investment

The Dorm Boom: Higher Education’s Fellow Traveler

"It’s a curious time for a campus construction boom. Alternatives to a traditional college education are growing every day. Amid the change and uncertainty, real estate developers are rushing to build student housing. Major homebuilding companies like Lennar and Toll Brothers that ramped their businesses up in the single-family housing boom have now shifted their focus to another boom: student housing. While Freddie Mac, a large purchaser of student housing loans, is a bit cautious after purchasing $1.7 billion in loans last year, the private sector is ready to build. Bricks-and-mortar higher education is a bubble searching for a pin. Student housing is going along for the ride." Continue reading →

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Why Bond Market Bulls Are About to Get Crushed

"We have the lowest interest rates in 250 years – lower than at any time since the founding of the country – created by the Federal Reserve forcing interest rates to zero in the short term. In addition, we have the Fed encouraging banks to help lower rates through buying Treasuries. On top of this, we also have some $350 trillion of swaps derivatives of interest rates – more than half of all the derivatives out there are interest-rate derivatives. Banks use these swaps to transmit lower rates to other debt instruments based on what can they can get from the Fed. This drives all rates down. We've seen 30 years of declining interest rates." Continue reading →

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Banking group warns there’s too much ‘easy money’ in global economy

"An influential group of leading world banks warned Thursday that central banks are pumping out too much easy money and markets risk becoming dangerously addicted to ultra-low interest rates. The Institute of International Finance, which groups 450 banks, said if central banks continue to flood money into the global economy then any future bid to get it under control could itself destabilize the financial system. 'These conditions — quantitative easing, very low interest rates — cannot last forever, but the risk is that financial markets have become addicted to them,' it warned." Continue reading →

Continue ReadingBanking group warns there’s too much ‘easy money’ in global economy

What Could Go Wrong with the Housing Recovery in 2013? Plenty.

"Given the preponderance of housing in bank assets, household wealth, and the perception of wealth, the key policies of Central Planning largely revolve around housing: keeping interest rates (and thus mortgage rates) low, flooding the banking sector with liquidity to ease lending, guaranteeing low-down-payment mortgages via FHA, and numerous other subsidies of homeownership. At least three aspects of this broad-based support are historically unprecedented." Continue reading →

Continue ReadingWhat Could Go Wrong with the Housing Recovery in 2013? Plenty.

What Could Go Wrong with the Housing Recovery in 2013? Plenty.

"Given the preponderance of housing in bank assets, household wealth, and the perception of wealth, the key policies of Central Planning largely revolve around housing: keeping interest rates (and thus mortgage rates) low, flooding the banking sector with liquidity to ease lending, guaranteeing low-down-payment mortgages via FHA, and numerous other subsidies of homeownership. At least three aspects of this broad-based support are historically unprecedented." Continue reading →

Continue ReadingWhat Could Go Wrong with the Housing Recovery in 2013? Plenty.

Gentlemen, Start Your Presses

"Many have dubbed the last decade or so to be an era of easy money. As it turns out, that characterization may have been premature. Based on the new crop of central bankers who are primed to take control of the world's financial system, the age of truly easy money may be just getting started. Many expect that when Bernanke's term expires in January 2014, he will be succeeded by the dovish Yellen. But that's just the beginning. In short order, a host of serial money printers will take up the reins at the world's most important central banks." Continue reading →

Continue ReadingGentlemen, Start Your Presses

Fears of Return of Euro Crisis Plague Central Bankers and IMF

"Last year, the ECB supported ailing Greece for months, because the EU couldn't agree on a bailout package for so long. It recently looked the other way when the Irish central bank came to the aid of a bank, and the prohibition on directly funding public budgets was cunningly circumvented. If the ECB were now forced to help an Italian government that is unwilling to institute reforms, its credibility would be destroyed once and for all. Many central bankers are no longer willing to cooperate with the lawmakers behind Europe's rescue programs." Continue reading →

Continue ReadingFears of Return of Euro Crisis Plague Central Bankers and IMF

Bank of Japan governor nominee Kuroda sets out aggressive policy ideas

"The Japan government's nominee to be the next central bank governor outlined more forceful policy prescriptions on Monday to finally defeat deflation, saying he would not set any limits on the amount of cash the Bank of Japan pumps into the economy. Haruhiko Kuroda told lawmakers the BOJ's current policies were not powerful enough to boost inflation to 2 percent, a target he said the central bank should strive to achieve in two years. Kuroda suggested the most natural central bank stimulus for the economy would be through huge purchases of longer-dated government bonds. The BOJ should also consider kicking off its open-ended asset purchases early." Continue reading →

Continue ReadingBank of Japan governor nominee Kuroda sets out aggressive policy ideas

Boycott Bitcoin!

"Well, Fellow Reckoner, it’s been something of a sad week for proponents of Bitcoin… Would-be buyers of the fringy cyber experiment have had to watch as the price of their beloved currency shot to within (as of this writing) a few cents shy of $35 per coin. No buyer wants to see that kind of action…unless they are also an 'already boughter.'" Continue reading →

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Bitcoin Ready To Go Mainstream With First U.S. Exchange

"Recently armed with $500,000 in seed funding and a partnership with Silicon Valley Bank, Coinlab, a startup based out of Seattle, is bringing its innovative Bitcoin project closer to the U.S. market. The deal brings over the North America-based book of Mt. Gox, one of the largest and most widely used bitcoin to currency exchanges. According to Coinlab CEO, Peter Vessenes, the book is worth nearly $500 million in annualized trade volumes, which he expects to grow nearly ten times over the next year. Silicon Valley Bank, a company that provides financial services to emerging growth companies, will be holding deposits of bitcoin and dollars for Coinlab." Continue reading →

Continue ReadingBitcoin Ready To Go Mainstream With First U.S. Exchange