From Bloomberg:
Commodities did spectacularly well from winter 08-09 to winter 09-10. Many tripled in price, such as oil, copper and palladium. The world seemed convinced that another great phase of inflation was underway or would start real soon now.
The reality is that demand is anemic and that there has been little or no economic growth. The [...]
Just when you thought your respect for economics PhDs couldn’t get any lower, a professor at the top-ranked University of Chicago, Casey Mulligan, is making the case in the New York Times that there was no bubble in housing:
Adjusted for inflation, residential property values were still higher at the end of 2009 than 10 years ago. This [...]
Forget the middlemen - the real criminals are those who betray their oaths of office.
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Via the Motley Fool, here is an email from someone inside John Paulson’s hedge fund:
It is true that the market is not pricing the subprime RMBS [residential mortgage-backed securities] wipeout scenario. In my opinion this situation is due to the fact [...]
Eric King always does a good interview, and Bill Laggner is a hedge fund manager (Bearing Fund, LP) who has been on top of the credit bubble and bust. He comes at things from an Austrian perspective.
Listen here.
Some take-aways:
- People of wealth around the world have lost faith in their respective governments.
- There is a [...]
From the National Times:
WHEN house prices soar, you can hear the silent cheering all around you. Most of us own homes, so rising prices increase our notional wealth. They mean someone else will have to pay us more in future to buy our homes.
Market analysts and the media bombard us with data on what are [...]
Prophet.net
As in financials, my preference is to short the ultralong, which will very likely fall by 90% IMO:
City and state government workers were huge beneficiaries of the boom years, since not only did their houses appreciate by double digit rates, so did their salaries. Since taxes are based on home values, the bubble meant that government got just as bloated as the real estate market. Now that homes are worth less, it [...]
Mortgages are still cheap, if you can get them. The spread over 30-year T-bonds has fallen to record lows, at just 0.2%.
St. Louis Fed
This spread is unsustainable and will be corrected by falling bond yields (rising prices) and/or rising mortgage rates. It is possible that mortgage rates fall still lower, but the spread must widen [...]
Thanks to Pej for finding this:
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Chanos relays a great quote from Milton Friedman: He was brought to watch the Chinese built a canal, and when he asked why they were using shovels and not bulldozers, he was told that machinery was being eschewed in order to create more jobs. Friedman replied with something like, “Oh, [...]