The Cure Is What Caused The Next Crisis
A weekend topic starting with the Citizen Times in North Carolina. “When discussing the West Asheville real estate market, one highly technical term surfaces repeatedly. ‘Oh yeah, it’s insane — it is,’ Delias Thompson said with a laugh, standing in front of the home she recently built with her partner. Thompson noted that several nearby homes, which are about the same size as their 1,100-square-foot home, old for prices much higher. ‘We’re lucky, because when we bought, I think we probably totaled $225,000 (for the land and house).’”
“Kyle Henry, Aaron Palmer and Tyler San Souci have a duplex nearly finished on State Street, on a small lot that cost $80,000, with each 1,100-square-foot unit selling for $279,000. If they hadn’t divided the lot for two homes, they would’ve had to build a house at least in the $450,000 range to recoup the land investment, Palmer said. Even though the land market is extremely tight in West Asheville, he thinks some buildable lots remain, as well as opportunities to rehab and sell existing older homes.”
“That all adds up to prices continuing to rise. ‘People always talk about a bubble and how everything is going to get softer, but I’m under the belief that as long as you have supply and demand, as long as there’s less inventory and there’s more people who want to be in this area, there’s always going to be that demand that’s pushing and driving the market up,’ Palmer said. ‘So I don’t see it slowing down over the next year or two.’”
“A bidding war would be just fine by another State Street resident, Johnny Harrin. Harrin grew up in the house his father built in the early 1960s, moved away when he got married and then moved back in 2002. Now it’s got a for sale sign out front. He bought the two adjacent lots after moving back, and they’re included, although he’s having problems with the city wanting him to not build within 30 feet of a creek on the empty lots. He’s torn about selling, in part because the house, now three bedrooms and two baths on two levels, was paid for more than 30 years ago. His dad paid about $3,500 for it when it was built as a two-bedroom, one-bath.”
“‘We’re going to see what we can get out of it,’ Harrin said, adding that a real estate agent told him to put it on the market at $499,000.”
The Coeur d’Alene Press in Idaho. “Matthew Gardner popped the thought that we’re in a housing bubble. ‘Just because some markets are overvalued there doesn’t have to be a bubble,’ Gardner, Windermere Real Estate’s chief economist, told nearly 200 Windermere Coeur d’Alene Realty employees.”
“Gardner cited multiple current market conditions, including high credit quality, borrowers not defaulting, good debt-to-equity ratios and slight mortgage rate increases to perhaps 4.4 percent, to dispel the thought that the economy has entered a housing bubble. Gardner predicts the economy will expand 2.5 percent in 2018, but foresees a slowdown in 2020.”
“Gardner said skyrocketing home prices in other areas such as California — the median sales price in San Francisco is $1.18 million — will continue to drive people to North Idaho. ‘We are cheap,’ he said.”
From Florida Today. “As we go through our second ‘housing bubble’ in this century, many are throwing the 2006-2011 crash histories down the memory hole. Let us hope local government does not follow suit. For example, in 2005 the Brevard County School Board, stung by the failure of their 2003 sales tax efforts, went all in on a plan to borrow over $800 million for capital improvements. The source of funds was to be the grossly inflating value of housing and real estate.”
“The school board’s taxable value estimates in April 2005 — just four months shy of our August 2005 peak median house value of $248,000 — had taxable values increasing by 10 percent annually for the next five years. Despite arguments in 2005 school population would flounder if median house price hit over $350,000, and in 2006 in the face of obvious falling values, the school board borrowed hundreds of millions of dollars.”
“This extravaganza led to the crash and burn spectacle a few years later. Windfall bubble revenues had not been put into reserves or capital but had either been leveraged for debt or used to increase operating expenses. Where the local governments had been given reports and charts of the market as it was collapsing, all was ignored. By the fall of 2007 foreclosure filings were exceeding sales, and did so for many more years.”
“The manipulator of the artificial market creating multiple asset bubbles in stocks, housing, and crypto-currencies is the Federal Reserve, with more than eight years of zero-interest policy. We’re on the cusp of 2005 prices, and the rental market has followed suit. I believe in 2005 landlords were shocked at the rapidly accelerating prices and failed to raise rents accordingly. This time they are raising rates rapidly and many landlords, determined not to miss their second shot at bubble prices, are selling their rentals.”
“I would never claim pricing in any economic bubble is not reflective of market values. Indeed it is. The problem is the underlying sound pricing economics have fallen prey to the intense belief prices will relentlessly surge. Prices do not just double in a few years due to demand unless demand skyrockets and supply is constricted. There are roughly 250,000 housing units and 580,000 people in Brevard. Housing is being built, not destroyed, and the population is not growing rapidly.”
“There is the oft-repeated phrase of ‘It’s different this time,’ but the only difference is in length and magnitude, not final resting point. There is no such thing as a perpetual bubble.”
From Bloomberg. “Back in November, former Fed chief Janet Yellen described the current low level of inflation as a ‘mystery.’ With QE having multiplied the amount of fiat money issued by central banks in just a few years, it’s fair to wonder: How come it didn’t trigger much higher levels of inflation than what we now see? The more fundamental answer is that QE resulted in a wealth increase for the richest, who consume relatively little of their revenue, while the middle class and the neediest largely failed to reap any benefit.”
“There are many problems with this, from growing inequality to pressures on social cohesion. But one that has received too little attention up to now is the prospect that we are heading toward a growing asset bubble that will result in a pronounced crash.”
“In the U.S., the top 10 percent of households hold over 70 percent of net wealth; the same is true, to a lesser extent, in the rest of the Western world. The wealthiest consume the lowest portion of their income, especially when the gains are exceptional rather than recurring, as with QE. As for the middle class, its income has been capped for decades by cheap foreign imports and an automation wave, none of which were changed by a monetary phenomenon like QE. As a result, only a small fraction of the newly created wealth found its way into consumption, and when it did, it was limited to luxury goods and real estate through higher rent.”
“Meanwhile, central bankers are still using inflation as a measure to gauge how much more QE they should proceed with. Journalist Ambrose Evans-Pritchard put the challenge now in the starkest possible terms, as a threat not simply to the recovery but to democracy: ‘The central banks themselves entered into a Faustian Pact from the mid-Nineties onwards, falsely thinking it safe to drive real interest rates ever lower with each cycle, until they became ensnared in what the Bank for International Settlements calls a policy ‘debt trap’. This has gone on so long, and pushed debt ratios so high, that the system is now inherently fragile. The incentive to let bubbles run their course has become ever greater.’”
From News.com.au. “They are calling it the ‘everything bubble’. All around the world assets have been rising with a beautiful synchronicity. Australia has seen east coast house prices go crazy. We are not alone. A simple home can cost well over a million dollars now in cities across New Zealand, Canada, Sweden and San Francisco.”
