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They Said I Had Bagged A Golden Opportunity, Now They Are All Full Of Sympathy

A weekend topic starting with the Times of London. “Unaffordable property prices are down to Britain’s ‘broken housing market,’to use Sajid Javid’s words as housing secretary in 2017. The chancellor was referring to the undersupply of new homes, and he was not alone in his analysis. Most people accept that Britain is failing to build enough, including the Bank of England.”

“Yet it turns out we’ve been wrong. Skyrocketing prices, which have risen 60 per cent above inflation since 2000, have more to do with the Bank than the builders. That’s the Bank’s own finding, published on its Bank Underground blog, where it posts research that officials believe is worth airing.”

“The analysis, using housing data for England and Wales, could not have been clearer. ‘We find that the rise in real house prices since 2000 can be explained almost entirely by lower interest rates,’ the authors write. ‘Increasing scarcity of housing has played a negligible role.'”

“But what about the ‘chronic shortage’? Ian Mulheirn, chief economist of Renewing the Centre at the Tony Blair Institute for Global Change, says there isn’t one. Official figures show that since 1996 English housing ‘ stock has grown by 168,000 per year, while household numbers ‘increased by 147,000. We have a surplus of 1.1 million homes now, he’ estimates. Amended figures suggest that England needs only 160,000 homes’ a year, not the 250,000 in Mr Javid’s 2017 white paper.”

“The Bank cannot be blamed for this price escalator effect. The cause has been near-zero rates and quantitative easing globally, which have pushed borrowing costs down everywhere, as well as fierce competition in the British mortgage market. Nor can it claim innocence. Its own analysis shows that central bank policies are driving up house prices, as it knew in 2014 when, on tightening the mortgage rules, it said that low rates pose ‘risks to housing markets.'”

From Malaysia Kini. “The National House Buyers Association (HBA) has cautioned that Housing and Local Government Minister Zuraida Kamaruddin’s proposal to market RM100 billion worth of unsold high-end properties to buyers from China could have unintended consequences. HBA honorary secretary-general Chang Kim Loong said developers who are not able to sell their high-end properties are reaping the consequence of not building what the Malaysian market needs.”

“He said helping developers to market them to China buyers could encourage them to continue with such behaviour. ‘Market forces are now punishing these developers resulting in a large overhang of unsold high-end properties, and hopefully this will force developers to build more affordable properties in the future. However, if the government suddenly wants to market these unsold overhang high-end properties to foreign buyers from China and Hong Kong, this will only encourage developers to continue building more high-end properties in the future and even abandon or shun building affordable properties altogether,’ he said.”

From Kuensel Online. “Lack of an independent property valuation authority and limited investment avenues, a huge demand for real estate has been created in the economy, leading to skyrocketing prices of land and buildings, especially in urban centres. This demand has drawn majority of investment from the public since investors see real estate as a long-term investment, hereditary of a sort. This is an innate Bhutanese trait that places inheritance, as rights.”

“However, in the banking sector, this special interest in the real estate has put pressure on the trade balance and INR reserve. Some even anticipate a housing bubble. The Deputy Governor of Royal Monetary Authority (RMA), Yangchen Tshogyel, however, said she was not sure whether there is a bubble at all or when it will burst. She said that limited alternatives for investors and the nature of real estate in Bhutan could have fuelled his trend.”

“The risk becomes higher when there are short supplies of tenants and owners are not able to generate the required income to repay the loan. ‘The central bank has to address the issues by enhancing the capacity expertise and standardising valuation,’ Yangchen Tshogyel said. ‘Entrepreneurship and Cottage and Small Industry should serve as a tool for diversification. The focus is on the young population. What we need is not a reform from the government but revolution,’ she said.”

The Times of India. “Amaravati, the new capital proposed for Andhra Pradesh, is on shaky ground. Silence cloaks construction activities that screeched to a halt after elections. Hotels and restaurants are running empty, new houses look haunted, auto showrooms have no buyers. It’s as if time itself has stopped.”

When Naidu made public the location of the new state capital in 2014, land prices skyrocketed. Prosperity and investments swept the region. Today there’s hopelessness all around. Farmers want to return to agriculture but large-scale construction in the last four years has turned fertile lands barren. Farmers who had become landlords are today saddled with a stock of empty houses. About 70% of the living quarters in the capital’s ‘villages’ are vacant.”

