Juggling Dynamite

“Steve Eisman, the hedge fund manager who famously bet against mortgages in the United States in the run up to the 2008 financial crash, has recommended investors now bet against Canada’s mortgage lenders and banks.

Eisman, founder and portfolio manager of hedge fund Emrys Partners, rose to prominence with subprime mortgage bets that were chronicled by Michael Lewis in the book “Big Short”…

Fears remain that Canadians aren’t listening as the ratio of credit market debt (such as mortgages) to disposable income continues to rise, according to Statistics Canada, reaching 165.0 percent in the last quarter, compared with 164.7 percent in the previous.” See: Canada’s housing market: the next big short?

Canadian home prices have doubled over the past 10 years (7% price appreciation per year), a rate of growth some 40% above the 5% a year long term average since 1980: “Canada is a commodity producer, and commodities have done very well in the past decade, so, in part, strong price gains in Canadian real estate might be a side effect” says Stein. A side effect that is due for a correction with the on-going global downturn in global commodity demand.

Degrowth thinking is a secular shift born from the prior period of extreme leverage and over-consumption via the global debt bubble. A new model of organic growth and much more moderate consumption is here and a healthy part of the correction process back to a slower but more sustainable economy.

Degrowth (in French: décroissance, in Spanish: decrecimiento, in Italian: decrescita) is a political, economic, and social movement based on ecological economics and anti-consumerist and anti-capitalist ideas. De-growth thinkers and activists advocate for the down-scaling of production and consumption—the contraction of economies—arguing that over-consumption lies at the root of long term environmental issues and social inequalities. Key to the concept of degrowth is that reducing consumption does not require individual martyring and a decrease in well-being. Rather, ‘degrowthists’ aim to maximize happiness and well-being through non-consumptive means—sharing work, consuming less, while devoting more time to art, music, family, culture and community.

Charles Hugh Smith (of Two Minds blog) and Gordon Long discuss the realities of the move back from Peak Consumption (27:30)Here is a direct link.

Our financial markets provide a vital link between investors and businesses in need of capital. They enable companies and governments to raise funds for operations, and investors to participate and earn a return. Their smooth and stable operation is inexorably intertwined with the well-being of the entire global economy. Since the birth of the republic, the US financial system has been challenged, tested, shaken and subject to growing pains. However in very recent times, it has been shaken by tremors so powerful, they are weakening confidence in a market that once was the envy of the world.

Ghost Exchange probes the current state of US capital markets, the impact of high frequency and algorithmic trading, the lack of, or ineffective regulatory oversight and the risks that are now inherent in our markets by going right to the source –Wall Street’s leading insiders – who shine a light on startling signs that the US stock market has built so much speed and complexity into the current system that it is impossible to regulate. The system has become – a Ghost Exchange.

Here is a direct link to the trailer. You can watch the film now on iTunes.

High-frequency traders and high-speed algorithmic trading have been blamed for everything from the Flash Crash to the Knight Capital disaster, and now HFT is the subject of an indie film. Acknowledging that she had no idea before she began working on the film that so many trades were decided by algorithms, Camilla Sullivan, director of “Ghost Exchange,” tells TABB Group founder and CEO Larry Tabb that the movie is relevant to anyone with a pension plan or a bank account

. Here is a direct link.