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Our Governments Have Left The Masses Of Available Money To Create Illusory Wealth, And To Borrow Against That Wealth

A weekend topic starting with Better Dwelling. “The Canadian property bubble was recognized by an unlikely entity — the Canadian government. MP Adam Vaughan dropped the b word this week. Vaughan isn’t just an elected official, but also the Secretary to the Minister in charge of most of the country’s housing policy. In an exchange, Vaughan said, ‘Getting the air out of the bubble without an explosion has been tried several ways.. the stress test, increase supply, speculation tax, etc… each time the market only slows to take off again… and the other challenge is that a drop in market prices might also unleash pent up demand.'”

The Globe and Mail. “The Governor of the Bank of Canada says there are signs of speculative behaviour in the country’s booming housing market and voiced concern over the pace of mortgage borrowing among highly indebted households. ‘While the resulting house-price increases are rooted in fundamentals, we are seeing some signs of extrapolative expectations and speculative behaviour,’ Tiff Macklem said during a media conference call to discuss the central bank’s scheduled monetary policy announcement.”

“‘Our concern … is that against a background of rapid price increases, people will extrapolate. They will expect that those price increases will continue indefinitely and they will overstretch to buy houses. That would be a mistake,’ he said.”

“In its Wednesday announcement, the Bank of Canada kept the benchmark interest rate at 0.25 per cent but said a potential rate hike could occur in the latter half of 2022 instead of 2023. The idea that the key interest rate would remain near zero until 2023 has given home buyers more confidence to borrow.”

“Mr. Macklem defended the bank’s decision to keep interest rates low, saying the bank needs to look at the whole economy, where employment is still well below prepandemic days. ‘Right now, the economy needs our support,’ he said.”

From Stuff New Zealand. “New rules for the property market mean interest rate increases will now have more of an impact on house prices, ANZ economists say. At the end of March, the Government announced a range of changes including an extension to the bright-line test and the removal of investors’ ability to offset their loan interest against rental income for tax purposes. They said the game had changed ‘a lot in a short space of time’ for property investors but the structural issues of a lack of housing supply remained.”

“‘All up, the Government is likely to be successful in taking the heat out of the market, but tilting the playing field from investors towards first-home buyers will never be enough to address New Zealand’s homelessness problem, overcrowding, and high cost of living for some of our most vulnerable. For that, the Government needs to continue to aggressively pursue positive supply side policies (such as freeing up land and cutting red tape) to such an extent that it will challenge the narrative that housing is scarce and always will be, and that house prices are one-way bet (not our view). But politically, that’s not easy to do when so many voters have already bet on housing for their retirement.'”

From Scoop. “Stories last week from Radio New Zealand: Expert analysis: low interest rates vs soaring house prices. interviews with two highly competent economists, University of Auckland property economist Michael Rehm, and former Reserve Bank monetary economist Michael Reddell. The hologram of another such economist, Arthur Grimes, was present also.”

“Ryan goes on to ask a couple of long questions, which include an assumption about the role of immigration in the 2013-16 house price inflation, and a reference in Rehm’s writing to a ‘Ponzi scheme’ analogy, though she may have been confusing a Ponzi scheme with a the manic behaviour that fuels a speculative ‘mania’ or ‘bubble’ (refer Kindleberger and Knoop).”

“Rehm’s main response – his ‘following the money’ point – was a good one; the price inflation this century of ‘land-house packages’ – in the regions as well as in Auckland and Wellington – was most determined by the ‘pumping of money’ into the real estate sector. He blames commercial banks’ competitive lending policies, rather than interest rates or immigration or financial greed, to explain why ‘house prices are so disconnected from fundamentals.'”

“But he largely missed the international dimension of this money supply problem, which has included loans into New Zealand banks (eg ANZ Australia lending to ANZ New Zealand, and a high connectedness of many NZ residents to foreign sources of finance). Of particular importance is that Rehm has studied the pre-2008 real estate bubbles, and he therefore was aware of the need to downplay the role of very low interest rates in stimulating land-house bubbles.”

“Ryan: ‘How does this central bank and government – who are working parallel to each other – exit this huge period of quantitative easing that has inflated asset prices everywhere, it’s the stock market as well. What is the endgame, the bond buying, the Reserve Bank prints money and buys government debt with that money through the secondary market; that keeps a lid on the cost of borrowing. Basically, that’s the means by which the government can spend and borrow. That stimulus is massive. At what point does it begin to have negative consequences?'”

“The New Zealand government, indeed, is fiscally austere to its core. Even with the opportunity to address substantial social and economic problems last decade by borrowing at record-low interest rates (and using its balance sheet to facilitate local government borrowing), the government – irrationally – has refused to budge; it has neither invested in our people nor our capital. Rather our governments have left the masses of available money to the land speculators to do with it whatever they have wanted to do; to create illusory wealth, and to borrow against that wealth to create a society characterised by unsustainable middle class imported consumption.”

Two reports from the Los Angeles Times. “Recent research by the Irvine consulting firm found low yields globally are driving investor interest and money is pouring into single-family housing nationwide from pension funds, private equity groups and other institutional investors. Tregg Rustad, a real estate agent focused on L.A.’s Westside neighborhoods, said some sellers start to panic when they don’t get an offer on their house within five days — a seeming eternity in today’s market.”

