place, we’re fully covered,” Larsen said, characterizing the notion that more may be needed as obsolete. The proposal for reforming bank structures has come under attack on multiple fronts since Barnier presented it in January.

In addition to a narrowly defined proprietary-trading ban, Barnier set out EU-wide standards for splitting up the most systemically important banks that would push certain kinds of derivatives and other trading activities into separately capitalized units. Barnier’s plans require approval from national governments and the European Parliament to take effect, with talks set to continue into next year. Britain’s Jonathan Hill, who will replace Barnier as financial services commissioner on Nov. 1, has said he will “take forward work” on the proposal. Larsen’s position shows some EU nations back industry efforts to block further regulation. Christian Clausen, the president of the European Banking Federation and the chief executive of Nordea Bank AB, said this week plans to add rules to the existing framework are “going beyond reason.” Clausen said he plans to have a “serious talk” with the European Commission and parliament to prevent further regulatory tightening.

Think Berlin.

• Citigroup Bets ECB Will Do QE as Morgan Stanley Sees Odds at 40% (Bloomberg)

Economists are at odds over whether the European Central Bank will do “whatever it takes” to revive inflation in the euro area. More than two years after President Mario Draghi promised to pull out all the stops to protect the euro from a swirling debt crisis, ECB-watchers are split over whether the central bank will buy government bonds to aid the struggling economy. In making forecasts for the possible deployment of full-blown quantitative easing, the pressures of weak growth and sliding inflation are being balanced against Germany’s aversion to purchasing sovereign debt and practical considerations such as how and whether it would work. Draghi said earlier this month that the ECB will use further unconventional monetary policy instruments if needed to support recovery. Goldman Sachs sees one-in-three odds of QE, Morgan Stanley views the chances at 40% and JPMorgan is at 50-50. By contrast, HSBC, Barclays and Bank of Americahave sovereign QE as part of their central scenarios. Citigroup even says it could happen before the end of this year.

Here then is a handy round-up, gleaned from reports and interviews, of where economists at major banks stand. Huw Pill, Goldman Sachs: “Sovereign QE is not part of our baseline scenario, which is for economic activity to go sideways and inflation to remain low. We think the current gloom and doom about the euro area outlook is overdone.” Joerg Kraemer, Commerzbank: “We were one of the first banks to predict at the end of August that the ECB would buy government bonds on a generous scale, envisaging this happening at the start of next year rather than this year.” “It has become far more likely that the bank will act before the end of this year. Concerns about the economy that have triggered the drop in equity prices make it ever more likely that the ECB will have to lower its optimistic growth forecast for 2015 of 1.6%.” “This fact plays into the hands of those on the ECB Council in favour of relaxing the reins, as does our expectation that the end of the bank stress test will not in fact sound the all-clear for weak lending. Long-term inflation expectations have dropped sharply.”

Gutted like a fish.

• 50% Of American Workers Make Less Than $28,031 A Year (Snyder)

The Social Security Administration has just released wage statistics for 2013, and the numbers are startling. Last year, 50% of all American workers made less than $28,031, and 39% of all American workers made less than $20,000. If you worked a full-time job at $10 an hour all year long with two weeks off, you would make $20,000. So the fact that 39% of all workers made less than that amount is rather telling. This is more evidence of the declining quality of the jobs in this country. In many homes in America today, both parents are working multiple jobs in a desperate attempt to make ends meet. Our paychecks are stagnant while the cost of living just continues to soar.

And the jobs that are being added to the economy pay a lot less than the jobs lost in the last recession. In fact, it has been estimated that the jobs that have been created since the last recession pay an average of 23% less than the jobs that were lost. We are witnessing the slow-motion destruction of the middle class, and very few of our leaders seem to care. The “average” yearly wage in America last year was just $43,041. But after accounting for inflation, that was actually worse than the year before… American paychecks shrank last year, just-released data show, further eroding the public’s purchasing power, which is so vital to economic growth.

