Home » Posts tagged 'asset bubble' (Page 2)
Tag Archives: asset bubble
There’s No Upside Left
There’s No Upside Left
The upside is ephemeral, illusory or wishful thinking; the downside is real and lasting.
There’s no upside left–not just in the real economy, but in jobs, politics or policy tweaks. Yes, there will be huge relief rallies in the stock market–relief that the Fed is still omnipotent, that the Fed didn’t destroy the world by withdrawing liquidity, etc., etc., etc.–but in terms of sales and profits, there’s no upside left: an increasingly nervous upper middle class is reining in profligate spending, while everyone below the top 10% is running out of credit cards, student loans, etc. to tap.
Whatever surplus the real economy generated has been skimmed by financiers, lenders and the central state. Stock buybacks have boosted the wealth of corporate managers and institutional owners while creating zero jobs; lenders have feasted on high-interest credit cards, federally backed student loans and subprime auto loans that are immediately spun off to credulous suckers (Widows and Orphans Fund of Norway, et al.) as high-yield securitized debt.
Anyone working for Corporate America or government has little upside but plenty of downside: bonuses are being slashed, divisions closed, sold off or privatized in the case of government, all to cut costs.
State and local pension funds, bloated by seven years of speculative frenzy, are about to start bleeding from every orifice as reality and risk intrude on the central banks’ fantasy of never-ending asset bubbles.
Whatever pension and bennies you were promised–start practicing your fractions, because only a fraction of the bloated promises made by politicos desperate to get re-elected can be paid in the real world.
Doing a great job will either get you fired or overworked: no upside there. If you have the courage (or foolish devotion to truth) to be honest, then you’ll be fired as a disruptive “non-team-player” who stepped on too many toes in the pursuit of excellence.
…click on the above link to read the rest of the article…
How Insane Is Canada’s Housing Bubble? 42% of “Second-Time” Buyers Need (a lot of) Money from Mom & Dad to Buy a Home
How Insane Is Canada’s Housing Bubble? 42% of “Second-Time” Buyers Need (a lot of) Money from Mom & Dad to Buy a Home
A housing bubble is a huge party. Everyone gets drunk and has a good time. The economy booms because housing, particularly construction, is a very local business. It creates local jobs. People spend this money. Businesses get this money. Governments exact their pound of flesh. But there is a drawback to a housing bubble, beyond the fact that it will eventually crash with terrible consequences: New entrants into the market are getting locked out by soaring prices.
Canada’s housing bubble has been a sight to behold. Home prices only dipped 8% when the US housing market crashed. Then it re-soared. Now, across the country, home prices are 26% higher than they were at the already crazy peak in 2008. In Toronto, they’re 42% higher! Prices in the major urban centers where young people like to live have become a challenge for first-time buyers.
First-time buyers are special. One, they’re the foundation of a healthy housing market; they represent growth. And two, they don’t benefit from any run-up in home prices. Current homeowners profit from the housing bubble by owning a home that has gotten pricier. When they move, they sell an overpriced home, which soothes the pain of buying another overpriced home. But first-time buyers feel the full brunt of the bubble price.
So the Bank of Montreal (BMO), in its Home Buying Report, determined just how difficult it’s getting in Canada. The survey found that 42% of the potential first-time buyers, those hardy folks that haven’t been discouraged by the soaring prices, expect to recruit the help of mom and dad, and in a big way.
To begin with, which is not a good sign, first-time buyers whittled down their budget by C$3,400 on average from last year to C$312,700 (US$259,000).
…click on the above link to read the rest of the article…
The Federal Reserve Has Declared the Winner in the Generational Financial War
The Federal Reserve Has Declared the Winner in the Generational Financial War
The policy of safeguarding Boomer benefits with asset bubbles will lead to the destruction of the unprepared, the unwary and those who foolishly trusted our “leadership” and central bank to tell them the truth.
Though it is exceedingly politically incorrect to mention it publicly, a financial war between the generations is being fought in the U.S. and every other developed nation that has promised social welfare benefits to its burgeoning class of retirees.
The war is being fought on multiple fronts: political promises, interest rates, housing, central bank policies and official rates of inflation, to name a few of the top battlefields.
Though no one in power will state this publicly, the Federal Reserve has already declared the winner of the generational war: the Baby Boomers won and Gen-X and Gen-Y lost. Fed policies insure the Boomers will benefit from financial bubbles inflated by the Fed, and the following generations will lose–not just this year or next year, but for decades to come.
Any nation that offers its retirees social welfare benefits (pensions and healthcare) faces a no-win demographic crunch: the number of retiring people entering the class of beneficiaries far exceeds the number of additional full-time jobs being created. In other words, it’s not just a matter of having enough young people to support the rapidly expanding cohort of retirees–there must be enough good-paying full-time jobs for the young people so they can pay high taxes to fund the retirees’ benefits and support their own consumption/saving.
…click on the above link to read the rest of the article…
Burst Chinese Housing Bubble Leads To First Annual Price Decline Since 2012; Prices Drop In Record 69 Cities | Zero Hedge
It has been over six months since the Chinese housing bubble has popped. What’s worse, as overnight housing numbers out of China confirmed, the government has so far failed to contain the fallout, and according to the National Bureau of Statistics, which is anything but, after a fifth straight monthly decline, Chinese home prices have now wiped out all price gains in the past year. This was immediately spun as bullish by media outlets and sellside experts as “raising expectations the government will have to implement more economic support measures to cushion the blow.” I.e., buy stocks because central banks will push risk prices artificially higher yet again. In other words, bad is still good and failure continues to be success.
According to the NBS, average home prices in 70 major Chinese cities were down 1.3% in September from a year earlier, the first such drop since November 2012.
