The Mess That Greenspan Made - Part 414

Consumer Prices Flat, Jobless Claims Plunge

The Labor Department reported that overall consumer prices were unchanged in December for the second month in a row as falling energy costs offset price increases elsewhere and, for the entire year of 2011, inflation came in at 3.0 percent.

Gasoline prices that fell 2.0 percent from November to December combined with household energy costs that were down 0.4 percent to push the energy index 1.3 percent lower, however, energy prices remain up 6.6 percent from a year ago with many analysts now predicting a sharp increase in pump prices this spring.

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Thursday Morning Links

MUST READS
Kodak files for bankruptcy – CNN/Money
Spain passes key bond test, France in demand – Reuters
Investors Are Facing Up to Reality of Greek Debt Default – CNBC
European debt crisis: Critical Greek debt deal talks continue – Guardian
IMF push for $1 trillon rescue fund to cost UK £15bn – Telegraph
Keystone pipeline permit is denied by Obama administration – Washington Post
Why The Conference Board Is Changing Its ading Economic Indicator – Business Insider
Man accused of illegally flipping 235 Ohio homes ends extradition fight – Naples News
Gingrich: U.S. should reconsider gold standard – CNN/Money
A new stimulus: Have Wall Street bail out Main Street – Fortune
One Million Homeowners May Get Mortgage Writedowns – CNBC
Defending Our Freedom to Share – The Big Picture

MARKETS/INVESTING
Oil above $101 on hopes IMF to curb Europe crisis – AFP
Gold climbs as rising risk appetite lifts euro – Reuters
Saudis target ‘triple-digit’ oil price for the first time – Globe & Mail
What the Next Decade Holds for Commodities – U.S. Global Investors
Natural gas prices rebound after touching 2012 lows – Reuters
Saudi comments on oil have bullish implications for gold – Commodity Online
Is Bullion Back? ‘Gold Is Still In a Super Bull Market’ – CNBC
Chinese demand, macroeconomic tensions to drive gold prices – Mineweb
The three real risks to continuing gold price advance – Mineweb
India’s gold duty hike stalls orders – Reuters

ECONOMY/WORLD/HOUSING/BANKING
Few U.S. Cities Recoup Jobs in Recovery – Bloomberg
Warm Winter Deflates Prospects for Retailers – NY Times
Does Austerity Promote Economic Growth? – Shiller, Project Syndicate
Nigeria reels after oil subsidy row turns into country’s biggest ever protest – Guardian
PBOC Conducts Reverse Repurchase Agreements – China Daily
The euro is pushing Italy into depression – Telegraph
Foxconn chairman likens his workforce to animals – Want China Times
China Reduced Treasury Holdings for Second Straight Month – Bloomberg
As Home Buying Returns, Do Apartments Face a Bubble? – CNBC
2012: The year of a housing turnaround? – Housing Wire
Local currencies: ‘In the U.S. we don’t trust’ – CNN/Money
Bernanke’s Housing-Market Meddling Tarnishes Trust – Bloomberg

 

Canada Home Prices: What, Me Worry?

They still seem pretty sanguine about home prices north of the border, but, if the country I lived in appeared in the far right position of a chart like this one from a recent IMF survey on global home prices, I’d be a little concerned about not overdoing it on credit and maybe selling an investment property rather than buying another one.

Bloomberg filed this report on the subject yesterday that included the following:

“Investor-owned condos have got to be a cause for concern, just because of supply and demand,” Bank of Montreal Chief Executive Officer William Downe said Jan. 10 at a banking conference in Toronto. Royal Bank CEO Gordon Nixon said “there’s no question” that the condo markets in Vancouver and Toronto are the most vulnerable in the country.

Investor owned condos… You don’t hear too much about that in the U.S. these days, but they were a hot topic in places like Miami and Las Vegas in 2005…

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Time and again you hear pundits say that what the U.S. experienced in the last decade was a terrible boom/bust cycle for the housing and credit markets. But then, almost in the same breath, they oftentimes say the nation must do whatever it can to get those eight million jobs back that were “lost” when the housing bubble burst.

But, does that make any sense?

Were those jobs really “lost” or should a good many of them have never existed in the first place?

Anyone with a rudimentary understanding of economics would conclude that, since many of the jobs created early in the decade were related to housing – construction workers, mortgage brokers, etc. – that they won’t be coming back anytime soon, at least not as long as the housing bubble remains “popped” (which is a pretty good bet over the next few years).

Of course, since the early-2000s housing boom was, effectively, the cure for the stock market boom that went bust at the turn of the century, one could argue that what the government and central bank need to do is create a new and different asset bubble.

But, so far, Fed Chief Ben Bernanke and crew seem to be shooting blanks.

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