“‘They are like: ‘My cousin, my brother and my sister-in-law — they are all telling me we should have 10 offers by now. What’s going on?'”

“The price keeps dropping for Eli Broad’s architectural marvel overlooking the Pacific Ocean. The billionaire philanthropist just relisted his Malibu home for $58.5 million, down around 22% from his original ask of $75 million.”

The New York Post. “What a steal! Developer Ara Hovnanian and his wife are in contract to buy a $10 million penthouse at 420 W. Broadway, otherwise known as the Soho Gallery Building. It was formerly owned by billionaire hedge funder Bill Ackman and his first wife, Karen — they had bought it for $17 million in May, 2015. (Bill then sold his half to Karen for $7 million in 2018; she then listed it for $15.5 million.)”

The Georgian Straight in Canada. “Not everyone gets to make money in the hot real-estate market of Vancouver. Some risk losing their shirt. Let’s look at 380 West 62nd Avenue, a Marpole area property listed this week. B.C. Assessment record shows that the single-family home on a 50-foot lot was purchased on February 11, 2018 for $4,280,000. On August 6, 2019, the same property came on the market, when RE/MAX Real Estate Services listed it for $4,380,000.”

“No buyer came forward, and so the listing terminated on September 19 of the same year. Another listing agency, Sutton Group-West Coast Realty, tried to sell the four-bedroom, two-bath home less than a week later. On September 25, 2019, the Marpole home in front of Winona Park returned on the market with a price of $4,280,000.”

“After more than a year, the listing expired on November 1, 2020. By that time, the price has been reduced to $3,980,000. Now it’s the turn of RE/MAX Real Estate Services again to try and sell the home. On April 21 this year, the property was listed for $2,990,000. Vancouver realtor David Hutchinson said this example speaks about the ‘blessing and the curse of the Cambie Corridor.'”

“‘A lot of people made money. There was a lot of investment and speculation. And, of course, some people lost money,’ Hutchinson said. ‘What the city got in return was a lot of overpriced housing,’ Hutchinson added.”

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This Post Has 100 Comments

  1. It is an illusion. That’s why it goes poof!

    ‘to buy a $10 million penthouse …they had bought it for $17 million in May, 2015’

    1. What was the bit about Bill selling half to his Karen for $7 million and then her listing it for $15.5 million?

      I take it that the Karen’s listing didn’t come to fruition, though the narrative of that story is confusing.

      1. They separated in late 2016, so the penthouse was likely part of the divorce settlement. Looks like she had to settle for $10M, unless there was an owner in between.

        1. That goes to my point about the cryptic wording of the article. I read the $10 million to apply to the entire penthouse, not only the Karen’s half she recently bought for $7 million. That wouldn’t be much to crow about.

          The missing details between when she got half for $7 million and Ara Hovnanian got it all for $10 million, after her failed attempt to sell her half for $15.5 million, make it difficult to understand the progression of events. It seems like there is a lot more crater to the story than the writer wanted to convey.

          1. I don’t think half part is relevant. My guess is that she got the penthouse as part of the divorce, maybe in exchange for $7 million less in alimony, or similar. Either way, she seems to have owned it outright to do as she wished with it. She wished to sell it for $15.5M. Unfortunately I can’t find a sale price for it so I don’t know whether she sold it for $10M or if there had been some intermediate owner.

  2. ‘Rising home values and low mortgage rates spurred many U.S. homeowners to refinance and cash in some of the equity in their home last year. Homeowners pulled out $152.7 billion in equity, an increase of 41.7% from 2019 and the highest refinancing cash-out dollar amount since 2007, according to mortgage buyer Freddie Mac.’

    ‘Homeowners also tapped into the equity in their home via a home equity line of credit, or HELOC. The volume of HELOCs more than doubled in 2020 from a year earlier to $74.9 billion.’

    https://fox42kptm.com/news/nation-world/hot-housing-market-fuels-a-rise-in-homeowners-equity

    Warning: a PDF:

    Sources and Uses of Equity Extracted from Homes

    Alan Greenspan and James Kennedy 2007-20

    https://www.federalreserve.gov/pubs/feds/2007/200720/200720pap.pdf

    1. Next up:
      – falling prices
      – widespread underwaterness
      – bailouts of people who withdrew their home equity and blew it on consumption spending

      1. In a previous life back on the cubicle plantation, I sold HELOCs on commission for a TARP bailout bank. Browsing customer transactions was always fun. Despite there being a fee for any transaction on the HELOC debit card less than $100, some of these clowns were regularly using it at the McDonalds drive through.

        Indirect auto financing was another joke job. Underwater on your trade in? 125% LTV? No problem!

      1. A colleague of mine went WFH in the ’90s. He spent the first two or three years remodeling his house.

        1. Instead of working, probably. This WFH is a major scam, and it won’t last. You have to remember a lot of these companies took out PPP loans, so they have to retain employees. Once that whole nonsense is over with, the axe will fall for many.

          1. Indeed it is. I have some real ugly consequences of the WFH scam to report. Not yet because the saga isn’t over yet. Just a hint though…. it’s destroying some lives of young guys in our firm.

  3. I generally like Better Dwelling, but they miss the point, as does the MP:

    ‘More important is the list of measures implemented, that have failed to cool markets. Stress tests, supply, speculation taxes, etc. — they didn’t drop prices. In his words, the market “only slows to take off again.”

