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Vancouver’s World Class Freak Show

That’s one tough bubble they’ve got north of here in Canada’s housing market and, apparently, China’s got a lot to do with its durability as detailed in this story at Maclean’s.

Does anyone call it “Hongcouver” anymore? Maybe that name isn’t as funny as it once was…

There was neither the time nor the desire for an exhaustive analysis, but it didn’t take long to turn up the chart below from the Fed’s Survey of Consumer Finances that seems to contradict the conclusion of former Minneapolis Fed President Narayana Kocherlakota (from this Bloomberg story) that, from 2010 to 2013 “the rich didn’t fare particularly well” .

I guess it just depends on how rich you are and, just speculating here, but it’s likely that the top curve above would show an even bigger divergence from the others the more you separate the richest of the top 10 percent from the rest of that group.

Draghi on Root Causes

I get a kick out of someone with great authority (especially central bankers these days, given their quickly fading super powers) speaking confidently about the root causes of some problem as if you’re an uninformed ignoramus (i.e., not an economist) if you don’t see what is so obvious to them and people like them. Such is the case with ECB chief Mario Draghi’s explanation to the Germans about why interest rates are freakishly low.

To wit:

They (low interest rates) are the symptom of an underlying problem, which is insufficient investment demand across the world to absorb all the savings available in the economy. And so the right way to address the challenges raised by low rates is not to try and suppress the symptoms, but to address the underlying cause.

Got it?

It’s the ‘ol “lack of aggregate demand” root cause canard (i.e., as opposed to the more sensible reckless, multi-decade expansion of credit and debt that artificially raised aggregate demand) that future historians will someday have fun with, that is, after the current set of top economists and central bankers are completely discredited.

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FinTech

CBS makes you sit through two commercials, but the prospect of Big Banks being the next sector to be overtaken by technology advances in the U.S. is worth the wait…

It couldn’t happen to a nicer sector…

Credit Crunch for Shale Drillers

Bloomberg reports on the long-awaited (yet still painfully slow) comeuppance for shale oil companies and the big U.S. banks who have lent to them. Of course, freakishly low interest rates that were too low for too long are in no way related to any of this.

This seems to be the new normal (that is, unless we get a huge rebound in oil prices):

Chesapeake Energy Corp., the deeply indebted shale producer, said that it can hang on to its $4 billion bank line as long as it posts just about everything it owns as collateral.

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