“The everything bubble goes beyond share markets and homes. The global bond market is worth around $80 trillion, 10 times more than all the land and buildings in Australia put together. It has soared to record highs over the past two decades before showing curious signs of weakness in the last year or so, that have been intensifying over the last week.”
“The Australian stock market may look like it’s not part of the everything bubble — after all, it is still below its 2007 peak. But when you delve into technology stocks you can find valuations that seem blown out of all proportion. For example Getswift, a company with revenue in the last 12 months of $600,000 — comparable to your local pizza shop — but valued at $585 million. (Getswift claims it has a deal with Amazon.)”
“This everything bubble is so strong it even conjured into existence a whole new class of assets and made them worth billions — cryptocurrencies. Bitcoin is up 226 per cent per cent in the past two months alone. That looks puny compared to ethereum, which is up 397 per cent.”
“But if you have an everything bubble, you need to look at the trend behind the trend. Cast your mind back a few years and you may recall the expression ‘quantitative easing’. This is where central banks pumped money into the economy to try to help us recover from the global financial crisis. It happened in the US, Japan and Europe. The problem with loose monetary policy is that while it is supposed to make people do productive things like start a new company, it has a side effect of making them buy assets at crazy prices. If the everything bubble pops, it may turn out that the cure for the global financial crisis is what caused the next crisis.”
Chester, CT Housing Prices Crater 9% YOY
https://www.movoto.com/chester-ct/market-trends/
https://www.federalreserve.gov/releases/h3/monetary-base-july-11-2013.jpg
http://greshams-law.com/wp-content/uploads/2012/02/federal-reserve-assets-from-1915-to-2012.png
with all this new currency creation how come velocity isnt picking up?
Because the Fed is paying interest on excess reserves.
Incorrect. Collapsing demand.
Add the activity base of M1 and M2
Increase the amount and you reduce the total because you only need so much.
QE was aimed the wrong way.
Infrastructure would have been better. Affects the middle class more.
QE was a fraud and typical government interference with borrowed money.
If you add new cars on the road and they are all going 50mph one hasn’t changed the velocity.
The acceleration, however, in money growth, has declined and we are heading towards a knock-down RECESSION.
Agreed. I think this is become income inequality has become increasingly concentrated to the top 1%. The debt-induced spending is losing its legs and can only run so far. My point was that the Fed expanding its balance sheet hasn’t produced runaway inflation because the liquidity isn’t being soaked up by the interest paid on excess reserves.
how much excess reserves are there? I know its not close to 4 trillion as about 4 trillion was printed to buy bonds. some of that money went somewhere. It sure didnt make it to the serfs.
Some of us serfs made money during the bubble and siphoned it off into savings. Not enough to make a dent in 4 trillion, but still.
So while we might expect larger banks to hold more cash, we observe that small and mid-sized banks have only modestly increased their holdings of excess reserves, and now the level of reserves of small banks is roughly consistent with levels predicted by a pre-crisis growth rate. This indicates that liquidity is not diffusing through the banking system, but is instead staying concentrated on the balance sheets of the largest banks.
https://www.clevelandfed.org/newsroom-and-events/publications/economic-trends/2015-economic-trends/et-20150811-who-is-holding-all-the-excess-reserves.aspx
Alphonso
I like your first line but disagree with the conclusion in your second.
Deceleration will put pressure on the interest rate which will help right the keel of this economy.
“Deceleration will put pressure on the interest rate which will help right the keel of this economy.”
If you were a sovereign country that held U.S. bonds and you knew our interest rates were going to go up, would you continue to hold these securities knowing that they were going to decline or sell them after the next two interest rate cuts?
Only about $2T of US debt has maturity of more than 10 years.
$2T is short term (less than 1 year).
$9T is from 1 to 10 years.
Some holders of debt might sell and take a loss…however, many will simply hold to maturity.
“…however, many will simply hold to maturity.”
…and take a loss.
This same fate awaits homeowners who opt to take their homes off the market when they discover that the market value has fallen below their wishing price. A loss is a loss, whether or not you realize it by selling.
“…and take a loss.”
Not necessarily. It depends a lot on how quickly yields rise. I face this dilemma all the time when I do CD-ladders. I locked in at 3.1% on some FDIC-insured PenFed CDs about 5 years ago on a good chuck of our savings. I had to make some assumptions on where interest rates might be in the future. Back then it wasn’t clear how quickly rates would rise, but 1 year, 18 month, and 2 year rates were pitifully low (like below 1% yield, so about 1% below inflation). The rate differential I received by tying up funds for 5 years had a break-even point. I calculated it, but don’t remember what it was now. Anyway, it worked out positively for me so long as rates didn’t precipitously go up (which they didn’t). This worked out for me precisely because even if rates did go up, I could hold to maturity. The profit/loss scenario becomes a lot more complicated if I were in a bond fund subject subject to redemptions and repricing based on interest rate changes and inflows and outflows of holdings. Holding to maturity doesn’t eliminate the interest rate risk, but it does give someone a little bit more control over mitigating its effects.
…and take a loss.
If I buy a $10,000 10-year treasury at a YTM of 2%, and then the yield rises to 3%, I would absolutely take a loss if I sold the treasury.
HOWEVER, if I simply held the treasury for 10-years, I would collect my 2% annually, and then get my $10k back.
No loss taken, but below-market yield received.
If I buy a $10,000 10-year treasury at a YTM of 2%, and then the yield rises to 3%, I would absolutely take a loss if I sold the treasury.
HOWEVER, if I simply held the treasury for 10-years, I would collect my 2% annually, and then get my $10k back.
No loss taken, but below-market yield received.
This is exactly what I was trying to state, although I did a much poorer job of it. The loss in your scenario above is the time-value of money or opportunity cost of being in a below market yielding safe haven asset.
So no hope for VIX?
Amazing graphs to behold.
Almost like some magical happened in 2009…
Like Hope and Change.
Just not the change you thought it was going to be.
“Amazing graphs to behold.”
+1 Amazing interference in the free market system. Toxic housing.
Wouldn’t the big spike in Fed balance sheet expansion have resulted in a concurrent large spike in asset prices?
Looking at that graph, I don’t even know what to say other than the Fed has engineered a completely fake eCONomy.
You can’t fix too much debt with more debt.
But you can sure try.
default or print!
exactly dude
asset inflation is not growth.
I guess they figure if the rich get richer they will hire so more minions?
Two wrongs don’t make it right!
Hillsboro, OR Housing Prices Crater 12% YOY As Housing Correction Expands In Portland Area
https://www.movoto.com/hillsboro-or/market-trends/
Wow - in the LA Times!
2banana’s Rule.
Long term democrat rule + public unions + free sh*t army = misery, ruin and bankruptcy
++++++
Why is liberal California the poverty capital of America?