    They did drop prices. Cratered actually in Vancouver then later in Toronto. The key issue is, you idiots removed all of this and cut interest rates three times in a month! It’s left to me to point this out?

  4. ‘‘Getting the air out of the bubble without an explosion has been tried several ways’

    ‘How does this central bank and government – who are working parallel to each other – exit this huge period of quantitative easing that has inflated asset prices everywhere, it’s the stock market as well. What is the endgame, the bond buying, the Reserve Bank prints money and buys government debt with that money through the secondary market; that keeps a lid on the cost of borrowing. Basically, that’s the means by which the government can spend and borrow. That stimulus is massive. At what point does it begin to have negative consequences?’

    The explosion, the negative consequences, have already happened.

    1. Why would they even bother to try to let air out of the bubble?

      The core risk is that market psychology turns while the stimulus is going full blast. What then?

      They want to treat stimulus as a bellows but their ability to back out becomes smaller and smaller with each passing year.

      Seems to me at some point, if/when market psychology does turn and stimulus is at max, they can either risk currency collapse with MOAR or hold steady and finally the market will expand and contract due to more organic (i.e. non-subsidized profit/loss) reasons.

      1. “Why would they even bother to try to let air out of the bubble?”

        Asset bubbles prevent new investors into the markets. For example, if the energetic young are priced-out of buying a home in a good neighborhood despite two incomes then what’s the point of working. Take another look at Japan.

        1. Housing bubbles create severe intergenerational inequity, as the older generation enjoys the wealth gains and the younger generation is priced out of home ownership forever.

          Small wonder the Millennials blow their stimulus checks gambling on cryptocurrency and GameStonk.

          1. The Financial Times
            Opinion The FT View
            A new deal for the young: how to fix the housing crisis
            An affordable place to live is a foundation of a decent life
            The editorial board
            When the FT surveyed young people, respondents from Hong Kong to Shanghai and London said housing costs were one of their biggest concerns
            The editorial board yesterday

            Securing a place to call one’s own is a key marker of independence, and a step towards starting a family. Yet for many young people, across many countries, a home has become unaffordable and renting is insecure, expensive, or both — especially in places where the good jobs they want are most plentiful.

            Those who bought homes long ago have enjoyed the benefits of tax-free appreciation, a tax-free implicit rental income and, in the case of the UK, freedom from capital gains tax too. Meanwhile, unless they enjoy support from the “bank of mum and dad” or are exceptionally well paid, many in the younger generation are stuck as “generation rent”.

            This is one of several intergenerational inequities that mar today’s high-income societies. Others are job insecurity, mountains of student debt, insecure pensions, inequities in public spending and, above all, climate change. The Financial Times believes it is now time for policymakers to offer a new deal to the young, whose economic prospects have taken a further blow during the pandemic. A series of editorials this week will examine housing, pensions, jobs, education, climate and tax, and how they might be reformed to help the younger generation.

            When the FT surveyed young people, respondents from Hong Kong to Shanghai and London said housing costs were one of their biggest concerns. To take the UK as a case study, the purchase of a home has become exceptionally expensive by historical standards relative to earnings, especially in London. The proportion of people in England aged 35 to 44 in private rentals jumped from 9 to 28 per cent between 1997 and 2017.
            …

          3. Those who bought homes long ago have enjoyed the benefits of tax-free appreciation, a tax-free implicit rental income and, in the case of the UK, freedom from capital gains tax too.

            Sounds like what the writer really wants are more taxes.

        2. “For example, if the energetic young are priced-out of buying a home in a good neighborhood despite two incomes then what’s the point of working. Take another look at Japan.”

          So true!

      2. “…or hold steady and finally the market will expand and contract due to more organic (i.e. non-subsidized profit/loss) reasons.”

        This time is different.

    2. ‘‘Getting the air out of the bubble without an explosion has been tried several ways’

      Speaking of bubbles, BitCON seems to be leaking pretty badly, down almost 30% in less than 2 weeks. Helluva store of value, I must say…

      1. I’m sorry, I spoke too soon. BitCON went straight up today by more than $6,000. I guess the FED stepped in and bought a bunch or something.

        1. The historic chart for bitcoin shows numerous 30% crashes, followed by a rise to all-time high. People saw the $50K as a support and a buying opportunity and piled back in.

          2. I have a teeny bit in a crytpo fund, but not enough to be considered a gambler. I’m likely going to sell out of it anyway once it breaks even. Thinking about the crypto vs. gold debate, I’ve come to realize that a crypto world has more risk from more counterparties than I thought. And just wait until they allow crypto ETFs and those ETFs start printing paper crypto the same way ETFs have been printing gold.

  5. ‘Media executive Chris Albrecht just sold his Pacific Palisades retreat for $16.25 million. The sale wraps up a year-long effort that saw Albrecht first list the home at $18 million in 2020. He still eked out a small profit compared to the $16 million he paid for the property when it was newly built in 2017, records show.’

    https://www.latimes.com/business/real-estate/story/2021-04-16/former-starz-hbo-chief-chris-albrecht-sells-palisades-estate-for-16-25-million

    And of course with transaction costs, he took an a$$ pounding. That’s 4 years. Wa happened to my red hotcakes?

