Monthly Archives: March 2010

Is Canada’s housing market bubble beginning to deflate?

Now we are reading a welcome news from Canada. The supply of houses on the market is beginning to increase which if it were to continue on this path would signify that Canadian housing bubble is being pricked as we speak and should provide a spectacular deflation in the months and years to come.

This is how it started in USA back in 2005. First supply of houses rose while the prices continued to inch upward. But then the supply really began to accumulate as more and more fools started to put their properties on the market sensing that it was time to get out. We know what happened next.

And now in Canada we are beginning to see the same kind of trends. They, of course, still continue talking about how real estate prices never go down, and that the rising valuations are based on fundamentals and that Canadian economy is strong and getting stronger. But we now know that this is precisely the bubble talk you hear at the top of many speculative markets throughout history.

Currency composition of FX reserves of world’s central banks.

Here you can find a useful graph of the currency composition of FX reserves for the 114 reporting countries’ central banks.

The Marginal Productivity of Debt.

The key to understanding the problem is the marginal productivity of debt, a concept curiously missing from the vocabulary of mainstream economics. Keynesians take comfort in the fact that total debt as a percentage of total GDP is safely below 100 in the United States while it is 100 and perhaps even more in some other countries. However, the significant ratio to watch is additional debt to additional GDP, or the amount of GDP contributed by the creation of $1 in new debt. It is this ratio that determines the quality of debt. Indeed, the higher the ratio, the more successful entrepreneurs are in increasing productivity, which is the only valid justification for going into debt in the first place.

A sure sign of deflation: 9 bailed-out banks report declines in new lending.

As the pool of credit worthy borrowers and worthy inestment projects dwindles in a deflationary environment so the lending declines. It is no surprise that in still democratic USA, unlike the communist China, the Government cant just mandate its banks to lend. It can provide interest free credit lines, it can embark on a massive Qunatitative Easing and public relations campaings, but if banks are scared to lend and the borrowers are not interested in borrowing nothing will get the lending machine going. At least, not until the bad debts are liquidated through defaults, which are, of course, deflationary. And so the lending contracts.

U.S. is in deflation as a nation. Shooting at the Pentagon. Revolt is brewing.

Now that the social contract has been torn up and stamped upon by the rich and the powerful elites of the USA, now that the trillions have been stolen from the millions in broad day light with smiles on their faces, now that tens of millions of jobs have been shipped off shore and tens of millions of immigrants have been allowed to pour into into America (even now in this difficult economic time) and take jobs that many US Citizens so desperately need, now that the mere dissent and opposition to the government policies is suppressed and government statistics are shamelessly falsified, the USA as a nation is deflating not only economically, but also sociall and politically.

We the People are damn f###ing tired of this disgraceful spectacle that the political establishment and their puppet masters are forcefeeding us.

May that is why the People of the USA are losing their patience (finally) and beginning to fly planes into privately owned tax collection agencies such as IRS and go on shooting sprees near buildings of other anti-American organizations, And oh by the way the Epic Beard Man is so popular, because he represents revolt and resistance to the government forced policies of tolerating crime and violence for the sake of diversity and multiculturalism.

Some fake tungsten gold bars controversy links.

Fake tungsten gold bars congroversy.