LA Times | 1/14/18 | Kerry Jackson
Guess which state has the highest poverty rate in the country? Not Mississippi, New Mexico, or West Virginia, but California, where nearly one out of five residents is poor. That’s according to the Census Bureau’s Supplemental Poverty Measure, which factors in the cost of housing, food, utilities and clothing, and which includes noncash government assistance as a form of income.
California Democrats have long been free to indulge blue-state ideology while paying little or no political price.
The generous spending, then, has not only failed to decrease poverty; it actually seems to have made it worse.
The state and local bureaucracies that implement California’s antipoverty programs, however, resisted pro-work reforms. In fact, California recipients of state aid receive a disproportionately large share of it in no-strings-attached cash disbursements. It’s as though welfare reform passed California by, leaving a dependency trap in place. Immigrants are falling into it: 55% of immigrant families in the state get some kind of means-tested benefits, compared with just 30% of natives.
To keep growing its budget, and hence its power, a welfare bureaucracy has an incentive to expand its “customer” base. With 883,000 full-time-equivalent state and local employees in 2014, California has an enormous bureaucracy. Many work in social services, and many would lose their jobs if the typical welfare client were to move off the welfare rolls.
Further contributing to the poverty problem is California’s housing crisis. More than four in 10 households spent more than 30% of their income on housing in 2015. A shortage of available units has driven prices ever higher, far above income increases. And that shortage is a direct outgrowth of misguided policies.
The political class wants to build a costly and needless high-speed rail system; talks of secession from a United States presided over by Donald Trump; hired former attorney general Eric H. Holder Jr. to “resist” Trump’s agenda; enacted the first state-level cap-and-trade regime; established California as a “sanctuary state” for illegal immigrants; banned plastic bags, threatening the jobs of thousands of workers involved in their manufacture;
With a permanent majority in the state Senate and the Assembly, a prolonged dominance in the executive branch and a weak opposition, California Democrats have long been free to indulge blue-state ideology while paying little or no political price. The state’s poverty problem is unlikely to improve while policymakers remain unwilling to unleash the engines of economic prosperity that drove California to its golden years.
‘A shortage of available units has driven prices ever higher, far above income increases.’
A shortage except where there’s a glut. One would think with all the money sloshing around, plenty of shacks and airboxes would be built. Well, there are plenty built, just too expensive. Why? The land got bid up, something I pointed out in 2013 to 2014. In places like Bozeman Montana and Perrysburg Ohio, lot prices doubled or more in just a couple of years. It was almost everywhere, turns out.
It is surprising to see the LA Times admit to the poverty. Bubbles just make you poor, then they pop.
“Bubbles just make you poor, then they pop.”
For the 99%…
But for awhile - everyone thinks they are a Donald Trump
“Bubbles just make you poor, then they pop.”
Great catchphrase. That should be on a bumper sticker.
As these articles show, people are finally starting to wake up to the idea that a bubble is robbing Peter to pay Paul, and they’re Peter. But it has taken a loooooong time to even start to get over the propoganda that bubbles make us rich and crashes make us poor.
Well, there’s at least one sane person in California!
And he’s probably got plans to move the hell out, much like I did over 11 glorious years ago.
Repeat after me: Clownifornia is a 5h!th0le
“Wow - in the LA Times!”
This is somewhat amazing. Some of the article’s comments share this amazement.
Hmmmm … I wonder if the LA Times is trying to, er, resurrect itself?
Stay tuned.
“Further contributing to the poverty problem is California’s housing crisis. More than four in 10 households spent more than 30% of their income on housing in 2015. A shortage of available units has driven prices ever higher, far above income increases. And that shortage is a direct outgrowth of misguided policies.”
Yet there’s not one honest media person to posit this to politicians who have made higher housing prices their goal. A simple question of “why are you trying to make life unaffordable for the masses?” would have sufficed.
Higher housing prices are the goal for two simple reasons:
1. Higher prices means higher taxes.
2. Homeowners are more likely to vote than renters. And there are more homeowners overall.
“A simple question of “why are you trying to make life unaffordable for the masses?” would have sufficed.”
Doing so would force them to explain why they haven’t done anything to correct an economy that’s been in recession for two decades and answer for 100 million unemployed adults.
“More than four in 10 households spent more than 30% of their income on housing in 2015.”
Not ours. We have continually rented at below 25% of income since 2005 and saved money each year. It’s very hard to save while paying off the mortgage on a house you can’t afford.
25% of median household income around here will get you a space in an RV park.
Our place is nothing to brag about compared to other area homes, but it meets our need for shelter without breaking the budget.
I’m sure it’s more than acceptable. I also suspect your household is far above the median income.
18% and dropping…that’s on a 30 year plan.
On a 22-year plan, I’m at 21%…
What do you mean by “on a 30 year plan” or on a 22-year plan”??
It’s simple math: take what your current monthly spend is on housing, and divide it by your monthly household income.
He’s including principal reduction in his math.
So, if he pays down his debt on a 22-year amortization, he’s spending 21% of his income on housing (including paying off the debt).
The difference for me between including principal reduction vs. not principal reduction is approximately 2.5% of my income.
In other words, if my total housing cost is x% of my income including principal reduction, it becomes x%-2.5% if I only include “costs” (taxes, maintenance, insurance, interest), but exclude repayment of debt.
Wow - in the LA Times!
I recall an article about why the NYT was so wrong about the election, and the LA Times had a poll with USC that showed Trump winning.
Apparently in the NYT newsroom, stories were in part dictated from the top down (the stories written are a byproduct of the editor’s interests). In the LA Times newsroom, apparently stories were driven from the reporters…if they dig up something interesting to write about, that’s the story.
‘Getswift, a company with revenue in the last 12 months of $600,000 — comparable to your local pizza shop — but valued at $585 million. (Getswift claims it has a deal with Amazon.)’
How Amazon doubled Young Rich Lister GetSwift CEO’s wealth in two …
http://www.afr.com/…/how-amazon-doubled-young-rich-lister-getswift-ceo-joel-macdonald...
Dec 4, 2017 - There’s nothing like an Amazon mention to turbocharge a company’s share price and a chief executive’s wealth. Shares in logistics technology firm GetSwift have doubled since Friday, after the revelation that the company – which celebrates its one-year anniversary on the ASX at the end of the week – has …
Never heard of it.
That’s nuthin’. Stick the word “cybercurrency” into the name and then stand back for liftoff.
A nation of dummies.
It is the dot.com bubble all over again
Same stories. Same insanity.
It will end the same way too.
Long Island Ice Tea Co. + Blockchain = Long Blockchain Corp + 300% increase
Long Island Iced Tea Corp. shares rose as much as 289 percent after the unprofitable Hicksville, New York-based company rebranded itself Long Blockchain Corp.