Average pay for 2013 was $43,041 — down $79 from the previous year when measured in 2013 dollars. Worse, average pay fell $508 below the 2007 level, my analysis of the new Social Security Administration data shows. Flat or declining average pay is a major reason so many Americans feel that the Great Recession never ended for them. A severe job shortage compounds that misery not just for workers but also for businesses trying to profit from selling goods and services. Average pay declined in 59 of the 60 levels of worker pay the government reports each October.

In Canada? Really? What part of the dream is that?

• The American Dream Is Still Possible, Just Not in the US (Daily Bell)

Although there are no firm statistics on the number of Americans living outside the US, the US State Department estimates that somewhere between 3 and 6 million Americans now live offshore. I think this is a low estimate and the number is clearly growing. I now live in Canada but often travel back to the United States. Driving through Customs near Buffalo is usually not a big ordeal but it does involve a time-wasting delay much like visiting the post office or any other US government bureaucracy. But governments should police their borders, as this is one of the few legitimate functions of a central government. Still, whenever I’m there I do notice the America I grew up in and once knew has really changed since 9/11. The trend toward a more militarized and aggressive police force continues to quicken. I know most Americans accept this as part of the consequences of the War on Terror just as they do the loss of financial privacy, increased fines and asset seizures.

The Canadian government recently warned citizens to be careful when taking cash to the US because of the risk of police taking their cash for hyped-up offenses. Did you know that in the last 13 years, over $2.5 billion has been stolen by law enforcement in almost 62,000 cash seizures? I have to say that as an American, I’m outraged at the situation and always on guard when in the USSA. I fear many Americans who don’t travel internationally might have become somewhat immune to the intrusive, arbitrary nature of today’s American government and its institutions. Here in Canada, law enforcement is almost always professional and courteous and even the bureaucrats are friendly and helpful, which simply amazes me. So to my American family, friends and business associates, I want you to know it is still possible to achieve the American Dream of a simple life with opportunity for wealth creation, fun, freedom and good times without an overly intrusive, threatening government … just not in the United States.

Rosy’s started living up to his nickname.

• Rosenberg Says No Recession Until At Least 2016 (MarketWatch)

It’s going to take a little bit more than Ebola, eurozone pessimism and a rising U.S. dollar to turn David Rosenberg into a bear. The chief economist and strategist at Gluskin Sheff, in his economic commentary, points out the leading economic indicator released Thursday showed a 0.8% monthly advance and a 6.3% year-over-year gain in September. This rate, he says, is consistent with annual real GDP just under 4.5%. Plus, the one-month diffusion index jumped to a four-year high of 90%. Usually, within six months of a recession, the year-over-year trend turns negative while the diffusion index falls below 30%.

“Looking at the situation another way, based on where both the YoY LEI trend and the diffusion indices are now, and tracing them through the classic business cycle, we are at least two years away from the next recession,” he says. What does that mean for stocks? “The reality is that bear markets do not just pop out of the air,” he said. “They are caused by tight money, recessions, or both. These conditions do not apply, nor will they until 2016 at the earliest.”

That’s a lot of cars planned for and produced, that are not going to be sold.

• China Auto Market Growth To Shrink by 50% This Year: Industry Head (Reuters)

Growth in China’s auto market, the world’s biggest, will halve to 7% this year weighed down by a slowing economy, the head of an industry body said on Saturday. “Personally, I think growth this year can reach 7%,” Dong Yang, secretary general of the China Association of Automobile Manufacturers (CAAM), told reporters on the sidelines of an industry conference in Shanghai. “The economy is slowing. The auto industry would reflect that but typically lags the economic cycle by a bit.” CAAM had forecast China’s auto market, which grew by 13.9% last year, to expand at 8.3% in 2014. Dong said CAAM will not make any official revisions to its forecast. [..] Nissan has said its China sales fell by 20% in September from a year earlier, the third straight month of decline, due to sluggish sales of light commercial vehicles and increased competition in the passenger car segment. During the first nine months of the year, overall vehicle sales in China rose 7% from the same period a year earlier, according to CAAM data.