“The prices have fallen steeply, almost to half. The state’s housing project Happy Nest — multi-storied, posh — has gone from class investment for the non-resident Telugu diaspora to a loss-making venture. It was a matter of record, and pride, when all 1,200 expensive flats were booked within minutes of opening. Satish Dhawan from Hyderabad was one of those who had booked a flat in Happy Nest.”

“‘Everyone called me up and congratulated me,’ he told TOI. ‘They said I had bagged a golden opportunity. Now they are all full of sympathy for me.'”

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This Post Has 105 Comments

  1. ‘The analysis, using housing data for England and Wales, could not have been clearer. ‘We find that the rise in real house prices since 2000 can be explained almost entirely by lower interest rates,’ the authors write. ‘Increasing scarcity of housing has played a negligible role’

    ‘But what about the ‘chronic shortage’? Ian Mulheirn, chief economist of Renewing the Centre at the Tony Blair Institute for Global Change, says there isn’t one. ..We have a surplus of 1.1 million homes now, he’ estimates’

    The shortage crap was a load of hooey all along, and they knew it.

    ‘Farmers who had become landlords are today saddled with a stock of empty houses. About 70% of the living quarters in the capital’s ‘villages’ are vacant’

    Check out the photos.

        1. CalPERS Commits More than $3 Billion to Real Estate

          ‘The California Public Employees’ Retirement System (CalPERS) has committed more than $3 billion to its $42.1 billion real assets investment class, shows a report to be presented to its investment committee today. The new real estate commitments are part of CalPERS’s continuing commitment to core real estate assets with moderate leverage, which CalPERS put renewed emphasis on after it lost around $11 billion on real estate during the great financial crisis.’

          https://www.ai-cio.com/news/calpers-commits-3-billion-real-estate/

          2. “… CalPER$ put renewed emphasis on after it lo$t around $11 billion on real e$tate during the great financial cri$i$”

            Well, $ound’s like they have a good chance of knot losing -8 billion$ due to HBB ll!

            Progre$$!

  2. ‘Market forces are now punishing these developers resulting in a large overhang of unsold high-end properties, and hopefully this will force developers to build more affordable properties in the future. However, if the government suddenly wants to market these unsold overhang high-end properties to foreign buyers from China and Hong Kong, this will only encourage developers to continue building more high-end properties in the future and even abandon or shun building affordable properties altogether’

    When people say, “They” will keep prices from falling they are ignoring supply and demand. The reason we got way too much luxury right now is prices are too high. The slaughter going on in New York City right now is where it goes if encouraged long enough. That bust is gonna leave a multi-billion dollar mark on development there for decades.

    Same with London, Sydney, Vancouver, Miami Beach, etc. Nothing can stop prices from falling when you got way too much of what almost no one can afford.

  3. Crude price surged more than 10% at the opening. Reminder: the Fed can’t print oil. Will this be a short-lived spike, or the beginning of something more serious?

      1. Earth Is An Oil-Producing Machine — We’re Not Running Out

        KERRY JACKSON
        11/04/2015

        “Thanks to investment into supercomputers, robotics and the use of chemicals to extract the maximum from available reservoirs, the accessible oil and gas reserves will almost double by 2050,” Engineering and Technology said.

        A BP official told the magazine that “energy resources are plentiful. Concerns over running out of oil and gas have disappeared.”

        Things are so good, in fact, that Engineering and Technology says “with the use of the innovative technologies, available fossil fuel resources could increase from the current 2.9 trillion barrels of oil equivalent to 4.8 trillion by 2050, which is almost twice as much as the projected global demand.” That number could even reach 7.5 trillion barrels if technology and exploration techniques advance even faster.

        This information backs up the idea that Earth is actually an oil-producing machine. We call energy sources such as crude oil and natural gas fossil fuels based on the assumption that they are the products of decaying organisms, maybe even dinosaurs themselves. But the label is a misnomer. Research from the last decade found that hydrocarbons are synthesized abiotically.

        In other words, as Science magazine has reported, the “data imply that hydrocarbons are produced chemically” from carbon found in Earth’s mantle. Nature magazine calls the product of this process an “unexpected bounty ” of “natural gas and the building blocks of oil products.”

        So don’t feel guilty about exploiting this “bounty.” There seems to be plenty to go around — and there will probably still be a lot left when technology, not hurried by government mandates and subsidies but guided by market forces, produces practical and affordable renewable energy.

        https://www.investors.com/politics/commentary/we-are-not-running-out-of-oil-earth-produces-crude/

    2. beginning of something more serious?

      Like a lot of bombs being dropped on those not responsible?