      1. In a world awash with Yellen bux and showers of fake-money confetti on the Fed’s Wall Street accomplices, such lavish speculation is par for the course.

    2. That’s a real yawn of a house. I’d rather have Steven Seagal’s digs in Scottsdale. Don’t architects design anything good anymore? For $16M you’d think they’d up with something more interesting.

      2. Have you ever been to Scottsdale? You have to stay indoors all summer long because it is so disgustingly hot. I really don’t understand the appeal. 110 degrees for months in a row is miserable.

    3. That lot looks absolutely tiny for that price. I can’t see owning anything on less than 5 acres with that kind of money. 20 would be preferable.

  7. ‘the Government needs to continue to aggressively pursue positive supply side policies (such as freeing up land and cutting red tape) to such an extent that it will challenge the narrative that housing is scarce and always will be, and that house prices are one-way bet (not our view)’

    See, it’s neo-liberal acceptable to crater prices with more supply. These globalists are two faced fools.

    ‘But politically, that’s not easy to do when so many voters have already bet on housing for their retirement’

    To expect the latest greater fool to fund yer retirement, with interest, is insanity. Get out a calculator and see for yerself. Wages haven’t risen enough to make that remotely possible.

  8. “B.C. Assessment record shows that the single-family home on a 50-foot lot was purchased on February 11, 2018 for $4,280,000.
    On August 6, 2019, the same property came on the market, when RE/MAX Real Estate Services listed it for $4,380,000.”

    Listing history since August 6, 2019:

    $4,380,000
    $4,280,000
    $3,980,000
    $2,990,000
    ???

    Sale by Dutch auction is incredibly simple: You start listing at an above market price and keep reducing it until you receive an offer. However, the method fails if the seller refuses to reduce the price to market value.

    Try not to catch yourself a falling knife.

    1. Would you take investing advice from Kayla?

      Kayla
      23 hours ago
      From the first time Bitcoin reached 40k to right now, Bitcoin had 6 correction over 30%.
      This is nothing more then a buying opportunity for those who were hesitant to get in.
      Bitcoin is still going to 100k and beyond.

  11. Revolver — These Key Similarities Between Lenin’s Red Terror and America’s Woke Culture Reveal Left’s Blueprint For Complete Takeover (4/24/2021):

    “Cancel culture is only the prelude to the rape, torture, and murder of the American people by a resentful underclass goaded on by a parasitic globalist ruling class.

    Why are there so many similarities between the Bolsheviks of old and the radical left of today? If there’s one constant in the 230 years since the French Revolution, it’s that extreme left-wing movements can’t deliver on their promises. There’s a reason online leftists have to retreat to the embarrassing anthem that “real Communism has never been tried.”

    https://www.revolver.news/2021/04/woke-cancel-culture-lenin-bolshevik-red-terror/

    I picked up the book Mao’s Great Famine: The History of China’s Most Devastating Catastrophe from the library but haven’t started reading it yet. The inside of the book jacket notes that “45 million people were worked, starved, or beaten to death.”

    45 million, is that a lot?

    1. City Journal (published by the Manhattan Institute) — How to fight critical race theory (4/22/2021):

      “An equity-based form of government would mean the end not only of private property but also of individual rights, equality under the law, federalism, and freedom of speech. These would be replaced by race-based redistribution of wealth, group-based rights, active discrimination, and omnipotent bureaucratic authority. Historically, the accusation of “anti-Americanism” has been overused. But in this case, it’s not a matter of interpretation: critical race theory prescribes a revolutionary program that would overturn the principles of the Declaration and destroy the remaining structure of the Constitution.

      According to a recent Gallup poll, 77 percent of conservatives are afraid to share their political beliefs publicly. Worried about getting mobbed on social media, fired from their jobs, or worse, they remain quiet, largely ceding the public debate to those pushing these anti-American ideologies. Consequently, the institutions themselves become monocultures: dogmatic, suspicious, and hostile to a diversity of opinion. Conservatives in both the federal government and public school systems have told me that their “equity and inclusion” departments serve as political offices, searching for and stamping out any dissent from the official orthodoxy.”

      https://www.city-journal.org/how-to-fight-critical-race-theory

    3. “45 million people were worked, starved, or beaten to death.”
      I have a friend from China born in late 1959 so she survived the Great famine. She has me over for dinner occasionally. I think she has had Dandelion greens as part of the dinner every time. She also sources Bamboo from local bamboo plants, hunts for mushrooms and has a chicken coop in her back yard. I know few Americans, including myself, that have chick coops or would have a clue where dinner would come from if the supply change were to grind to a halt, but she sure knows. She spices the dandelion greens up so they are actually pretty tasty.

      2. My son and daughter-in-law have chickens in the back of their place. And a work colleague who lives a few miles away is raising chicks to start up a backyard egg production system.

        It’s good to have friends and family with chickens.

    1. “The masses in whose name the Communist party claimed to rule were eminently disposable”

      Sounds about right.

      France 1791, Russia 1917, it’s the same thing every time.

      1. Since Communism was invented in the eighteenth century, the French Revolution is not an example of it.

        But I agree that the consequences of revolutions normally turn out badly for many of the insurgents.