Long Island Iced Tea had a net loss of $3.9 million on sales of $1.6 million in the three months ended Sept. 30. The company has lost $11.6 million on sales of $3.9 million in the first nine months of the year.
https://www.bloomberg.com/news/articles/2017-12-21/crypto-craze-sees-long-island-iced-tea-rename-as-long-blockchain
Smart move by the execs at LI Iced Tea…pump the stock price so they can dump it before shutting down their unprofitable company?
“Blockchain” = a moniker for separating blockheads from their money
pets.com=blockchain
But…but…democrats told us this would be the end of the world with minorities and women hardest hit
All these good manufacturing jobs…people may actually buy houses in Detroit again.
+++++++
Tax cuts drive business back to the Motor City
washingtonexaminer.com - 1/14/2018,
Fiat Chrysler will make Ram trucks in Michigan instead of Mexico beginning in 2020, and the company says this will mean 2,500 extra jobs at the plant in Warren, Detroit’s largest suburb.
While this isn’t the first bit of good economic news in the wake of big corporate tax cuts Republicans just passed, it’s the one that cheers us the most, because it best reflects the way lower corporate taxes work.
The key is not bigger profits but increased competitiveness.
More companies will set up more business in the U.S., because it’s now easier to compete by doing so.
Mexico has a 30 percent corporate rate. When the U.S. had a 35 percent rate, it made sense for Chrysler to make its profits in Mexico. Now the U.S. rate is 21 percent. Labor is still much cheaper in Mexico, but Chrysler weighs the pros and cons of where to manufacture, and the U.S. is suddenly much more appealing than it had been before the bill passed.
Lower tax rates aren’t the only reason to move a plant to Michigan. Better energy infrastructure, a more educated workforce, and a better legal system all weigh on that side of the scale. But reducing the tax rate from 35 percent to 21 percent weighs heavily, and in many cases, it will tip the balance in favor of America.
So cheers to Fiat Chrysler. May it be the first of many.
SIDE EFFECT???
It was the main feature!
If the everything bubble pops…..
“A fool thinks himself to be wise, but a wise man knows himself to be a fool.”
++++++
It happened in the US, Japan and Europe. The problem with loose monetary policy is that while it is supposed to make people do productive things like start a new company, it has a side effect of making them buy assets at crazy prices. If the everything bubble pops, it may turn out that the cure for the global financial crisis is what caused the next crisis.”
if you can make free money just by buying stocks and homes why would u take any risk and start a business where u could lose your @ss?
It is amazing how little volitility there is in this market. Its a one sided trade like people know they cant lose.
“Its a one sided trade like people know they cant lose.”
It helps considerably when the Fed backstops the market.
thats exactly what does it. Everyone thinks they will bail them out if the market goes down. Thats why there is no volitility anymore. How can u call these free markets?
A lot of people have lost a lot of money betting on a free market that isnt there. who is liable for their losses?
Big picture 50,000ft view…
QE unwind + a more hawkish FED + higher Treasuries rates = what for the housing market?
NOT a trick question
++++++
Bond Market Smells Inflation, Begins to React
Wolf Richter - Jan 14, 2018
The 10-year US Treasury yield breached 2.5% on January 9 and hasn’t looked back since, closing on Friday at 2.55%. The three year yield closed at 2.12%, the highest since October 2008. The two year yield, after breaching 2% on Friday intraday, closed at 1.99%, the highest since September 2008.
Though the “new Fed” in 2018 hasn’t fully taken shape yet, with several key vacancies still to be filled, there is already tough talk even among the “doves.” And that’s where tough talk matters.
On Thursday it was New York Fed President William Dudley who outlined the “two macroeconomic concerns” he is “worried about”: “The risk of economic overheating,” and that the markets are blowing off the Fed. In the end, the Fed “may have to press harder on the brakes,” he said.
These “doves” are worried that the Fed will have to speed up its rate hikes to get a grip on asset price inflation, wage inflation, and consumer price inflation before they become difficult to control.
The Fed’s QE Unwind, or “balance sheet normalization.” The scheduled balance-sheet shrinkage accelerates this year to:
Q1: $60 billion
Q2 $90 billion
Q3 $120 billion
Q4 $150 billion
For a total of $420 billion in 2018. This is scheduled to increase to $600 billion in 2019.
who is gonna buy all these bonds at these pathetic yields? Central banks have been the only buyer in town. Rates are going to have to go way up to attract real investors.
Bonds are DOA once interest rates start rising.
Bill Gross called the end of the 40-year bond cycle this week. We’ll see if he is prescient. I wouldn’t bet against him. The question will be whether the Fed will wade back into become the asset-purchaser-of-last resort if their “quantitative tightening” pushes up interest rates to where a recession is induced. As they say, “don’t fight the Fed.”
https://www.forbes.com/sites/robertlenzner/2017/12/16/janet-yellen-leaves-us-with-goldilocks-economy/#5c20005994b6
yellen left us with a goldilocks economy minion!
How many times thus far has Gross called the end of the bond bull market?
The question will be whether the Fed will wade back into become the asset-purchaser-of-last resort
I think it’s inevitable. They couldn’t face the alternative before and now it’s worse. The only possible reason I can think of to face the music now is if the decision is being made based on who is president at the time and therefore whose political fortunes will take the hit. I could see how there might be forces who want Trump to be the fall guy for this.
“I think it’s inevitable.”
I concur. But just how high can asset prices be inflated?
I concur. But just how high can asset prices be inflated?
Do prices matter if eventually the Fed owns everything and we just rent it from them (and their agents)?
Wouldn’t the Yanks revolt before the fed owns everything?
I think we’re going to find out.
All assets are DOA as a result of collapsing demand.
Bitcoins do not have as yet collapsing demand.
Define asset class.
DOA
Hey Dudley, you doubled the price of food, gas and housing on us a few years back, but you didn’t double our wages. Your kind of control is like an aerial bomb. All it does is cause craters.
Sounds rasis
“Gardner cited multiple current market conditions, including high credit quality, borrowers not defaulting, good debt-to-equity ratios and slight mortgage rate increases to perhaps 4.4 percent, to dispel the thought that the economy has entered a housing bubble. Gardner predicts the economy will expand 2.5 percent in 2018, but foresees a slowdown in 2020.”
Maybe this time is different, but the last time prices rocketed up in sh!thole locations was just before the onset of the 2007-2009 financial crisis and housing price crash.
Today’s articles and posts remind me of good ol’ Helicopter Ben…
[img]https://farm5.staticflickr.com/4762/25816205258_8307fbd3f4_o.jpg[/img]
[img]https://farm5.staticflickr.com/4626/39688584051_6f1c8533b4_o.jpg[/img]
Forgot which forum I was on…
https://farm5.staticflickr.com/4762/25816205258_8307fbd3f4_o.jpg
https://farm5.staticflickr.com/4626/39688584051_6f1c8533b4_o.jpg
“How come it didn’t trigger much higher levels of inflation than what we now see? The more fundamental answer is that QE resulted in a wealth increase for the richest, who consume relatively little of their revenue, while the middle class and the neediest largely failed to reap any benefit.”