      There are no pictures of supposed drones. No reports on exactly what the damage was. It’s not like a refinery blew up. Nobody was even injured. No discussion of what kind of bottleneck a crude desulfurization unit (sweetener) is to the overall delivery chain. Little reassurance of the Saudi’s huge overcapacity and product storage. If there is just a broken pipe that welders can fix in 24 hours what’s the big deal.

      Plenty of talk of bombing Iran. Talk of the US opening its strategic reserve.

      1. I posted earlier today on FB with this question: If we are a net exporter now what do we care? Why not sit back and let the Saudis take care of themselves and just enjoy the extra money from selling oil? That’s what the Saudis always did when the situation was reversed…

    3. Due to its aging fields the Saudis were forced to produce oil from fields where the oil has a high sulfur content called sour oil in the trade. Without the equipment to reduce the sulfur the oil is rather useless since it is highly corrosive. This may or may not be huge depending on how long it takes to repair the equipment. Reports are that a third of the lost capacity will be back on line by the end of Monday. That means that there will still be nearly three and half million barrels of crude offline. There is no where near that in spare capacity in the world.

      1. may or may not be huge

        De-Sulfurization is not very complex. I ran one of these units at the refinery as a summer student job. This is kind of like thinking the world is going to end because a pipe burst in your garage.

        1. You’re missing the larger point. Somebody launched a large-scale drone attack that knocked out one of the world’s largest production facilities. This might not be a one-off, and Saudi Arabia (and the U.S.) might feel a need to respond to an attack of that magnitude. Which could cause things to escalate into a larger regional conflict. Which means the 30% of the world’s oil that flows through the Straits of Hormuz might stop flowing. Which would have all kinds of knock-on effects.

          1. ‘Somebody launched a large-scale drone attack that knocked out one of the world’s largest production facilities’

            That stinks to high heaven. Note the media gobbled it up without question.

          2. You’re missing the larger point.

            I’m trying not to.

            a large-scale drone attack

            What is “large scale”? The Saudis say it was a drone attack. Do we really know any details? Do they ever lie? I know how easy it is to have a fire due to operator error. Is that a possibility, with a cover story? Large scale, so where are the pictures of the failed drones and the children?

            the U.S.) might feel a need to respond to an attack of that magnitude

            Really? What magnitude was it? There was not a single injury in Saudi Arabia. How many civilians do you want to kill in Iran or Yemen? Why do you want to kill people over your gasoline going up 25c for a week anyway?

            Which means the 30% of the world’s oil that flows through the Straits of Hormuz might stop flowing.

            Oh, TEOLAWKI! Because of tiny drones. More powerful than rockets or stealth bombers!

            The big picture is war with Iran, and what it takes to persuade media crazed Americans to jump in. Please resist the temptation.

          3. The big picture is war with Iran, and what it takes to persuade media crazed Americans to jump in. Please resist the temptation.

            Well said Blue.

          4. If you tell a lie big enough and keep repeating It, people will eventually come to believe It. The lie can be maintained only for such time as the State can shield the people from the political, economic and/or military consequences of the lie. It thus becomes vitally important for the State to use all of its powers to repress dissent, for the truth is the mortal enemy of the lie, and thus by extension, the truth is the greatest enemy of the State. — Joseph Goebbels

          5. “…the truth is the greatest enemy of the State.”

            Substitute ‘people’ for ‘State’ to get a similar statement that resonates more strongly with our times.

          6. Beat! Beat! Drums!
            By Walt Whitman
            Beat! beat! drums!—blow! bugles! blow!
            Through the windows—through doors—burst like a ruthless force,
            Into the solemn church, and scatter the congregation,
            Into the school where the scholar is studying,
            Leave not the bridegroom quiet—no happiness must he have now with his bride,
            Nor the peaceful farmer any peace, ploughing his field or gathering his grain,
            So fierce you whirr and pound you drums—so shrill you bugles blow.
            …

          8. “You’re mi$$ing the larger point.”

            Good thing there’$ no profit$ to bee realized from $uch behavior$!