  14. The US and China have very different societies but people still pursue profit and seek to improve their, and their children’s fortunes:

    “FEW LIFE stories are as soap-operatic as Lai Xiaomin’s. The fallen state financier dallied with more than 100 mistresses, according to Chinese media. He was subsequently caught with three tonnes of cash in one of his dozens of homes. The sheer scale of his thievery—1.8bn yuan ($279m) in kickbacks, the largest bribery case since the founding of the People’s Republic of China in 1949—justified the death penalty, a judge opined. In a tragic denouement, Mr Lai was executed on January 29th.

    The moneyman’s most serious offense—and the one that ultimately cost him everything—may have been something else. Under Mr Lai’s control, Huarong Asset Management, a state-run financial group, became the lender of last resort to China’s riskiest corporate borrowers. When state banks said “no” to loans, Huarong said “no problem”. Its lending helped private conglomerates get around capital controls and scoop up assets overseas. This enabled some of them to enlarge their balance-sheets—occasionally to breaking point. These strains put the broader financial system at risk. And that perturbed the communist regime’s paramount leader, Xi Jinping, who prizes stability—including the financial sort—above all else.”

    https://www.economist.com/business/2021/02/04/what-the-fate-of-hna-group-says-about-china-incs-foreign-ambitions

    In the US, there was a debate over “cleaning vs leaning” (whether the Fed should stay out of the way and clean up after market implosions, or whether it should lean on the financial sector to avoid market disruptions. Here, people who help blow up the financial system are completely unmolested.

    I saw a post on the Web that said, “When the market does well, we don’t benefit. But when it collapses, we lose our jobs.” This system – a heavily financialized economy – and that mindset enables a lot of trickle up policies.

  15. “In its Wednesday announcement, the Bank of Canada kept the benchmark interest rate at 0.25 per cent but said a potential rate hike could occur in the latter half of 2022 instead of 2023. The idea that the key interest rate would remain near zero until 2023 has given home buyers more confidence to borrow.”

    Brings to mind Yellen the Felon’s indeterminable “Lucy and the Football” routine where she would try to jawbone up the dollar (and suppress precious metals, the antithesis of the Fed’s fake money) by talking about supposedly pending rate hikes – which she alway found some lame excuse to defer. The Keynesian fraudsters at the Fed and central banks have ZERO credibility now – an implosion of their Everything Bubble is now baked in the cake, since their half-measures will never be enough to defer the financial reckoning day.

  16. Growth & Development
    Downtown is being flooded with fancy, new office buildings. So who will fill them?
    After a 20-year quiet period, downtown office building is booming with developers banking on tech and biotech firms coming to town — even while vacancy rates are skyrocketing
    By Jennifer Van Grove
    April 25, 2021 5 AM PT

    The low rise at the northwest corner of First Avenue and G Street, constructed by one of San Diego’s most esteemed builders, is the picture of modern office perfection.

    Designed with tech worker efficiency in mind, each of the four floors is big and open, with natural light streaming in from floor-to-ceiling glass windows. An inviting, central courtyard and a Peloton-equipped fitness center are ready to compete for employee downtime. A street-level restaurant space opposite the future Campus at Horton could satisfy other cravings. And, despite the building’s short stature, there are still plenty of quintessential urban views to be had. There’s even underground parking.

    Yet the 167,000 square-foot Paladion project from Bosa sits eerily empty, despite being ready for tenants for nearly a year. The building, thanks to a COVID-driven lockdown on corporate leasing interest, finds itself stopped at what had been a green light for developers ready to transform downtown San Diego’s dated office supply ahead of a banked-upon influx of new-to-market technology and biotech companies.

    The project is not an anomaly. Everyone is struggling to attract tenants.
    …

    1. What is it about commercial real estate developers that makes them want to build like crazy, as though there is no tomorrow, even as a yawning crater leaves already-built units sitting empty and awaiting price reductions?

      1. What is it about commercial real estate developers that makes them want to build like crazy, as though there is no tomorrow, even as a yawning crater leaves already-built units sitting empty and awaiting price reductions?

        Builders build. That’s what they do. If they stopped building, there’s no point of going into the office in the morning (these days, the home office). They keep building because that’s all they know. That’s why.

  17. I saw this in the Colorado Sun:

    At Fluid Truck, which agreed to stay in Colorado and add 1,483 new jobs over the next eight years, the average annual salary will be $163,677.

    In return, the company could qualify for special state job-growth incentives of $16.4 million in tax credits. They’ve got to provide the jobs first, of course.

    Fluid got its start in Denver circa 2016 as an item-sharing company. It’s now a truck-sharing company operating in more than 30 markets. Rent a truck or list your own to make extra cash.

    So, a few questions pop into my head:

    -How much money is Fluid Truck losing each month, while paying well above local market wages? (my answer: a lot)
    -How long until they fold and go out of business? (My answer: once the everything bubble pops)
    -Why is the state gooberment going to subsidize them,? (My answer: because .gov are idiots)

  18. Also from today’s Colorado Sun:

    New Mexico marijuana legalization poses a serious threat to Colorado’s lucrative border-town pot shops

    Trinidad, Antonito and San Luis are towns along the Colorado-New Mexico border that have clusters of cannabis shops that could go up in smoke. How will local governments that rely on marijuana tax revenue fare?

    Easy come, easy go.