It’s great to see journalists connect the dots between QE and asset bubbles, given that all of the bright minds in the central banking community seem unable to figure it out.
u can drop all the money in the world from the sky but if people are afraid to spend it never enters the economy.
plus if people do get any money they basically pay off debt.
There is too much debt out there.
Debt jubilee!!!!!
When you’re at the end of your debt rope, just walk away.
“The manipulator of the artificial market creating multiple asset bubbles in stocks, housing, and crypto-currencies is the Federal Reserve, with more than eight years of zero-interest policy. We’re on the cusp of 2005 prices, and the rental market has followed suit. I believe in 2005 landlords were shocked at the rapidly accelerating prices and failed to raise rents accordingly. This time they are raising rates rapidly and many landlords, determined not to miss their second shot at bubble prices, are selling their rentals.”
I am not throwing away my shot!
Love it!
““Matthew Gardner popped the thought that we’re in a housing bubble. ‘Just because some markets are overvalued there doesn’t have to be a bubble,’…Gardner said skyrocketing home prices in other areas such as California — the median sales price in San Francisco is $1.18 million — will continue to drive people to North Idaho. ‘We are cheap,’ he said.”
What an absolutely asinine comparison. Everywhere is cheap as compared to San Francisco, but that has nothing to do with whether or not there is a bubble locally. It’s like comparing apples to concrete.
Aren’t open borders causing home prices to skyrocket? Illegals and “refugees” are colonizing middle class/lower income neighborhoods - the question of how they are affording these homes is a question that “shall not be asked”.
Several incomes per household. Renting out the basement is very common around here.
Stack 10 people in a house with gig economy type jobs, charge $300-$400 a head to cover the $3000-$4000 monthly nut. It’s pretty easy to do.
Which leads to an even more massive oversupply of houses, which puts more pressure on prices and rents.
Rent it for half the monthly nut. $2500/month in this case. Buy later after prices crater for 70% less.
Capitol Hill, Washington DC Rental Rates Crater 10% YOY As Speculators Dump Properties
https://www.zillow.com/capitol-hill-washington-dc/home-values/
Select price from dropdown menu on rental chart
https://www.cnbc.com/2018/01/12/mark-cuban-and-jay-leno-avoid-credit-cards.html
“Here’s why Mark Cuban and Jay Leno are skeptical about credit cards…”
These articles crack me up. I guess Mr. Banker doesn’t allow CNBC to point out that you can actually make money using cards. IF the card has no fees and you pay the balance in full every month. I’m happy with the ~$650 I earned in 2017, while buying things I needed to buy.
Of course, millionares like Leno and Cuban wouldn’t notice a few extra hundred (or, at their spending level, several extra thousand) dollars per year.
$650 I earned…
Good for you. You probably overpaid for your stuff by $1200, but good for you Earning it.
The price is the same, whether I pay in cash or with CC, except for gas. At least everywhere I shop, maybe you are seeing something different where you are?
I have a few options out here in the boonies where I can save money by paying cash but they are getting few and far between. So I also overpay to help support the banks and their skim too. I’m just aware that it is costing me, despite any ccd rewards.
Interesting. Other than gas prices at the pump, I never see anything with different prices for cash vs credit. So, you can go into a store, and you’ll literally pay less for an item if you use cash instead of a CC?
IIRC, my apartments will charge a little extra if you pay online via CC as opposed to a bank draft. That’s the only thing I can think of.
Yes and some of the places I go here don’t even take credit cards.
So, you can go into a store, and you’ll literally pay less for an item if you use cash instead of a CC?
Yes. Many credit cards agreements have a stipulation you can’t advertise two different prices (from what I understand), but often you can get a cash discount if you ask. Always worth doing for larger purchases — I’ve gotten such on guns, furniture, guitars, etc…
Bahahaha … there are two ends to every financial transaction and it is the pleasure of bankers such as myself to position ourselves IN THE MIDDLE of each of these transactions whenever possible. And this is (among other things) what credit cards allow bankers to do.
Pukes work, bankers reap.
https://status.kraken.com/incidents/nswthr1lyx72
The crypto growing pains continue. Wednesday evening, crypto exchange Kraken took down their system for an upgrade. It was only supposed to be down for a few hours. Their updates are posted at that link, most recent at the top.
As of this morning, they’re still not fully back online. Namely, withdrawls are still not available. And might not be available until this evening. Or later, judging by how things have gone up to this point.
This cryptocurrency bubble is absolutely ridiculous. It will be looked back upon as the pinnacle of stupidity once this everything bubble pops.
Nope. It’s a new currency. The BIG banks and Investment houses want to control it. That’s the game being played out now.
It’s a perfect vehicle for old-time traders.
its the peoples currency!
Nope, it’s a mania, nothing more. Ever tried to pay the rent with Ripple? Ever filled up your tank with your Ethereum? How about grocery shopping with Litecoin? Ain’t happenin’…
“Also, if you held bitcoin on your Kraken account at Bitcoin block #472889, you have been credited with your Stellar lumen (XLM) from the last airdrop.”
What is this nonsense?
It doesn’t matter, just put all your money in. You can’t lose.
Every activity creates its own vocabulary. What does “shorting against the box mean” ? Maybe that accounts for Commercial Short numbers.
A foreign language always elicits fear.
A foreign language always elicits fear…
Every big con makes up its own vocabulary. It’s supposed to make them look smart.
Why do you assume fear? It’s the same thing libs do by tacking “phobia” onto the end of whatever they like that somebody else doesn’t, eg homophobia, islamophobia etc.
I guess it’s designed to make the holder of the “incorrect” opinion appear small, weak minded, backward, or bigoted.
I don’t fear cryptos, I just think they are nonsense, you know, the same word I used in my post that you somehow inferred fear from.
Another day, another Buttcon crash…
https://www.ccn.com/cryptocurrency-market-suffers-another-major-correction-as-bitcoin-ether-ripple-fall/
‘Song Eng, a cryptocurrency research, revealed that Binance has become a billion dollar startup in the shortest time in history. Within six months, it has become the largest cryptocurrency exchange in the global market, with a market valuation of nearly $2 billion.’
“What determines its market cap? In August, Coinbase raised $100m from prominent VCs at $1.6bn, confirming its status as the first ‘Bitcoin’ unicorn. While their business models are not identical, Binance likely has surpassed Coinbase in trading volume and at its current rate should take global #1, given that it operates in Asia (Japan/China) and Asia is 40%+ of global Bitcoin trading,” wrote Eng.’
