Since the 1980’s, the American financial and monetary establishment has gotten better and better at bundling risk. This bundling can be a boon, but sometimes leads to catastrophe. Most famously, bundled mortgage securities blew up the banking industry in 2008. Lending anyone money is risky. This is true whether you’re getting a promise of interest or […]
How to get back to “normal” interest rates: US vs. German 10-year yields
There has been a lot of discussion as to when US interest rates will return to “normal”. I’m shocked that a lot of so-called experts agree that interest rates will get back to normal when the Fed tightens. Nothing could be further from the truth. To illustrate, below is a tale of two interest rates. […]
Can the same bubble happen twice?
Something interesting is happening in equities and housing markets. Prices look bubbly to a lot of commentators, who are throwing their hands up in confusion. Stocks must be overvalued, overdue for a correction. Housing will correct too, presumably. The question on everyone’s mind: what the hell is going on? There are a couple theories out […]
Housing part II: price-to-rent trends since 2010
In my previous post on house price-to-rent ratios in major US markets, I looked at price-to-rent in different zip codes compared to each other. In it you can see where certain areas look over- or undervalued in terms of price-to-rent ratio. That analysis shows a lot of pertinent data in one place, but you’re stuck in time. […]
The division between capital & labor part II
I received this thoughtful comment from a reader on SeekingAlpha, and thought I would respond with a post. He’s asking about my article on The division between capital & labor matters now more than ever Joe, It seems to me that in addition to the two roles you mention for the role of money, one;1) […]
House price-to-rent ratios in major US markets: a data visualization case study
My wife and I are buying (and selling) a house, and the metric I always return to is price-to-rent ratio. Sure, the real estate agent will show you comps for similar homes in the area. And all your friends, family, in-laws will chime in as to what they think a proper price. But price-to-rent ratio […]
Contagion: Make no mistake, a Grexit means the end of the Euro
And good riddance! When different economies line up under the same currency, eventually bad things happen. One polity eventually wants lower (or higher) prices. Either the first nation suffers runaway inflation or the second suffers deflation and depression. This was true of the international gold standard (France forced its lower prices on the rest of […]
Your own, personal inflation rate
This is going to be a strange post. I’ve been battling a flu, so my mind is a little less rule-bound, a little more fluid (no pun intended). I stumbled upon this article at ECONLOG: Robert Murphy on the Minimum Wage. From a liberal perspective, the minimum wage guarantees a bare minimum income so you […]
The division between capital & labor matters now more than ever
There’s a lot of speculation on Fed moves. Some think the Fed will raise interest rates soon, that inflation is just around the corner. Others fear the economy still isn’t strong enough for tighter monetary policy. With inflation still weak, why not wait before raising rates? For investors, this could have major implications on stock […]
Is your money safe from a US stock market crash?
The best temperament for an investor is serenity. While others fear the crash, buy and snap up bargains. If others are greedy, then sell and take home your profit. But what do you do when everyone’s afraid, but markets keep going up? I saw this interview from Robert Shiller that shook my serenity. After all, I’m […]