    1. Have you ever been to San Luis?

      “The median income for a household in the town was $14,213, and the median income for a family was $20,875. Males had a median income of $20,156 versus $13,333 for females. The per capita income for the town was $8,887.”

  20. A weekend topic starting with Better Dwelling. “The Canadian property bubble was recognized by an unlikely entity — the Canadian government. MP Adam Vaughan dropped the b word this week. Vaughan isn’t just an elected official, but also the Secretary to the Minister in charge of most of the country’s housing policy. In an exchange, Vaughan said, ‘Getting the air out of the bubble without an explosion has been tried several ways.. [but, asset bubbles always pop.] the stress test, increase supply, speculation tax, etc… each time the market only slows to take off again… and the other challenge is that a drop in market prices might also unleash pent up demand [ There’s that phrase again. It must be trademarked by the REIC/UHS.].‘”

    The Globe and Mail. “The Governor of the Bank of Canada says there are signs of speculative behaviour in the country’s booming housing market and voiced concern over the pace of mortgage borrowing among highly indebted households. ‘While the resulting house-price increases are rooted in fundamentals [Oh, please! The arsonists (BoC) are in charge of the fire brigade.], we are seeing some signs of extrapolative expectations and speculative behaviour,’ [aka bubble] Tiff Macklem said during a media conference call to discuss the central bank’s scheduled monetary policy [There’s your problem, as if it needs pointing out.] announcement.”

    – There’s no real reporting anymore, just layers and layers of horse hockey.
    – It’s a bubble and it’s been going on for years if not decades. Even the the Canadian government (MP Adam Vaughan) says so. The Canadian gov’t. encouraged it, as aided and abetted by the BoC.

  21. The same globalist oligarchs who are imposing Stalinist censorship on the internet are bankrolling the Communist insurrectionists destroying our urban centers. This is my shocked face.

    REVEALED: Twitter, Facebook and Netflix moguls have donated $7.5M to ‘Marxist’ BLM co-founder who is pushing their ‘net neutrality’ policy as their tech firms block users sharing critical stories about her

    https://www.dailymail.co.uk/news/article-9508427/Big-Tech-moguls-donated-millions-groups-tied-BLM-founder-Patrisse-Cullors.html

    Tech moguls who made their fortunes from Facebook, Twitter and Netflix have donated at least $7.5 million to groups tied to BLM co-founder Patrisse Cullors, who has in turn publicly backed their policy goals, according to a new report.

    Twitter CEO Jack Dorsey, Facebook co-founder Dustin Moskovitz, and Patricia Ann Quillin, the wife of Netflix’s billionaire CEO, all gave generously to Cullors’ PAC and associated charities, according to the New York Post.

    1. Sure would be an awful tragedy if Dorsey went for a helicopter ride and accidentally fell out 1,000 feet above San Francisco Bay.

  22. From Scoop. “Stories last week from Radio New Zealand: Expert analysis: low interest rates vs soaring house prices. interviews with two highly competent economists, University of Auckland property economist Michael Rehm, and former Reserve Bank monetary economist Michael Reddell. The hologram of another such economist, Arthur Grimes, was present also.”

    “Ryan goes on to ask a couple of long questions, which include an assumption about the role of immigration in the 2013-16 house price inflation, and a reference in Rehm’s writing to a ‘Ponzi scheme’ analogy, though she may have been confusing a Ponzi scheme with a the manic behaviour that fuels a speculative ‘mania’ or ‘bubble’ (refer Kindleberger and Knoop).”

    “Rehm’s main response – his ‘following the money’ point – was a good one; the price inflation this century of ‘land-house packages’ – in the regions as well as in Auckland and Wellington – was most determined by the ‘pumping of money’ into the real estate sector. He blames commercial banks’ competitive lending policies, rather than interest rates or immigration or financial greed, to explain why ‘house prices are so disconnected from fundamentals.‘”

    “But he largely missed the international dimension of this money supply problem, which has included loans into New Zealand banks (eg ANZ Australia lending to ANZ New Zealand, and a high connectedness of many NZ residents to foreign sources of finance). Of particular importance is that Rehm has studied the pre-2008 real estate bubbles, and he therefore was aware of the need to downplay the role of very low interest rates in stimulating land-house bubbles.”

    “Ryan: ‘How does this central bank and government – who are working parallel to each other – exit this huge period of quantitative easing that has inflated asset prices everywhere, it’s the stock market as well. What is the endgame, the bond buying, the Reserve Bank prints money and buys government debt with that money through the secondary market; that keeps a lid on the cost of borrowing. Basically, that’s the means by which the government can spend and borrow. That stimulus is massive. At what point does it begin to have negative consequences?‘”

    “The New Zealand government, indeed, is fiscally austere to its core. Even with the opportunity to address substantial social and economic problems last decade by borrowing at record-low interest rates (and using its balance sheet to facilitate local government borrowing), the government – irrationally – has refused to budge; it has neither invested in our people nor our capital. Rather our governments have left the masses of available money to the land speculators to do with it whatever they have wanted to do; to create illusory wealth, and to borrow against that wealth to create a society characterised by unsustainable middle class imported consumption.”