‘Exchanges like Kraken, Bitstamp, Coinbase, and Binance are said to be adding over 100,000 users on a daily basis, and consequently are struggling to meet the demand from their users.’
‘Evidently, given the exponential increase in the growth rate of cryptocurrency exchanges, there exists a significant demand for cryptocurrencies. But, it is also important to consider the rate of the growth of the market.’
‘Short-term major corrections prevent bubbles from forming, by shaking off weak hands and solidifying the market. After a 20 percent decline in the valuation of the cryptocurrency market, a large number of weak hands or speculators tend to exist, while strong hands remain in the market.’
‘Given sufficient demand for cryptocurrencies from the global market, it is likely that the market will recover in the upcoming days, as it recovers from the South Korea trading ban controversy.’
This stuff is hilarious. There is no limit to how many cryptos that can be created, but there certainly is a limit to investment in it. When the tide goes out on this scam, the losers are going to be left wondering what the f**k they were thinking. There’s absolutely nothing to base value upon.
So what connections is there between Housing and Bitcoins?
Bank of America and Chase are refusing bitcoin housing down-payments if the stories are true. They’re assuming it’s laundered money. Bad assumption when China is quietly letting NEO run.
If you roll back BTC and Kumpany by 80%, who stands to gain the most?
Give the fraud and failure that ButtCon is, why would anyone accept it as payment?
“Give the fraud and failure that ButtCon is…”
For whom?
If there is Caveat Emptor in housing then the same holds true for coins.
“Give the fraud and failure that ButtCon is, why would anyone accept it as payment?”
One answer may be to sell something that is difficult to sell otherwise.
Think of this: If a puke is dumb enough to own bitcoins then he is probably dumb enough to over pay for a car or for a boat or for whatever. Once the dumb puke lays down his bitcoins these same bitcoins can be traded for cash - traded for cash with some other dumbed-down puke.
Bitcoin sounds good on an individual level, but a major bank? No way. The worth of that bitcoin could drop in half just between the approval and the closing table.
And it’s highly doubtful that Treasury allow Bitcoin to count in the banks reserves? They certainly can’t lend the bitcoins out and it’s doubtful a customer would have a checking account in bitcoin. So the bank’s bitcoins would be stuck in limbo. Better to avoid the whole debacle.
Stick a fork in it…
“Within the past 24 hours, the valuation of the cryptocurrency market fell from $742 billion to $683 billion, by nearly $60 billion.Bitcoin, Ethereum, Ripple, Cardano, Stellar, and IOTA recorded almost 10 percent in daily decline, while smaller cryptocurrencies such as Bitcoin Gold and Tron demonstrated larger losses in value.
Even cryptocurrencies with trading volumes heavily concentrated in the South Korean market, which tend to trade with high premiums, have plummeted in value. In the South Korean market, the price of bitcoin fell by around 12 percent, while Ripple fell by 12.65 percent.”
Professor
Obviously, it ain’t your cup of tea. Nevertheless you are looking at statistical variance here. Trust me,it’s terrific.
Of course having a stock market that only goes up is healthier?
P.S.
China is winning the blockchain war against BTC. Seriously…when Jamie Dimon loses seven billion dollars in silver trading no one says boo, but, when he says BTC is dangerous everyone agrees. WTF is wrong with people?
Here’s the message:
A BTC player loses HIS money; Dimon was losing OTHER people’s money that did NOT know JPM was engaged in this activity.
Do you remember Corzine’s 1.3 billion mistake?
So long as participants in the Bitcoin craze recognize that they are gambling in a mania, I have no problem with it. It’s when people pretend that Bitcoin is a form of money, and not a highly unstable speculative asset, that I have problems. The extreme volatility, and particularly the recent appreciation rate far in excess of what Dutch 🌷 s experienced at the height of Tulipmania, render it illiquid and unreliable as a store of value, thereby failing a key test to qualify as a currency.
Trust me,it’s terrific…
An indisputable argument if ever there was one!
BlueSkye
My comment was inappropriate. I duly apologize.
Transactions involving money have the potential to create losses or gains. We will leave it at that.
Bitcoin and cryptocurrencies ‘will come to bad end’, says Warren Buffett
The billionaire investor and his longtime manager Charlie Munger, two of the world’s most successful investors, say they’d never invest in cryptocurrencies
Dominic Rushe in New York @dominicru
Thu 11 Jan 2018 03.33 EST
First published on Wed 10 Jan 2018 10.18 EST
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Warren Buffett says he would never invest in Bitcoin.
Billionaire investor Warren Buffett said Wednesday that he would never invest in Bitcoin or other cryptocurrencies, and predicted the wildly popular assets are in for a fall.
World’s richest 500 see their wealth increase by $1tn this year
Read more
“I can say almost with certainty that cryptocurrencies will come to a bad end,” Buffett told CNBC in an interview.
Buffett’s comments were backed by Charlie Munger, his longtime partner at his investment company Berkshire Hathaway, who described the soaring values of Bitcoin and the other cryptocurrencies as “bubbles”. Munger said investors “are excited because things are going up at the moment and it sounds vaguely modern. But I’m not excited.”
…
Bitcoin and cryptocurrencies ‘will come to bad end’, says Warren Buffett
The billionaire investor and his longtime manager Charlie Munger, two of the world’s most successful investors, say they’d never invest in cryptocurrencies
Dominic Rushe in New York @dominicru
Thu 11 Jan 2018 03.33 EST
First published on Wed 10 Jan 2018 10.18 EST
Warren Buffett says he would never invest in Bitcoin.
Billionaire investor Warren Buffett said Wednesday that he would never invest in Bitcoin or other cryptocurrencies, and predicted the wildly popular assets are in for a fall.
“I can say almost with certainty that cryptocurrencies will come to a bad end,” Buffett told CNBC in an interview.
Buffett’s comments were backed by Charlie Munger, his longtime partner at his investment company Berkshire Hathaway, who described the soaring values of Bitcoin and the other cryptocurrencies as “bubbles”. Munger said investors “are excited because things are going up at the moment and it sounds vaguely modern. But I’m not excited.”
…
Does it seem as if someone rang a bell and all the developed world central banks suddenly went into tightening mode in response?
China: Experts see tightening of money supply
in World Economy News
27/12/2017
China is likely to set the slowest money growth target in history, at around 9 percent, next year after top policymakers pledged to control the “master valve” of total money supply, which is recognized as the origin of the surging debt burden and the trigger of asset bubbles.
Economists, who were involved in high-level policy discussions before the tone-setting annual Central Economic Work Conference last week, told China Daily the signal that the debt level will continue to be reduced is “very obvious”, based on a statement after the conference highlighting that “prudential monetary policy should remain neutral”.
It is not only the top goal of 2018 but also a target for the next three years, as financial risks become the largest threat of China’s economic stability in the medium term and long term, Li Yang, director of the National Institution for Finance and Development of the Chinese Academy of Social Sciences, who participated in the policymaking process, told China Daily.
