Juggling Dynamite

Torrents of foreign capital seeking land banks in the west, misguided government policies that encourage real estate speculation, the lowest interest rates in centuries, excessive credit abuse enabled by central banks, debt securitization and yield-desperate, price indiscriminate funds buying everything in sight–all these factors served to temporarily hyper-inflate realty and security prices into 2017.  Now these same forces are moving in the other direction–all together, even while many realtors and builders are working to keep up bullish appearances.  See Recycled listings around Vancouver obscure a major market correction.

While it is a common fantasy that affluent people always buy and never need to sell their properties, history does not agree.  This is especially the case in today’s highly interconnected, debt-soaked economies and markets.

CNBC’s Robert Frank (who reports in the clip below) is the author of the must-read book The High-Beta Rich (2011) which brilliantly illuminates on the global interconnections at work here.

CNBC’s Robert Frank reports on how New York City real estate fared in the second quarter of 2018. Here is a direct video link.

Manhattan real estate continues to slide from CNBC.

Thanks to a reader who, this week, sent me the below snapshot of a December 1997, Vancouver Sun article, reminding of the forced selling wave that hit Vancouver realty during the Asian liquidity crunch of 1997-98.  This was the same butterfly flapping its wings in Asia, that brought down the ‘genius’ Long Term Capital Management funds and shook Wall Street in 1998.  A synchronous liquidity crunch across many highly levered economies and asset markets in the months ahead, is likely to hit harder and last longer than previous cycles in memory.  We’ve been amply warned about how these cycles go.

Now for some pure fun.

James Corden heads to Liverpool for a special day with Paul McCartney spent exploring the city of Paul’s youth, visiting his childhood home where he wrote music with John Lennon, performing songs in a local pub and of course driving around singing a few of Paul’s biggest hits.Here is a direct video link.

Justin Trudeau and Canada’s political elite is fighting for the Tar Sands and oil industry’s interests, even if it means Canada misses all of its climate targets. Kevin Taft, ex-Liberal Party politician and author of ‘Oil’s Deep State’.  Here is a direct video link.

For some more discussion on why the Trudeau government may have agreed to buy out Kinder Morgan and take over building a pipeline in contradiction of all its previous climate commitments, see Did Canada buy an oil pipeline in fear of being sued by China?:

Trudeau is desperate to keep China happy. In 2016, his government began negotiating a free trade agreement with China. At the time, the Globe and Mail reported, “a senior Chinese official said this will require Canadian concessions on investment restrictions and a commitment to build an energy pipeline to the coast”.

Less than a year later, Trudeau approved the expansion of the Trans Mountain pipeline. Talks for the free trade agreement are ongoing.

Now he has bought that pipeline, and will have to live with the political fallout, which will likely include protesters, court cases and other acts of civil disobedience. In what might be a strategy to avoid lawsuits from Chinese companies that may result in massive secret payouts, Trudeau’s government may find itself arresting Canadians.