Essays

Bubble Symmetry and Housing

"Hmm, what would have happened if the Federal Reserve hadn't dumped trillions of dollars into the mortgage market, and the Federal housing agencies hadn't subsidized mortgages and housing with 3% down payments and tax credits? Perhaps all the trillions of dollars of intervention has accomplished is extend Phase 2. Central bank and state manipulation distorted the symmetry of housing's decline, but did they stave off Phase 3 permanently? If bubbles eventually revert to their starting level, Phase 3--capitulation and a return to pre-bubble prices--still lies ahead." Continue reading →

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David Graeber, DEBT: The First 5,000 Years [2012]

"Graeber carefully shows that everything from the ancient work of law and religion to human notions like 'guilt,' 'sin,' and 'redemption,' are deeply influenced by ancients debates about credit and debt. It is no accident that debt continues to fuel political debate, from the crippling debt crises that have gripped Greece and Ireland, to our own debate over whether to raise the debt ceiling. Debt, an incredibly captivating narrative spanning 5,000 years, puts these crises into their full context and illuminates one of the thorniest subjects in all of history." Continue reading →

Continue ReadingDavid Graeber, DEBT: The First 5,000 Years [2012]

Bye-Bye, Bernanke… Hello Timmy?

"Paul Brodsky, a founder of QB Asset Management, with a decidedly different take. As some background, Paul's hypothesis – not unlike that of many Casey Researchers – is that governments will have no choice but to continuously accelerate money creation, which will lead to a reset of the global financial system sooner rather than later. Therefore the Fed doesn't need someone with sterling academic credentials as its next chairperson – it needs a diplomatic,'relationships' type to lead the US through the coming economic upheaval. And he believes that dark horse is Timothy Geithner." Continue reading →

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Is the Fed Blowing a New Housing Bubble?

"Over the past year, the Federal Reserve has ramped up its policy of quantitative easing, with the result being new stock market highs and surging bond prices. Moreover, housing prices jumped 8%, the biggest annual gain since 2006. The result is that more than a trillion dollars have been added to the market value of single-family homes. Homeowners are now wealthier and according to what economists call the 'wealth effect,' they should be willing to spend more, helping the economy. But recent data released by FHFA suggest that the increase in house prices is not being driven by a broad-based improvement in the economy's fundamentals." Continue reading →

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A New “Global Standard” Takes Shape

"Financial privacy should not be viewed in a negative light, as it is often portrayed. The Swiss view it as a fundamental human right to preserve dignity, akin to medical privacy. How would you feel if the government snooped into your medical records and automatically shared those records with foreign governments? While it would appear the primary objective of this new 'global standard' is to rake in more money for bankrupt governments, it seems another motive is at play here. The optimistic estimate for FATCA is that it will bring in around $9 billion over 10 years or $900 million on average per year. It appears the primary motivation here is control." Continue reading →

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The Coming ObamaCare Shock

"In total, it appears that there will be 30 million to 40 million people damaged in some fashion by the Affordable Care Act—more than one in 10 Americans. When that reality becomes clearer, the law is going to start losing its friends in the media, who are inclined to support the president and his initiatives. We'll hear about innocent victims who saw their premiums skyrocket, who were barred from seeing their usual doctor, who had their hours cut or lost their insurance entirely—all thanks to the faceless bureaucracy administering a federal law." Continue reading →

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Fred Reed: Terrorism in Boston

"The return on investment is phenomenal. For example, the attack on New York cost perhaps several hundred thousand dollars. Yet it drew the US into multiple drawn-out, losing wars costing hundreds of billions of dollars, and transformed America from a reasonably free country into a rapidly deepening Orwellian gloom. A tiny input, a stunningly large effect. If terrorism were a hedge fund, it would be the hottest buy on the planet. It is truly slick. The terrorists don’t do serious damage to the attacked country. They stimulate the victim society to damage itself." Continue reading →

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Cowardice Redefined: The New Face of American Serial Killers

"A little after 10:00 p.m., and a serial killer is getting ready to make his move. He has watched and waited for this moment for some time. He watches his victim get out of a cab and dig in his pockets for money. Two of his children run out to the porch to greet their daddy. The killer presses a button and watches as the victim, the taxi driver and the two children are vaporized. Other people in the house, the man's wife, parents and three other children are badly injured and burnt by the high explosive. The house next door partially collapses, killing an elderly woman and injuring her grandson. But this is just the beginning." Continue reading →

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Better “Safe Haven” – Switzerland or Canada?

"Not only is Switzerland a nation with an impossible terrain for armies, it has an army (mainly reserves) of over a million soldiers ready for action at any time in a well-trained state of readiness. Its complex of bridges and tunnels, which link it with all the different parts of Europe and allow its own people to travel through the nation, is mined with explosives that will make it impassable should it be invaded. As a result its refuge for capital is 300 years old and its banking industry 5 times the size of its own GDP stretching all over the world. It has been tried and tested in war and in peace like no other nation." Continue reading →

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The Global Status Quo Strategy: Do More of What Has Failed Spectacularly

"The only metrics that count are debt and the ability to service that debt. Households have this tiny little problem known as declining income that makes it impossible to service more debt unless interest rates fall to near-zero. Presto-magico, real interest rates (adjusted for inflation) are near-zero, and can't fall any lower. That means the Fed has run out of room to lower rates. From here on, households will only be able to service more debt if their income rises. Alas, with full-time employment back to 1980 levels, that is not even a remote possibility." Continue reading →

Continue ReadingThe Global Status Quo Strategy: Do More of What Has Failed Spectacularly