    – It’s the (artificially low) interest rate, stupid!

    https://mobile.reuters.com/article/amp/idUSKCN1LR2AV
    Tue Sep 11, 2018 / 2:56 PM EDT
    Breakingviews – Chancellor: The mother of all speculative bubbles
    Edward Chancellor

    LONDON (Reuters Breakingviews) – In 1776, English man of letters Horace Walpole observed a “rage of building everywhere”. At the time, the yield on English government bonds, known as Consols, had fallen sharply and mortgages could be had at 3.5 percent. In the “Wealth of Nations”, published that year, Adam Smith observed that the recent decline in interest had pushed up land prices: “When interest was at ten percent, land was commonly sold for ten or twelve years’ purchase. As the interest rate sunk to six, five and four percent, the purchase of land rose to twenty, five-and-twenty, and thirty years’ purchase.” [i.e. the yield on land fell from 10 percent to 3.3 percent].

    Smith explains why: “the ordinary price of land … depends everywhere upon the ordinary market rate of interest.” That’s because the interest rate discounts and places a capital value on future income. All the great speculative bubbles in the past – from the tulip mania of the 1630s through to the global credit bonanza of the last decade, have occurred at times when interest rates were abnormally low.

    The trouble is that after the Lehman Brothers collapse, central bankers refused to accept this fact. The position of Ben Bernanke’s Federal Reserve was that the real-estate bubble was caused by lax regulation rather than his predecessor Alan Greenspan’s easy money. If this were true, then taking short-term rates down to their lowest level in history – to zero in the United States and negative in Europe and Japan – was sensible. But if Smith was correct, then monetary policy in the wake of Lehman’s bust was a case of the hair of the dog.

    This collection of bubbles has pushed U.S. household net worth to a record $100 trillion, the Fed reported in June. As a share of GDP, Americans are now richer than they were at the peak of the dot-com bubble and the real-estate bubble, according to the Fed. But this is not real wealth derived from savings and investment, both of which have languished in recent years. It is merely the illusion of wealth.

    Former Treasury Secretary Larry Summers once observed the American economy only expands when bubbles are inflating. Both U.S. corporate profits and GDP growth are responding to changes in household net worth. It should be the other way around. Yellen was wrong. The United States is a “bubble economy”, no sounder in its fundamentals than the one which collapsed in the subprime debacle.

    1. – Some additional supporting BoE analysis and data via City a.m.:

      https://www.cityam.com/what-175-years-of-data-tell-us-about-house-price-affordability-in-the-uk/
      Monday 29 March 2021 2:38 pm Schroders Talk
      What 175 years of data tell us about house price affordability in the UK
      Duncan Lamont
      I am head of research and analytics at Schroders.

      Conclusions
      How might affordability improve?

      “The elephant in the room here is interest rates. A Bank of England working paper[2] concluded that nearly all of the rise in average house prices relative to incomes between 1985 and 2018 can be seen as a result of “a sustained, dramatic, and consistently unexpected, decline in real interest rates as measured by the yield on medium-term index-linked gilts”[3]. The Bank doesn’t rule out other factors, but concludes that they have had more of a short term impact. It furthermore concludes that: “An unexpected and persistent increase in the medium-term real interest rate of 1 percentage point from its level as at end 2018 could ultimately generate a fall in real house prices (over a period of many years) of just under 20%.”

      1. (over a period of many years)

        That’s a hoot!

        Meanwhile, the expectation of prices falling for many years causes a rapid decline in house prices.

      2. “A Bank of England working paper concluded that nearly all of the rise in average house prices relative to incomes between 1985 and 2018 can be seen as a result of “a sustained, dramatic, and consistently unexpected, decline in real interest rates as measured by the yield on medium-term index-linked gilts.””

        And since the same protracted trend in falling rates took place wherever modern finance plays a role, I guess we can apply the same logic to the global rise in housing prices since the 1980s?

    2. Everyone [knows] the markets are fake. Over the past year production of everything is down, way down. Or how about the accommodation and travel sector? The shutdowns were unprecedented in economic history. All the fed has done is widen the gap between the haves and have-nots.

  24. Brace for a flood of bedwetting pro-gun control articles from the usual globalist propaganda flagships as the globalists’ Bolshevik-Democrat Quislings step up their efforts to disarm the kulaks.

    I Grew Up on Guns. Now I’ve Learned to Love Firearm Control.

    https://www.bloomberg.com/opinion/articles/2021-04-25/max-hastings-i-grew-up-on-guns-now-i-love-britain-s-firearm-control?srnd=premium-africa&sref=ibr3A0ff

    One evening in 2008, I attended a Republican rally in Kansas, with an address by vice-presidential candidate Sarah Palin. Because I am very tall and somehow visibly un-American, I was quizzed by neighbors in the crowd. One of them asked me defiantly, though not offensively: “What do people like you not like about people like us? Is it that we’re Christians? Is it that we’re White? Is it that we do guns?”

    I answered cautiously. But I felt able to say plenty about guns, which have been big in my life — too big, I fear. My father would have qualified as a gun nut, even by National Rifle Association standards. He not only owned sporting weapons, but also muzzle-loading flintlocks together with pistols of every kind, dating from several centuries.

  25. “…voiced concern over the pace of mortgage borrowing among highly indebted households.”

    IIRC it is lending to subprime credit risks which generates the biggest profits to financiers.

    So exactly what is the problem with highly indebted households taking on more mortgage debt?

    Moar debt = Moar profits = Good

  28. Any thoughts on why the New York Times is suddenly talking up a possible housing crash ahead? Is it a subscription drive strategy?