      1. Is 20% alot?

        Oil
        Oil prices soar after attacks halve Saudi output
        Brent crude spikes as much as 20% in biggest percentage move since 1990 Kuwait invasion
        This image provided on Sunday, Sept. 15, 2019, by the U.S. government and DigitalGlobe and annotated by the source, shows damage to the infrastructure at Saudi Aramco’s Abaqaiq oil processing facility in Buqyaq, Saudi Arabia. The drone attack Saturday on Saudi Arabia’s Abqaiq plant and its Khurais oil field led to the interruption of an estimated 5.7 million barrels of the kingdom’s crude oil production per day, equivalent to more than 5% of the world’s daily supply. (U.S. government/Digital Globe via AP)
        Damage to the infrastructure at Saudi Aramco’s Abaqaiq oil facility in Buqyaq, in an image provided by the US government and DigitalGlobe © AP
        David Sheppard and Anjli Raval in London and Hudson Lockett in Hong Kong 2 hours ago

        Oil prices rose as much as 20 per cent to above $71.00 a barrel — the biggest percentage spike in almost three decades — as markets reopened after an attack on Saudi Arabia’s oil infrastructure at the weekend cut more than half the country’s production.

        The rally, which followed news that Saudi Arabia’s oil production is expected to be well below maximum capacity for weeks, set oil on course for one of its biggest one-day gains as traders worried over the extent of the outage.

        Brent crude oil, the international benchmark, gained almost $12 to trade as high as $71.95 a barrel, before easing back to $65.21 in the European morning, still up by 8.5 per cent. The US benchmark, West Texas Intermediate, was up by as much as 16 per cent to $63.64 a barrel before paring back these gains to $59.25 or 8 per cent up.
        …

        2. It was an oil shock that precipitated the Great Recession as I recall. Yes of course it was a housing bubble, but the spike in oil was the jolt that exposed the shenanigans when it got over $100+/barrel.

          1. $147 oil, when the US was producing 5.5 million barrels a day, now we produce around 12.5. I said about a year ago with today’s production $100 a barrel is positive for the US economy. Ironically, it was you that confirmed my hunch with an article in the Economist magazine which had confirming research. Obama’s best years were when oil was above $100 a barrel and production was much less than now.

          3. China is the big loser. Take for example the steel it tries to dump in the US and other countriesto pay for those steel plants it borrowed money to build. It imports the iron ore and met coal from Australia. Higher oil prices mean higher shipping costs. After it produced the steel, it has higher shipping costs to the US. Then, the steel has to be shipped across the US to the real demand centers car production plants, oil drilling sites etc. Higher oil prices raise the cost per mile of that a good needs to be shipped Much better if the steel is made closer to the end user. Just one example but it applies to all goods and the bigger and heavier the higher the cost.

          4. I said about a year ago with today’s production $100 a barrel is positive for the US economy. Ironically, it was you that confirmed my hunch with an article in the Economist magazine which had confirming research.

            Yes, we do agree on that point. I think now is a bit different than 2008. But history may rhyme. US consumers are back with their trucks and SUVs, and high gas prices would hurt consumption.

            With regards to oil price and the US economy, I think there is a sweet spot for oil in the US, because the US is now the world’s largest supplier. But I think once prices get too far above $100/barrel, the drag on consumption and logistics outweighs the boost given to the oil production and related industries.

            From WSJ article “Cheaper Oil Isn’t the Boon It Used to Be”:

            “Economic data from the last big downturn in oil prices reflect the new dynamic. Months after oil prices began falling from their mid-2014 peak of $105 a barrel, drilling slowed. By late 2016, private investment in oil and natural gas exploration and wells had fallen by two-thirds, and the oil-and-gas industry had shed nearly 190,000 jobs.”

            “The negative effects of the price downturn were most acute in oil-producing regions like Texas and North Dakota, but national measures of business investment slowed, too, and overall expansion of GDP sputtered.”

            “It’s still difficult to map the complete footprint of oil in the U.S. economy. The Bureau of Economic Analysis estimates business investment in petroleum and natural gas structures at $137.48 billion annually. While that’s less than half of what consumers spend on gasoline and motor fuel—$324.51 billion—it includes none of the homes, hospitals and strip malls that pop up in regions that pump oil.”

  4. Well, that and a lower of lending standards and government guaranteeing loans…

    #######

    “We find that the rise in real house prices since 2000 can be explained almost entirely by lower interest rates,’ the authors write. ‘Increasing scarcity of housing has played a negligible role.’”

    2. If oil got above $100 a barrel it would hurt the US, I do believe But any rise less than that is just going to make shale and all the related industries boom. The related industries include steel pipe. Of course those oil workers will be buying deluxe trucks because they can. Probably lots of RV’s to live in too.

      1. I agree with you Dan. I think oil will be self-limiting this time because when it gets high enough, a certain small segment of the population will opt for an EV, which will take some of the demand out of the equation. I think US oil production could conceivably keep oil prices within a slightly elevated range for a good amount of time.

