Everyone loves a good conspiracy theory debate. Regardless of whether you argue for it, or against, there are times when suddenly the ramifications for plausible truth are realized that overshadow the conspiracy. This is where the plot of truth can get far more sinister than the imagined conspiracy ever could.
For the 2nd month in a row, home prices in Calgary - corporate hub of Canada's oil industry - have fallen. This is the biggest 2-month-drop in almost 2 years (and comes on the heels of yesterday's news that Suncor is slashing jobs and capex). As Bloomberg reports, Bank of Canada Deputy Governor Tim Lane said yesterday development of the more expensive deposits are threatened by lower crude oil prices. "The dive in energy prices will put pressure on house prices in the Western provinces in the coming months," warns one economist and as the following chart shows, more pain is likely...
And yet on Friday morning, the solution came to me in a shot. And, as with most good solutions, it comes from no less a place than Star Trek: The Original Series. Hear all now my idea:
"We’ve read a lot of silly articles since oil prices started falling about how U.S. shale plays can break-even at whatever the latest, lowest price of oil happens to be. Doesn’t anyone realize that the investment banks that do the research behind these articles have a vested interest in making people believe that the companies they’ve put billions of dollars into won’t go broke because prices have fallen? This is total propaganda."
The surreal nature of this world as we enter 2015 feels like being trapped in a Fellini movie. The .1% party like it’s 1999, central bankers not only don’t take away the punch bowl – they spike it with 200% grain alcohol, the purveyors of propaganda in the mainstream media encourage the party to reach Caligula orgy levels, the captured political class and their government apparatchiks propagate manipulated and massaged economic data to convince the masses their standard of living isn’t really deteriorating, and the entire façade is supposedly validated by all-time highs in the stock market. It’s nothing but mass delusion perpetuated by the issuance of prodigious amounts of debt by central bankers around the globe. But now, the year of consequences may have finally arrived.
In Canada, there seems to be a cult belief that housing simply will not correct. They are full on drinking the good old tasting real estate Kool-Aid. Canada has enjoyed many years of the global commodities boom and now finds itself contending with a market full of debt and inflated housing values. Short of oil rising back up to $80 a barrel or higher, Canada is likely going to face some short-term pain. The housing market is due for a correction.
With Greek CDS surging to near post-bailout highs (and short-end bond yields back above 11%), it appears the market is anxious of the endgame as tomorrow's 3rd and final 'snap-election'-saving vote looms. Following Samaras fearmongering yesterday, it appears Germany is starting to fear the worst (and play down its effect), as Merkel's bloc states "the prospect of a Greek sovereign default is no longer a concern for euro member countries and financial markets," adding "hope that Greece’s international partners would pay if the country’s policymakers refuse to carry out necessary reforms is misplaced." However, as Bruno de Landevoisin notes, "what is at stake is none other than the prosperity of the common man pitted against the privilege of concentrated power."
On the old continent, this December 29th, a succinct political showdown is scheduled to take place which may well become a defining moment for our entirely unsettled new millenium.
Fukushima prefecture has been conducting regular checkups of over 360,000 people who were in Fukushima in March 2011 and were age 18 or under when the nuclear crisis struck. As WSJ reported in August, a study by researchers in Fukushima prefecture found 57 minors in the prefecture have been diagnosed with thyroid cancer so far and another 46 are showing symptoms that suggest they may also have the disease. Today, as The Japan Times reports, four more children are suspected of suffering from thyroid cancer in the latest survey bringing the total to 107 out of 385,000 now surveyed. This is dramatically higher than the normal "between 5 to 11 cases per million people," that Okayama University professor Toshihide Tsuda cites for national statistics between 1975 and 2008.
The timeline is not long enough. Hotties and totties for all!
It's hard for me to imagine a more appropriate way to celebrate the birth of the redeemer of our sins and the lamb of God than the shameless purchase of a bunch of useless crap that no one needs.
Despite the authorities' best efforts to keep everything orderly, we know how this global Game of Geopolitical Tetris ends: "Players lose a typical game of Tetris when they can no longer keep up with the increasing speed, and the Tetriminos stack up to the top of the playing field. This is commonly referred to as topping out."
"I’m tired of being outraged!"
Every year, David Collum writes a detailed "Year in Review" synopsis full of keen perspective and plenty of wit. This year's is no exception. "I have not seen a year in which so many risks - some truly existential - piled up so quickly. Each risk has its own, often unknown, probability of morphing into a destructive force. It feels like we’re in the final throes of a geopolitical Game of Tetris as financial and political authorities race to place the pieces correctly. But the acceleration is palpable. The proximate trigger for pain and ultimately a collapse can be small, as anyone who’s ever stepped barefoot on a Lego knows..."
The shale oil “miracle” was an epochal stunt. Thanks to ZIRP, what every pom-pom carrying cheerleader failed to note was how much of the day-to-day shale operation was being run on junk bond financing. ZIRP destroyed the most fundamental index in the financial universe: the true cost of borrowing money. Finance was the lifeblood of the global economy and scam after scam left it riddled with wormholes of fragility. That fragility has been waiting to express itself and the ability of bank wizards to squelch and conceal it may have come to an end. There will be no quick cure for cratering oil prices and the damage it will wreak among the shale drillers.
The Federal Reserve conducted a study on Millennials and tried to ascertain why so many of them are living at home. Is it too much student debt? Lower incomes? Or is it that home prices are simply unaffordable? The study finds that all of these factors have a big impact on why many Millennials are living at home and why the first time home buyer market is performing so badly. (Hint: EB-5)