2012 February 17 | timiacono.com

Quantitative Easing Revisited

This follow-up to the wildly popular original YouTube hit Quantitative Easing Explained covers such subjects as how quality improvements in the iPad 2 keep inflation low and how Fed money printing rewards the wealthy while punishing the poor.

Though its popularity pales in comparison to its predecessor (about 5 thousand views vs. 5 million views), it’s still worth a look if for no other reason than this quip:

I have figured out the formula for predicting the Fed’s actions. First, you take a past policy that has been a complete bust. Then you double the size and do it twice as long.

Marc Faber – U.S. Housing Bull

Count Gloom, Boom & Doomer Marc Faber as one more in a rapidly expanding group of housing bulls, the long-time market analyst commenting in this CNBC story today that there is value in the southern states where property prices continue to fall.

“If you look at the supply of homes, new construction, and compare it to immigration into the United States, to the growth of the population, then these (southern) markets are very attractive from a longer term perspective,” Faber told Bernie Lo on CNBC’s Straight Talk.

Among the markets he pointed to were Atlanta, Phoenix and Miami. Faber said investors could earn a rental yield of 8 percent per year and buy homes in the south of the U.S. at a 40 to 50 percent discount to construction costs.

Faber said he went to see homes in Phoenix and Atlanta, and in some cases, U.S. homes were cheaper than those in Thailand, where he lives.

At the same time, the fact that people couldn’t get credit to buy homes in the U.S. was helping to boost the rental market, he added.

It is rather remarkable what is happening in a place like Atlanta. According to the latest Case-Shiller home price data, they’ve recently overtaken Cleveland and Phoenix while rapidly closing in on Las Vegas in what is, for some cities, an ongoing race to the bottom. Detroit remains the unquestioned leader in the group, however, extrapolating recent trends would see Atlanta claim that title by the end of the year.

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Consumer Prices Rise, Danger in the Core

The Labor Department reported that the consumer price index rose 0.2 percent in January, paced by a surge in apparel costs, and the official measure of U.S. inflation now stands at an annual rate of 2.9 percent, down from a 3.0 percent rate in December.

The so-called “core rate” of inflation – excluding food and energy – also rose 0.2 percent in January and now sports a 2.3 percent year-over-year gain, its largest 12-month increase since September 2008.

The closely watched energy index rose 0.2 percent last month – one of the smallest changes ever for this volatile component – and it is now up 6.1 percent from a year ago, though, with gasoline prices now rising sharply, higher fuel costs will likely show up next month.


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Friday Morning Links

What Next for Greece After Another Week of Deadlock? – CNBC
Greece closes in on bailout, lenders seek more oversight – Reuters
ECB Said to Swap Greek Bonds for New Debt to Avoid Enforced Losses – Bloomberg
Congressional leaders back deal on $150B economic package – Washington Post
Moody’s Warns Big Banks of Possible Credit Rating Cuts – DealBook
Creeping Fascism, Part One: Return of the Company Town – Dollar Collapse
Japan slowly wakes up to doomsday debt risk – Reuters
US Housing Among Most Attractive Assets: Marc Faber – CNBC
Is China Central Bank increasing their gold reserves? – Mineweb
Is China faking its economic growth? – CNN/Money
China goes for the gold – China Daily
Citigroup Says Peak Oil Is Dead – WSJ

Oil hits 8-mth highs in London – AFP
Gold up on Greece bailout hopes – Reuters
Stock Market Is Expecting Too Much – Comstock Funds
Can S&P Retake 2011 High Before Pull Back? – CNBC
Not Long, Not Short, Not Participating – Surley Trader
Nasdaq hits decade high; stocks close up 1% – CNN/Money
Gold Traders More Bullish, Billionaire Paulson Says Buy – Bloomberg
Gold priced in CHF ready to rock and roll – Peter Brandt
Gold is money in extremis – just ask Iran – Mineweb
Gold gains as China demand remains strong – MarketWatch

We’re #1 – EconomPicData
The Uptick’s Downside – Roubini, Project Syndicate
Public More Optimistic about Economy, But Concerns Persist – Pew Research
Chinese enterprises encouraged to invest in US Midwest – China Daily
Greece and the euro: What Argentina tells us about Greece – Economist
Retail Sales in Britain Unexpectedly Increase for a Second Month – Bloomberg
Is Canada’s housing market slowdown starting? – Winnipeg Free Press
Government intervention delays housing market recovery – OC Housing News
Housing faces problems, despite gains – MarketWatch
Cheap Money Is Not a Victimless Crime – Real Clear Markets
Quantitative Easing’s Best Years Behind It – WSJ
Will They Or Won’t They? – Fed Watch

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