  5. Something interesting I happened to run across. It has to do with the availability of natural gas, or rather, the unavailability of natural gas to Holyoke, Mass …

    Natural Gas Service Notice | Holyoke Gas & Electric, Holyoke, MA
    https://www.hged.com/news/articles/2019%20News/natural-gas-service-notice.aspx

    (snip, snip, snip)

    “Natural Gas Service Notice
    January 28, 2019:
    Moratorium on New Natural Gas Service
    HG&E natural gas customers are served by Tennessee Gas Pipeline’s Northampton Lateral, which has become severely constrained due to a dramatic increase in demand over the last two decades. Unfortunately, there has been no corresponding increase in pipeline capacity to deliver additional supply to the region.”

    Oh? And why is that?

    “Both Berkshire Gas and Columbia Gas of Massachusetts (CMA), which are also served by the Northampton Lateral, have had moratoriums on new gas services since as early as 2014. Over the last several years, HG&E’s load has grown significantly and is now operating at capacity during peak periods. As a result, HG&E is forced to impose a moratorium on new natural gas connections until the capacity issue is addressed.

    “As of January 2019, HG&E is unable to accommodate new natural gas service requests due to the lack of natural gas availability in the region. Customers can make improvements to their existing gas service (i.e. replace a gas furnace, gas stove, or gas hot water heater), so long as the load profile does not increase and the service was active as of December 31, 2018. HG&E may be able to accommodate certain commercial and industrial requests; depending on the specific load profile, and the ability for those new customers to utilize dual fuel during peak periods, on HG&E’s interruptible rate.

    “The Economic & Environmental Impact
    While inexpensive natural gas has never been more plentiful in the United States, there is insufficient pipeline capacity in our region to deliver additional load.”

    Well that is certainly interesting. Just why is that?

    “Recent proposals that would increase natural gas capacity in the region have been met with opposition, and the current pipeline constraints are causing significant adverse environmental and economic impacts on the region’s ratepayers.”

    Oh. Please tell me more about these restraints.

    “With the retirement of many coal-fired electric plants and several nuclear generators, New England has become more dependent on natural gas to provide the region’s electricity. Natural gas emits approximately 50% less carbon dioxide than coal and oil.”

    Wow. Something good thing to report for a change. Please continue …

    “During peak demand periods, due to the lack of natural gas, more electric generators are forced to switch to oil, while coal generators are called upon to operate, causing significant spikes in greenhouse gas emissions.”

    Bummer!

    “ISO New England reported that during a 15-day cold spell in January 2018, over two million barrels of oil were burned to generate electricity due to the lack of natural gas, more than the total amount of oil burned in 2017.”

    A big bummer!

    “In addition to increased emissions, the lack of natural gas has a significant impact on energy costs throughout New England. At times during the 2018 cold spell, the spot price for natural gas in the northeast reached over $100 per dekatherm (dth), compared to an average of less than $7/dth in other areas of the country.”

    This is the biggest bummer of them all!

    “These price spikes translated to approximately $700 million increase in energy costs for New England ratepayers compared to the prior year.”

    Damn, I hate that!

    “HG&E’s Natural Gas Future
    After evaluating several options, HG&E has identified a solution that involves a cooperative effort with CMA. The plan requires CMA to obtain certain approvals for system upgrades in other communities, HG&E is working with CMA to determine the viability of those approvals. This solution will address local capacity issues, which will help reduce regional carbon emissions, improve reliability, and support local economic development.

    “If you are interested in natural gas service in the future, please visit complete the Natural Gas Service Interest Form. HG&E will review new service interest and requests as soon as the capacity issue is adequately addressed.”

    1. And the wacko environmentalists and their puppets in governments in the NE won’t allow any new natural gas pipelines to be built…

      Crazy, isn’t it?

        1. PA is not New England, but it is NorthEast. The line between Northeast and Mid-Atlantic has always been a bit blurry. It’s like asking if West Virginia is in the South.

          1. “It’s like asking if West Virginia is in the South.”

            Hehe…probably depends on who you ask, e.g., a cartographer or psychologist.

          2. PA was once described as Philadelphia and Pittsburgh with Alabama in the middle by a political consultant for the Democrats.

          3. A-dan, the same is true of New York State, and any other state. Rural conservatives in the countryside outvoted by the progressives in the cities.

          4. “It’s like asking if West Virginia is in the South.”

            -coal job$ + opiod$ = “things have gone $outh”

            Where is Robert.thee.Bird when ya need him?

  6. “We find that the rise in real house prices since 2000 can be explained almost entirely by lower interest rates,’ the authors write. ‘Increasing scarcity of housing has played a negligible role.’”

