1 China’s different sort of housing bubble (Noah Smith in Gulf News) Right now, much of the world is in danger from a potential recession in China. China, which still is the biggest contributor to global growth, has been looking shaky for a couple of years now. Growth is down from insanely fast to moderately fast.
It’s the housing sector that will really make or break the country’s economic destiny. Prices fell in 2014 and early 2015, and it looked as if the long-promised Chinese housing crash had finally arrived. If a true crash ever does come, it may well be catastrophic. China doesn’t have well-developed stock markets, so households save a lot of their money, directly or indirectly, in housing and land. Much of the economy itself is based on real-estate development.
Some economists interpret the housing boom as a bubble. Kaiji Chen and Yi Wen of the Federal Reserve Bank of St Louis have a model in which demand for housing as a savings vehicle kicks off expectations of rising prices that then become a self-fulfilling prophecy.
Some other papers take a more agnostic view. Jing Wu, Joseph Gyourko and Yongheng Deng, for example, note that price-to-rent ratios are very high, meaning that small downward revisions in growth expectations could cause prices to fall a lot.
Homebuyers may not be borrowing like crazy, but real-estate developers and many other companies have. If slowing economic growth causes households to pull back on their housing purchases, it could be companies, and the banks that lend to them, that are on the hook. Even if the housing market isn’t a true bubble, a downturn could still wreak a lot of damage on the Chinese economy — and on all the economies around the world that are dependent on China.
2 Disney breaks record, takes $7bn in a year (Mark Sweney in The Guardian) Disney has become the first film studio to take $7bn in global ticket sales in a year, with Star Wars spin-off Rogue One joining the hit factory production line alongside Marvel superheroes and animated children’s movies.
With Rogue One: A Star Wars Story, the spin-off tale of the mission to steal the plans for the Death Star, taking almost $300m globally on its opening weekend, Disney has easily shot past the previous $6.9bn annual ticket sales record set by rival Universal last year with hits including Jurassic World and Furious 7.
With almost two weeks of the year left, the momentum generated by the most famous sci-fi franchise in the world and the popularity of the studio’s animated film Moana ($282m and counting) is likely to push Disney’s overall takings closer to $8bn.
Disney has already released the four top-grossing films of the year so far with Captain America: Civil War, Finding Dory and Zootopia taking more than $1bn at the global box office, while a live-action version of The Jungle Book fell just short. Doctor Strange, starring Benedict Cumberbatch, released in November, has made more than $650m to date.
The record haul is the crowning achievement of a decade long strategy to reinvigorate Disney’s film division by buying up blockbuster franchises, characters and talent. In 2006, Disney spent $7.4bn buying Apple founder Steve Jobs’ Pixar, the hit factory behind Finding Nemo, its sequel Finding Dory, Toy Story and The Incredibles, to help revive its once proud tradition of producing hit animated films.
This was followed in 2009 by the surprise $4bn purchase of Marvel Comics’ superhero universe, bringing in characters including X-Men, Iron Man and Captain America, which took Disney into new live action territory. The third transformational deal was snapping up George Lucas’ Lucasfilm, maker of Star Wars and the Indiana Jones franchises, in a $4bn deal in 2012, with a plan to vastly expand the sci-fi franchise starting with 2015’s The Force Awakens.
3 Balochistan rebels protect rare birds from Gulf royals (BBC) Suspected rebels have attacked a hunting party of Gulf royals in the Pakistani province of Balochistan. The gunmen let the men off with a warning not to hunt in the area, after firing bullets into their vehicle, officials said.
Hundreds protested in Balochistan on Tuesday against Arab hunting parties, which travel to Pakistan every year. Farmers say the hunts endanger the birds and damage crops. Pakistan issues dozens of permits every winter to the royal families of the Middle East to hunt rare Houbara bustards in its southern plains. The princes and their wealthy friends consider the bird’s meat to be an aphrodisiac.
The Supreme Court lifted a ban on hunting the birds earlier this year, after the government argued it helped build diplomatic relationships with Arab dignitaries. The shooting incident happened in the remote hilly tracts in Gichk area, some 90km south of Panjgur.
The Balochistan Liberation Front (BLF) said it carried out the attack. “Our fighters let the sheikhs go unharmed in view of our ancient mutual links and values and in the hope that in future they won’t obtain lease of any area of Balochistan for hunting from the occupying country, Pakistan,” a statement said.