“A single-digit growth rate of broad money supply, or M2, is likely in the coming year, which will be close to its real growth this year,” Li said.
…
So, China rang the bell and mass pucker butt set in. That ought to tell everyone the world is under new management.
Just in case anyone failed to hear the bell ring…
China is reportedly thinking of halting US Treasury purchases and that’s worrying markets
- The report notes that Chinese officials think U.S. debt is becoming less attractive compared with other assets.
- Trade tensions between the two countries could provide a reason to slow down or halt the purchases, according to the report.
- Treasurys and the dollar fell on the report. Gold rose. Equities fell
- China is the biggest buyer of U.S. sovereign debt.
Fred Imbert | @foimbert
Published 8:02 AM ET
Wed, 10 Jan 2018
Updated 4:16 PM ET Wed, 10 Jan 2018
CNBC.com
…
“The suit/gold ratio has been over and under parity many times, sometimes as much as 30%. But, today, you can buy a very nice suit for about $1,249. Not the best, which go for $1500-2000, but a VERY nice suit - suitable for any interview at Goldman Sachs.”
https://seekingalpha.com/instablog/119508-thomas-noon/94553-the-gold-suit-index
As Labor Pool Shrinks, Prison Time Is Less of a Hiring Hurdle
By BEN CASSELMAN
JAN. 13, 2018
A rapidly tightening labor market is forcing companies across the country to consider workers they once would have turned away. That is providing opportunities to people who have long faced barriers to employment, such as criminal records, disabilities or prolonged bouts of joblessness.
In Dane County, Wis., where the unemployment rate was just 2 percent in November, demand for workers has grown so intense that manufacturers are taking their recruiting a step further: hiring inmates at full wages to work in factories even while they serve their prison sentences. These companies were not part of traditional work-release programs that are far less generous and rarely lead to jobs after release.
“When the unemployment rate is high, you can afford to not hire anyone who has a criminal record, you can afford to not hire someone who’s been out of work for two years,” said Lawrence H. Summers, the Harvard economist and former Treasury secretary. “When the unemployment rate is lower, employers will adapt to people rather than asking people to adapt to them.”
The American economy hasn’t experienced this kind of fierce competition for workers since the late 1990s and early 2000s, the last time the unemployment rate — currently 4.1 percent — was this low.
The tight job market hasn’t yet translated into strong wage growth for American workers. But there are tentative signs that, too, could be changing — particularly for lower-paid workers who were largely left out of the early stages of the economic recovery. Walmart on Thursday said it would raise pay for entry-level workers beginning in February; its rival Target announced a similar move last fall.
https://www.nytimes.com/2018/01/13/business/economy/labor-market-inmates.html?_r=0
If you pull demand forward with debt for prolonged periods of time eventually demand falls off a cliff when the credit runs out. That is called recession 101.
The other part of the story is low ROI due to the massive glut that results from usin a hair-of-the-dog debt remedy to artificially pull demand forward.
The seeds that were planted five years ago will soon bear fruit.
#Business News
May 8, 2013 / 7:11 AM / 5 years ago
Former UK central bankers say mortgage scheme fuels debt risk
Christina Fincher
LONDON (Reuters) - Two former Bank of England policymakers criticized on Wednesday a flagship government scheme to boost mortgages, saying it would encourage more risky lending in an economy already overburdened with debt.
Former deputy governor Rachel Lomax described the Help-to-Buy initiative as a “short-term political fix” and a “hair of the dog” approach - a reference to treating a hangover with more alcohol.
Finance minister George Osborne announced the scheme in March as a way of helping people on to the property ladder at a time when banks are demanding big down payments.
…
Keller, TX Housing Prices Crater 8% YOY On Plunging Housing Demand
https://www.movoto.com/keller-tx/market-trends/
trump said the unemployment numbers were rigged during the campaign. basically the number only includes folks who are getting unemployment benis. once you fall off the rolls and run out of benis u basically disappear.
How come we cant get some honest numbers here?
So you literally have more than twice as many cranes building residential towers in Sydney than you have across all of North America.
https://www.zerohedge.com/news/2018-01-14/regulators-could-catalyze-undoing-resource-driven-housing-booms
Ruh roh Shaggy.
‘Why on earth would anybody buy more of something as the price goes up? The reason is because it transitions from something you consume, a consumption good, to an investment good.’
‘And you saw this in the US. You’ve seen it in every property bubble globally, historically. People buy the most of these things, the most housing, when the prices are at their most extreme, i.e. their most unaffordable.’
Sounds similar to what you’ve been saying for the last 12 months Ben. Whether people know it or not they are speculating.
Also, this guy supposes a correction WILL come to australia and Canada. From the last couple months you’ve documented here that correction is in full swing and will soon become the financial crisis he predicts.
Kind of like cryptocurrencies. They’ve never been more popular, with over 100,000 new accounts per day, yet prices are near the peak.
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The Fed official most concerned about possible asset bubbles presses the alarm button (again)
By Greg Robb
https://www.marketwatch.com/story/the-fed-official-most-concerned-about-possible-asset-bubbles-presses-the-alarm-button-again-2018-01-12
Published: Jan 12, 2018 4:15 p.m. ET
In MarketWatch interview, Boston Fed’s Rosengren says ebullient asset prices make a soft landing harder to achieve
Bloomberg
Boston Fed President Eric Rosengren has been concerned about a potential asset bubble in commercial real estate since late 2015. And he says that the problem of asset prices has gotten worse, not better.
“For a while, real estate looked like the only asset class that was showing signs of having substantial variation from what the average valuation had been, but I think we’re starting to see more asset markets have that characteristic,” he says.
This makes life hard for the central bank. For instance, it makes it more difficult for the central bank to engineer a soft landing for the economy, Rosengren said. It also means the Fed cannot pause in its gradual pace of rate hikes and should even pick up the pace a bit this year. The U.S. central bank might have to raise rates four times in 2018, he said, more than the median forecast of Fed officials or the two hikes the market expects.
…
“…the problem of asset prices has gotten worse, not better.”
Does anyone else recall the days when the Fed narrowly focused on consumer price inflation, and pretended its policies had no connection whatever to asset prices? I think we are seeing serious progress in their perception of the impacts of extraordinary accommodation.
Realtors are liars.
We had and rode snowmobiles back in the 70s but these new Global Warming Sleds are something else.
https://www.youtube.com/watch?v=g3iRoeKO4W4
Crimes against homeless people up 42 percent in Denver and suburban cops say that’s pushing transients into their towns:
“Law enforcement representatives in Lakewood, Wheat Ridge, Littleton, Englewood and other nearby areas say they have seen an increase in the number of homeless people living in their jurisdictions.