Jeff Bezos has issues.

• Blood In The Water As Amazon Magic Fades (Reuters)

Amazon.com’s once fairy-tale ride on Wall Street has hit its most jarring bump yet. The company that for years enthralled investors with improbable growth and earned one of the technology sector’s highest valuations drew widespread ire after a spectacular results letdown on Thursday. Amazon missed expectations across the board – on margins, on its net loss and on revenue. An unaccountably poor 7% to 18% revenue growth forecast for the typically strongest holiday quarter was the final straw for some. Coming just three months after a big letdown in July, the warning may represent a tipping point for investors who are already wary of a triple-digit price-earnings ratio and a persistent unwillingness to throttle back spending.

“They’re becoming much too distracted in all these other efforts” outside core businesses like online retailing and web services, said Matthew Benkendorf, portfolio manager at Vontobel Asset Management. Benkendorf unloaded his Amazon holdings a year ago and said he would be skeptical of future involvement even if the stock falls further. “They are their own worst enemy to success,” he said. “They really need to do some soul searching and get focused.”

Not a bad analysis.

• Putin Accuses U.S of Blackmail, Weakening Global Order (Bloomberg)

The U.S. is behaving like “Big Brother” and blackmailing world leaders, while making imbalances in global relations worse, Russia’s president said. Current conflicts risk bringing world order to collapse, Vladimir Putin told the annual Valdai Club in the Black Sea resort of Sochi. The Cold War’s “victors” are dismantling established international laws and relations, while the global security system has become weak and deformed, with the U.S. acting like the “nouveau riche” as global leader, he said. “The Cold War has ended,” Putin said. “But it ended without peace being achieved, without clear and transparent agreements on the new rules and standards.” Russia has clashed with the U.S. over conflicts from Syria to Ukraine, sending relations between the two countries to levels not seen since Soviet times. Putin, whose nation is on the brink of recession because of U.S. and European sanctions over Ukraine, also offered asylum to fugitive American government intelligence contractor Edward Snowden in 2013.

“Global anarchy” will grow unless clear mechanisms are established for resolving crises, Putin told the invited group of foreign and Russian academics and analysts. The U.S.’s “self-appointed” leadership has brought no good for other nations and a unipolar world amounts to a dictatorship, he said. “The United States does not seek confrontation with Russia, but we cannot and will not compromise on the principles on which security in Europe and North America rests,” State Department spokeswoman Jen Psaki said in response today in Washington. Psaki said the U.S. was committed to upholding Ukraine’s sovereignty and territorial integrity while continuing to cooperate with Russia on other issues, including destroying nuclear stockpiles and Syria’s chemical weapons cache.

“Our focus is on continuing to engage with Russia on areas of mutual concern, and we’re hopeful that we’ll be able to continue to do that,” Psaki said, “while we still certainly have disagreements on some issues.” Putin also attacked globalization, which he said has “disillusioned” many countries and risks hurting trust in the U.S. and its allies. More nations are trying to escape dependence on the dollar as a reserve currency by forming alternative financial systems, according to the Russian leader. Russia doesn’t want to restore its empire or have a special place in the world, Putin said. While it’s not seeking superpower status in international relations, it wants its interests to be respected, he said.

Progress!

• NPR Slashes Number Of Environment Reporters To One Part-Timer (HuffPo)

National Public Radio is down to just one environment reporter, and he’s only covering the beat part time, InsideClimate News reported Friday. As of early 2014, NPR had three reporters and an editor on the environment beat. Now they have one person, science reporter Christopher Joyce, holding down coverage of the issue, and his stories span a broad range of issues beyond the environment. The other three environment staffers have left NPR or moved to other beats. While other reporters could, of course, fill in with environment coverage, as needed, InsideClimate’s analysis of NPR’s archives finds that the number of environment stories has declined:

The number of content pieces tagged “environment” that NPR publishes (which include things like Q&As and breaking news snippets) has declined since January, according to an analysis by InsideClimate News, dropping from the low 60s to mid-40s every month. A year-to-year comparison shows that the outlet published 68 environment stories in September 2013 and 43 in September 2014. Last month, about 40% of that content was climate-related due to NPR’s cities project, as well as the media-intensive People’s Climate March and the UN climate summit in New York City. The rest was a mix of stories on agriculture and food, land conservation, wildlife, pollution and global health.