    It is very simple, as I said in an earlier thread. A person with a $30,000 income might be able to pay the interest on a $700,000 home if he somehow managed to get the loan by lying etc., if the interest was 3 percent but move the interest rate to 5 percent and there is not enough money even ignoring taxes etc. Very low interest rates encourage speculation and allow incredible leverage.

    1. “Very low interest rates encourage speculation and allow incredible leverage.”

      Prices too! Very low interest rates allow for incredible prices, a good thing! And these incredible prices produces some incredible equity which, incredibly, is interpreted as an incredible increase in wealth, another good thing!

      Why it’s win win win all the way to the bank to suck out some of this incredible wealth so it can be spent spent spent to keep our incredible consumer-based humming along for … for forever!

      For forever or until reality sinks in, whatever happens first.

      1. Economy, to keep our consumer-based ECONOMY humming along.

        (I picked a bad time to give up shooting smack.)

      2. I guess in hindsight, the unexpected consequences of asset bubbles become clearer. In foresight they’re a bit harder to see. And especially for assets which are used to provide a necessity (shelter).

        So what are they?
        1) You have existing asset holders.
        2) Central banks start pumping money into financial sectors, leading to asset inflation of physical and financial assets.
        3) As people see the asset markets rise, they allocate more money to them (deflationary for the rest of the economy)
        4) For housing, people go into greater and greater debt to purchase the asset. Again deflationary.
        5) Resentment builds in outsiders, new entrants against the market barriers of high prices and debt loads.

        So we get deflationary forces and populist/disruptive sentiment as the cost (in some people’s eyes at least). What was the benefit? Enriched asset holders – not really – they’re not able to monetize something like a house as all houses go up in price. Politicians are big winners in housing bubbles due to property tax increases. Also the FIRE sector is a big winner. As far as stocks go, there existing asset holders win big.

        Do low interest rates and asset bubbles create jobs? They coincided with a drop in unemployment, and are certainly credited with creating jobs, but if debt is being used for stock buybacks, not buildout to meet demand (which may or may not exist), then it is again increasing fragility. Hard to say really.

        1. And actually, I think it’s flat out the housing bubble that breeds populist/disruptive tendencies. People also point to runaway medical and education costs but AFAIK, these issues don’t exist in the rest of the world, which is also being swept by populist sentiment. The only common theme the world over is the housing bubble.

          1. “People also point to runaway medical and education costs”

            While people in other countries aren’t facing out of pocket medical expenses, from what I hear the waits for non emergency services keep getting longer and longer. Having to wait years for a hip or knee replacement could make anyone grumpy.

            But yeah, not being able to afford decent shelter is becoming a global problem.

          2. The housing bubble hits the lower income people the hardest. It has, for all intents and purposes, eliminated shelter as an option for many, which is why you see working homeless people now.

          3. “The housing bubble hits the lower income people the hardest.”

            From automation to easy credit, the off-shoring of jobs, natural disasters, opioids, etc., it seems like everything hits the the lower income people the hardest.

        2. “Do low interest rates and asset bubbles create jobs? They coincided with a drop in unemployment, and are certainly credited with creating jobs, but if debt is being used for stock buybacks, not buildout to meet demand (which may or may not exist), then it is again increasing fragility. Hard to say really.”

          Sure asset bubbles contribute to economic stimulus in the short-term, but all fueled by easy/cheap credit/ultra-low rates/etc. The free market has been short-circuited. Kind of like your brain on drugs.

          Problems:
          1) That debt pulls demand forward by borrowing from the future. This is “artificial” growth of Frankenstein’s monster a la the Fed and other central banks vs. “organic” growth of a sustained economic expansion under a (regulated) free market economy.
          2) Exacerbates the extremes of economic cycles.
          3) Those with the assets garner all of the gains. This leaves out much of the socioeconomic population. Lopsided recovery leading to extreme wealth inequality.
          4) Based on history going back to at least “tulip mania”, asset bubbles always pop. What about the aftermath, the inevitable falling asset prices, the speculators that go BK; what about the economy then?

          BTW, stock buybacks are a result of the same easy/cheap credit/ultra-low rates/etc. and also essentially can be described by the same list, above. Stock buybacks enrich the C-Suite corp. insiders and stock holders, but these are investment dollars that never went into Cap-Ex, new plants and facilities, R&D, actual, real innovation and growth. It’s all about financialization now.