“This is a statewide concern,” Wheat Ridge Police Chief Dan Brennan said. “A lot of us are dealing with a higher number of transients.”
Littleton Police Cmdr. Trent Cooper said camps with multiple inhabitants have popped up on abandoned properties in the city. He recently talked to about a dozen homeless people at one campsite. All said they had come from Denver.
“For the first time in my memory, we have had a couple of homeless camps where multiple people are living,” he said.
He said he’s aware that homeless populations increase over time, but “cities are pushing them out.”
Denver’s population has grown rapidly over the past decade, and the U.S. Census Bureau estimates that the city added 13,028 people in the year that ended July 1. How many newcomers are homeless is unknown.”
https://www.denverpost.com/2018/01/14/crimes-against-homeless-people-up-42-percent-in-denver-and-suburban-cops-say-thats-pushing-transients-into-their-towns/
By JEFF PEGUES CBS NEWS January 10, 2018, 7:04 PM
Man captures video of “patient dumping” outside Baltimore hospital
BALTIMORE — Overnight, Imamu Baraka was walking past a Baltimore hospital when he noticed something he says he’ll never forget.
The hospital’s security guards had just wheeled a patient to a bus stop, and in the freezing temperatures they left her there. The only thing she had on was a hospital gown.
“It’s about 30 degrees out here right now,” Baraka says in a recording of the encounter. “Are you OK, ma’am? Do you need me to call the police?” he asks.
It’s called “patient dumping” and it doesn’t just happen in Baltimore. In 2007, “60 Minutes” investigated the practice of removing homeless patients from Los Angeles hospitals and leaving them downtown.
https://www.cbsnews.com/news/man-captures-video-of-patient-dumping-outside-baltimore-hospital/
I am mining PoNziCoin today from the comforts of starbucks.
Seriously!?
Not a chance. There’s not enough floor space in Starbucks for all the equipment you’d need.
So you’re thinking about investing in bitcoin? Don’t
A collective insanity has sprouted around the new field of ‘cryptocurrencies’, causing an irrational gold rush. I know you’re tempted, but don’t be a fool
Mr Money Mustache
Mon 15 Jan 2018 05.00 EST
Last modified on Mon 15 Jan 2018 09.22 EST
An investment is something that has intrinsic value, not speculative value.
I’ve been watching this bitcoin situation for a few years, assuming it would just blow over.
But a collective insanity has sprouted around the new field of “cryptocurrencies”, causing an irrational gold rush worldwide. It has gotten to the point where a large number of financial stories – and questions in my inbox – ask whether or not to “invest” in BitCoin.
Let’s start with the answer: No. You should not invest in Bitcoin.
The reason why is that it’s not an investment; just as gold, tulip bulbs, Beanie Babies, and rare baseball cards are also not investments.
These are all things that people have bought in the past, driving them to absurd prices, not because they did anything useful or produced money or had social value, but solely because people thought they could sell them on to someone else for more money in the future.
When you make this kind of purchase – which you should never do – you are speculating. This is not a useful activity. You’re playing a psychological, win-lose battle against other humans with money as the sole objective. Even if you win money through dumb luck, you have lost time and energy, which means you have lost.
…
“You should not invest in Bitcoin.”
Nonsense, you should buy every dip.
I like how you are quoting Mr. Money Mustache on investment advice…you do realize that he retired young in part due to rental real estate investments?
Good on him for jumping in on a mania at an advantageous point in time.
Cryptocurrencies are the Seinfeld episode of financial manias.
Cryptocurrencies investor: ‘My neurons are fried … I’ll lose a million dollars in a day’
By Victor Reklaitis
Published: Jan 15, 2018 5:29 a.m. ET
Early buyers of bitcoin and Ethereum describe their worlds in a New York Times article
Getty Images
A member of Virtual Currency Girls, a new Japanese pop group, poses with a fan Friday.
So what’s it like being one of the bitcoin millionaires?
A New York Times article published over the weekend aims to give a sense of what it’s like for the long-time believers in cryptocurrencies who have become the “crypto-wealthy.”
The article describes houses in San Francisco called the “Crypto Castle” and “Crypto Crackhouse,” as well as it also highlights hedge funds established using profits from virtual-currency investments.
Grant Hummer — who runs the San Francisco Ethereum Meetup and the new hedge fund Chromatic Capital — described his state of mind to the newspaper as follows:
‘My neurons are fried from all the volatility. I don’t even care at this point. I’m numb to it. I’ll lose a million dollars in a day and I’m like, OK.’
Bitcoin (BTCUSD, +5.26%) and its rivals skyrocketed in 2017, but they also have suffered sizable selloffs. While the No. 1 virtual currency is showing a 12-month gain of more than 1,550%, it stands well below its December all-time high above $19,000.
Jeremy Gardner — another hedge fund manager who ranks among the crypto-wealthy — sounded shaken last month as bitcoin soared, the NY Times reported.
“Nothing feels real, it doesn’t feel real,” he told the paper. “I’m ready for crypto assets to go down 90%. I’ll feel better then, I think. This has been too insane.”
Meanwhile, a Quartz report earlier this month said the “real sign of our times” is a new all-girl pop group in Japan — the Virtual Currency Girls — in which group members represent different cryptos.
…
Bootnotes
Junk food meets junk money: KFC starts selling Bitcoin Bucket
Transaction costs more than chicken, which would go cold by the time BTC change hands
By Simon Sharwood, APAC Editor 15 Jan 2018 at 07:02
KFC Canada’s bitcoin bucket
Mmmmm …. cryptochicken
KFC’s Canadian wing has started selling chicken for Bitcoin.
The artery-clogging Bitcoin Bucket “Includes 10 Original Recipe Tenders, Waffle Fries, Med Side, Med Gravy and 2 Dips,” at a cost of however many Bitcoin equates to CA$20.
KFC Canada’s page for the promotion helpfully includes live updates of that sum in Bitcoin.
The company said it’s sold out of the buckets, and that’s not in the slightest surprising given that Bitcoin is currently rather less convenient than many other currencies: transaction-processing times are currently over 100 minutes, while transaction fees can exceed US$50. The latter sum is more than the cost of the chicken, while waiting 100 minutes for a transaction to clear makes it faster and easier to either drive to KFC or to order just about any other food imaginable.
…
transaction fees can exceed US$50…
It costs less than that to wire actual money to another country.
I know there is little credit given to the likes of John Burns around these parts. That said, I thought the following post on their website was interesting…it talks about particular markets, and where they feel we are in the housing cycle:
https://www.realestateconsulting.com/where-are-we-in-the-housing-cycle/
The only question here is how many years behind the curve is Mr. Burns.
lyon realtors and john burns
“If you have any questions, please contact Kate Seabaugh at (949) 870-1211″
Somebody needs to call Kate it doesn’t look like she has reached exuberance in quite a while.