Key line: “90,122 deaths in Montserrado alone by Dec. 15. Of these, the authors estimate 42,669 cases and 27,175 deaths will have been reported by that time.” Less than a third of deaths to be reported.

• Ebola Epidemic In Africa To Explode Without Rapid, Substantial Aid (Lancet)

The Ebola virus disease epidemic already devastating swaths of West Africa will likely get far worse in the coming weeks and months unless international commitments are significantly and immediately increased, new research led by Yale researchers predicts. The findings are published in the Oct. 24 issue of The Lancet Infectious Diseases. A team of seven scientists from Yale’s Schools of Public Health and Medicine and the Ministry of Health and Social Welfare in Liberia developed a mathematical transmission model of the viral disease and applied it to Liberia’s most populous county, Montserrado, an area already hard hit. The researchers determined that tens of thousands of new Ebola cases — and deaths — are likely by Dec. 15 if the epidemic continues on its present course. “Our predictions highlight the rapidly closing window of opportunity for controlling the outbreak and averting a catastrophic toll of new Ebola cases and deaths in the coming months,” said Alison Galvani, professor of epidemiology at the School of Public Health and the paper’s senior author.

“Although we might still be within the midst of what will ultimately be viewed as the early phase of the current outbreak, the possibility of averting calamitous repercussions from an initially delayed and insufficient response is quickly eroding.” The model developed by Galvani and colleagues projects as many as 170,996 total reported and unreported cases of the disease, representing 12% of the overall population of some 1.38 million people, and 90,122 deaths in Montserrado alone by Dec. 15. Of these, the authors estimate 42,669 cases and 27,175 deaths will have been reported by that time.

Much of this suffering — some 97,940 cases of the disease — could be averted if the international community steps up control measures immediately, starting Oct. 31, the model predicts. This would require additional Ebola treatment center beds, a fivefold increase in the speed with which cases are detected, and allocation of protective kits to households of patients awaiting treatment center admission. The study predicts that, at best, just over half as many cases (53,957) can be averted if the interventions are delayed to Nov. 15. Had all of these measures been in place by Oct. 15, the model calculates that 137,432 cases in Montserrado could have been avoided. There have been approximately 9,000 reported cases and 4,500 deaths from the disease in Liberia, Sierra Leone, and Guinea since the latest outbreak began with a case in a toddler in rural Guinea in December 2013.

Reality is likely three times worse here as well.

• ‘Official’ Number of Ebola Cases Passes 10,000, With 5,000 Deaths (BBC)

The number of cases in the Ebola outbreak has exceeded 10,000, with 4,922 deaths, the World Health Organization says in its latest report. Only 27 of the cases have occurred outside the three worst-hit countries, Sierra Leone, Liberia and Guinea. Those three countries account for all but 10 of the fatalities. Mali became the latest nation to record a death, a two-year-old girl. More than 40 people known to have come into contact with her have been quarantined. The latest WHO situation report says that Liberia remains the worst affected country, with 2,705 deaths. Sierra Leone has had 1,281 fatalities and there have been 926 in Guinea.

Nigeria has recorded eight deaths and there has been one in Mali and one in the United States. The WHO said the number of cases was now 10,141 but that the figure could be much higher, as many families were keeping relatives at home rather than taking them to treatment centres. It said many of the centres were overcrowded. And the latest report also shows no change in the number of cases and deaths in Liberia from the WHO’s previous report, three days ago.