          Analogy: Asset bubbles: similar to Beyond Meat (artificial meat made with largely artificial (vs. natural/organic ingredients).

          https://twitter.com/mokanjim/status/1171921708028190725
          jim hertzog @mokanjim
          Look at what it takes to make FAKE MEAT,And that’s not all of the ingredients #eatrealbeef

    1. $15 million for a 5 bedroom townhouse in NYC…

      Yeah, I think some “not giving it away” price cuts are coming.

    2. Sucky news all around. Seen The Cars in concert on 4 different tours including the last one in 2010.

      Hmm. I guess his divorce wasn’t final .. does that mean an even bigger payday for Paulina ?

    3. He wrote some really catchy tunes and guitar licks. The Cars were an excellent, really tight band back in the day.

  9. I’ve noticed that the ubiquitous “I buy houses” signs have suddenly vanished from the intersections in my little burg.

    1. Haven’t seen one of those “real estate investor seeks apprentice” signs by the side of the road in a while either. Couldn’t believe when those started popping up again a couple of years ago. Hadn’t seen one since 2006.

      2. I haven’t seen a “seeking apprentice” sign for a few years, but the “I buy houses for cash” signs were still popping up like dandelions just a few months ago.

  10. and in today’s fun and games, the UAW just went on strike. The libs at the WashPost are all gung-ho stand-for-labor, and don’t-cross-the-picket-line.

    IMO GM should fire all those workers and replace them with illegal immigrants on the factor floor and H1-Bs from India in the accounting and IT. What would the Dems do then?

      1. And regarding the assembly line, those continue to be quietly offshored. And not just to Mexico. The Chevy Envision is imported from China.

        I usually get the itch for a new car every 7-8 years. But seeing what is being offered these days has turned me off. The prices are stratospheric. Too many brittle gadgets. Turbos that will break and be expensive to fix. And tech I don’t want. I don’t want my car to center itself in the lane or hit the brakes by itself.

        And don’t get me going about cars with “stop and start” tech, where the engine shuts down when the car comes to a stop and restarts when you step on the accelerator. That alone is a show stopper for me.

          1. In theory, it can add an mpg or two to city driving, at least for the EPA tests.

            Obviously this technology will make your engine wear out extra fast.

            Other things we are seeing to boost fuel economy are tiny engines with gasoline direct injection (GDI) and turbos. GM has a 1.5L turbo that cranks out 170 ponies. Ford has a similar 1.5L that has 179 HP. GDI engines have carbon buildup issues in the intake valves.

            Then there is the CVT (Continuously Variable Transmission), which is a gearless transmission which instead of shifting gears it just varies the ratio via the use of belts.

            Both GDI and CVT add a few mpgs to a car, though both have long term reliability issues.

    2. The media wants a recession by any means necessary. Too bad for them it will only slow growth this year and cause faster growth next year as the inventory is rebuilt. The latest Rasmussen poll shows Trump at 50 percent which is four percent higher than Obama was at the same point in his presidency.

    1. You could see the manipulation. The question is whether they are just scapegoats to hide the manipulation of metals to keep fiat currency going by the politically connected banks.

      1. Oddly, the three banks and one company aren’t named. For anyone with decent internet sleuthing skills, those should be easy to figure out with the defendants’ names.

          1. That was my guess thanks for doing the research. The PM community has accused JPMorgan of price suppression for years. I think the three just got thrown under the bus.

          2. Article appears to have been update and had a title change: DOJ Accuses JPMorgan’s Precious Metals Trading Desk Of Being A Criminal Enterprise

            “Here’s where it gets extra interesting: according to Bloomberg, the unusually aggressive language language embraced by prosecutors reminds legal experts of indictments utilizing the RICO Act – a law allowing prosecutors to take down ‘criminal enterprises’ like the mafia by charging all members of the organization for any crimes committed by an individual on behalf of the organization.”

            “Prosecutors charged the head of JP Morgan’s global metals trading operation and two other traders with ‘conspiracy to conduct the affairs of an enterprise involved in interstate or foreign commerce through a pattern of racketeering activity’ – language that is typically used to describe a RICO charge.”

            “This hints at the possibility of a deeper prosecution for JP Morgan. Already, 12 people have been charged in the precious metals market-rigging conspiracy.”

      1. What I think was so different about 1945 to 1975 in the USA was that Coporate America acted like they were invested in the workforce. Cost of living raises, , benefits paid for by the Company, and almost a partnership type approach between employer and employee.

        This attitude produced greater loyalty and production , but no doubt it put a limit on profits and Wall Street Casinos. I guess you could say that the Great Depression and World War 2
        tempered the greed, along with some good laws they got rid of in the 1990’s that keep Wall Street in check.