    1. U.S. Home Sales Are Surging. When Does the Music Stop?
      Nervous buyers and sellers are asking: ‘When is the housing market going to crash?’ Here’s what to expect this year.
      U.S. home sales and prices are surging, with market watchers wary of a bubble — but today’s market bears little resemblance to the one that fueled the 2008 crisis.
      By Stefanos Chen
      April 22, 2021

      As housing omens go, beware the trending Google search.

      In the first week of April, U.S. search interest in the phrase “when is the housing market going to crash” jumped 2,450 percent compared to the previous month, and is now more popular than anytime since 2004, according to Google. The search terms “should I buy a house” and “sell my house” also reached record interest.

      Market watchers are right to be wary. The median sale price of an existing home in the U.S. was $313,000 in February, up nearly 16 percent from a year earlier, when a 3 to 5 percent annual increase is considered healthy, according to a report from the National Association of Realtors, a trade group.

      “I think it’s what’s on everybody’s mind,” said Jonathan J. Miller, a New York appraiser who analyzes markets nationwide. “How long is it going to last?”
      …

    2. Homes are selling in record time and prices keep rising
      Homes typically sold in 18 days in March, according to the National Association of Realtors.
      Credit…Ted Shaffrey/Associated Press

      The median sale price of an existing home in the United States was $329,100 in March, up 17.2 percent from a year earlier, when a 3 to 5 percent annual increase is considered healthy, according to a report from the National Association of Realtors, a trade group.

      Nationwide, housing inventory was at 1.07 million units at the end of March, just above its record low of 1.03 million the prior month and down 28.2 percent from a year earlier, the group said on Thursday.

      Sales of new single-family houses soared the highest level since 2006 in March, the Census Bureau reported on Friday, to a seasonally adjusted annual rate of 1.021 million, up 21 percent from February. The typical new home sold for $330,800, down from its recent peak of $365,300 in December.

      Existing homes typically sold in 18 days, a record speed. Normally, 60 days is typical, Lawrence Yun, the National Association of Realtors’ chief economist, told Stefanos Chen of The New York Times.

      When the housing market peaks will depend largely on where you live and how the pandemic continues to reorder buyer priorities, but it will hinge on two trends: rising mortgage rates and incredibly tight inventory in some markets, which will likely keep demand strong through the rest of 2021, even as price growth moderates, several analysts said.
      …

      1. When did the government start actively pursuing the inflation of real estate bubbles, and what is the justification?

        2. I’ll put my money on 1973 and the U.S. increasing commitment in the Middle-East. Staggering sums of money have been exhausted with few tangible gains other than buying time.

        3. Alan Greenspan was the King of All Bubbles, so late ’80s or thereabouts. First with financial assets during the “Greed is Good” era, then later with houses after the collapse of the tech stonk bubble in 2000. Greenspan et al promoted the idea that someone can get rich through various scams vs. building a legit business. Justification being globalization gutted the U.S. industrial economy at the same time, slowly turning us into a 3rd world country.

          1. In all fairness to Alan Greenspan, the movie Wall Street, in which Michael Douglas made the “Greed is Good” speech, came out in 1987, the year Greenspan was appointed Fed chair. So you can’t fairly blame Wall Street’s culture of greed on Greenspan’s leadership at the Fed…it predates his tenure.

            I always thought of the “Greed is Good” speech as a parody of the ideas of Adam Smith (1723-1790), who pointed out how individuals acting in their own self interests can promote the greater good through cooperative economic production and trade, subject to a rule of law.

  30. Fact Check: Oscar Winner Claims Police Killings Happen ‘Disproportionately’ to Black People

    by Breitbart
    April 26th 2021, 4:30 am

    CLAIM: An Oscar winner on Sunday used his acceptance speech to criticize law enforcement, claiming that fatal police shootings happen “disproportionately” to black people.

    VERDICT: MOSTLY FALSE. Police shot and killed 1,021 people in 2020 with white people accounting for 44 percent of those deaths, more than any other racial group. Blacks accounted for 23 percent of those deaths. That percentage has held steady since at least 2017.

    Filmmaker Travon Free, who shared the Academy Award for the live-action short film Two Distant Strangers, made the claim during Sunday’s live Oscars broadcast from Union Station in downtown Los Angeles.

    “On average, the police in America every day kill three people, which amounts to about a thousand people a year. And those people happen to be disproportionately black people,” he said. “So I just ask that you please not be indifferent. Please don’t be indifferent to our pain.”

    The filmmaker may have been referring to the fact that black people account for 13.4 percent of the U.S. population, while fatal police shooting victims are 23 percent black.

    But it is also true blacks tend to commit crimes at disproportionately high levels, accounting for approximately 60 percent of robberies and 53 percent of homicides in 2018.

      1. My wife is a movie addict.

        It was pretty interesting this year. For example, the Best Picture winner has the flavor of a 2020s update of the Great Depression. Several of the top contenders were stories of struggle with issues of social displacement.

    2. “disproportionately”

      Any honest definition of “proportionate” needs to acknowledge the possibility that some racial groups have higher crime rates than others, and hence more risk of police interactions that go badly. But our Democratic politicians are way too dishonest to acknowledge this simple truth and allow it to enter the discussion.

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