Financial Bubbles | timiacono.com

A New Kind of Crazy in Canada Housing

There’s lots of crazy stuff going on in the world these days, both global finance and geopolitics-wise, but one of the crazier elements of the former has been the continuation of what, for many years, has appeared to be an unstoppable asset bubble (yes, that’s an oxymoron) in Canada’s housing market that, recently, appears to be veering toward a pin.

This chart of home prices from Vikram Mansharamani serves as a timely reminder of how nuts it’s been north of the border and how much potential currently exists for an unpleasant change in direction for that light violet curve.

Surging household credit, soaring home prices, tumbling oil prices, and now an admission by the Bank of Canada that they really don’t understand what’s been driving Canada’s housing market make this a situation that is just begging for a resolution of some sort.

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Like a Ball and Chain

Someday, these post-financial crisis years will be looked back upon as being one of the most damaging periods to the American psyche with soaring wealth/income inequality topping the list of ills due, in large part, to monetary/fiscal policies enacted by TPTB.

Not far down said list is the burgeoning student loan problem that is transforming an entire generation and this CNN/Money story provides a view of things from recent graduates.

Interestingly, I have some first hand experience with this issue recently where a surprising number of ski instructors I’ve worked with over the winter are 20-something recent graduates who, you’d think, should be doing something different at this time.

A common refrain is that the four-year degree is the new high-school diploma and they all dread the student loan bills coming due.

Here’s the chart from about half-way through a highly entertaining Ted talk (due in part to a Tennessee twang) given by hedge fund billionaire Paul Tudor Jones depicting where the U.S. stands on a measure of inequality via-a-vis social ills (go here for the entire clip).

It’s not clear how that left scale is calculated, by my guess is that the American obesity epidemic is what puts this nation off the chart.

Of course, the headlines that were generated from this talk had to do with how situations like those depicted in the chart are resolved and I’ve obliged in the title above.

Shocker! New Tech Bubble Spurs Confidence

A recent Gallup poll indicates that, in a part of the country where stock values and home values are at nosebleed levels with a dovish Federal Reserve just last week providing a green-light for more of the same, the populace is pretty confident about the economy.

About the only thing that might be considered surprising about the data below is just how big the confidence gap is between the Bay Area and the rest of the country.

At the other end of the spectrum are areas in states such as Alabama, Mississippi, Tennessee, Arkansas, and Oklahoma where folks are downright gloomy. In these areas, 60 percent or more of the respondents said that the economy is getting worse, not better, and less than 20 percent said that current conditions were good or excellent.

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