        The Majority worker gained in the time period I speak of. Than came Globalism and greed and monopolies and Politicans selling out to the highest bidder.

        Prices are so fake today unlike before when they tracked with Majority wages. I can truly say that people were.not stressed out like they are today in a World that has taken all their power away.

        That golden period of time I speak of might be the best example of free market capitalism at it’s best. It just was a better balance of power where greed was contained by some sound laws. Even music wise it was a highly creative period.

        Actually some good social gains were made during that period in terms of civil rights also.
        I just keep remembering that period of time also because its just so insane today by contrast. Balance of power seems to be a big factor . The majority productive working class has the least amount of power these days. The rich and the poor are the class that are destroying the middle. The rich and the poor both want something for nothing and gain the most by the taxpayers coffers. The last 50 years have proven that tax dollars to those sectors has produced corruption and just more demand for free stuff. Now we have foreigners demanding that they have right to our welfare free stuff.

        So, now they think communism will solve the lack of balance of power. That is just one more bogus idea that doesn’t work in the final analysis .

        I guess my main point is that balance of power produces the best results as well as the most humane results.

        1. I agree. As long as you do not have the inexhaustible supply of cheap labor which open borders bring, the capitalist business cycle will even out the gains and will reward both capital and labor. Open borders removes all fairness since they eliminate labor shortages which raise real wages for workers. Only in the fracking fields did we see workers really get their fair share of wealth creation. Of course, it was due to labor shortages.

          1. Only in the fracking fields did we see workers really get their fair share of wealth creation. Of course, it was due to labor shortages.

            And the bitmines. Due to the difficulty of finding people who are good at it even with a bunch of H1Bs being issued and all those Yellenbucks being pumped into it in hopes of striking it rich with the next big thing.

        2. “Actually some good social gains were made during that period in terms of civil rights also.”

          The post WWII period was likely wonderful if you were a white male, educated and a veteran.

          1. The post WWII period was likely wonderful if you were a white male, educated and a veteran.

            Seems like it. But was it getting worse for others? Or just not getting better as fast?

  13. Also I can’t fail to mention that the employee Unions being government and private at some point got to greedy and started wanting to much. It still all goes back to balance.

    1. I have been studying the far left recently , along with their admired thinkers.

      Basically the narrative is that the USA is a white man’s Empire that was built on the exploiting of every other ethic group and Country. Therefore they believe that some sort of wreaking ball should destroy
      America and white man culture and it be replaced with the fill in the blank.

      If you look at the facts however, most of the history of USA was a poor working class that struggled to survive. Every other Country was also doing the same thing. While slavery was a bad thing, white working class were also abused by the powerful.

      In spite of all the bad things that took place in the USA , a lot of good eventually emerged in terms of advances and civil rights and conditions for the common man and women.

      Just throwing out any good we all now enjoy because of the growing pains of our history, that no doubt wasn’t just all the time, is stupid.

      Why did it take so long for women to get the vote? I guess they finally decided to fight for it. Power seems to be something that always seems to be something that isn’t automatic and power structures don’t give up easy.
      We can’t change the way World history went.

      What is evolving today is the idea that government can hand out free stuff to correct harm done to people who aren’t even alive anymore in this Nations history. The notion is also that current whites should suffer for the sins of the USA
      History to the point of punishment.

      What I really think Is that all this talk of history is a diversion by the powers so they can keep on ripping off the population, or it’s other Countries that want to see us fall, or it’s the Communist that want to take over.

      1. “If you look at the fact$ however, most of the history of USA was a poor working class that struggled to survive.”

        “If you look at the fact$ however, most of the hi$tory of U$A was a poor working class that was exploited so that those doing the exploration did knot have to $truggled to $urvive.

        Have you been to Hear$t Castle? … Gue$$ William just “found” the gold that the savages just left buried in their native $oil. $illy injuns!

        1. The great evil is lack of balance of power. I like it when the productive middle class has power because this class earns what it gets being the productive class as well as the consumer.
          The rich are thieves and the poor want everything for free also. They are the parasites of big government.

          It doesn’t mean we shouldn’t help the poor, but it’s sucide to destroy the productive working class.

          As I have said, the concept of the ‘American Dream” came out of that golden period between 1945 and 1975 when we had a balance of power that actually allowed for that dream to be realized.

          They got rid of all the good laws that kept the powerful in check, and Globalism only served to gut the working class in America

          Everything that is talked about today is just a diversion from the real issues..

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