HERE WE GO AGAIN: HOUSING, TECH BUBBLE BURSTING
A Worrisome Pileup of $100 Million Homes
The listing is part of a global pileup of homes listed for $100 million or more. A record 27 properties with nine-figure prices are officially for sale, according to Christie’s International Real Estate. That is up from 19 last year and about a dozen in 2014.
If you add in high-priced “whisper listings” that are offered privately, brokers say the actual number of nine-figure listings worldwide could easily top 40 or 50.
“It’s a bumper crop,” said Dan Conn, chief executive of Christie’s International Real Estate. “It’s just a new world in terms of what people are building and offering for sale.”
The rise in nine-figure real estate listings comes just as sales of luxury real estate have cooled. Many say the sudden surge in hyperprice homes — often built and sold by speculative investors — is the ultimate bubble signal.
Tech bubble is bursting…
Its beginning folks when tech stocks crash, and then wallstreet crashes don’t say you weren’t warned
This WSJ is eyeopening because essentially what they’re saying is that the 2016 tech bubble will be far worst than the 2000 one
Get your money’s out of the banks now!!!
When the dot-com bubble burst in early 2000, the fallout for publicly traded stocks was quick and severe.
When the dot-com bubble burst in early 2000, the fallout for publicly traded stocks was quick and severe. The Nasdaq Composite Index fell 37% in the 10 weeks following its peak on March 10, 2000.
For startups, the immediate impact was less dramatic. In the second quarter of 2000, venture capitalists invested $25 billion in startups, down only 5% from the first-quarter peak.
“There was a lot of suspended disbelief between March and June,” says Keith Rabois, then a vice president at PayPal Inc. and now a partner at Khosla Ventures.
Mr. Rabois and others think we’re now in a similar period of suspension of disbelief. Startup investment has cooled. Valuations are falling. But Mr. Rabois says many investors and entrepreneurs haven’t yet grasped the new reality. “If that suspended disbelief ends, all hell breaks loose,” he says.
The parallels between the two eras aren’t perfect. After a seven-month decline, the Nasdaq index has gained 12% since early February.
As of April 18, it was within 5% of its post-2000 high. Initial public offerings have all but disappeared, but venture-capital funds raised a record amount of capital in the first quarter.
Mr. Rabois says the record fundraising actually is a bearish sign. Winter is coming, he says, and venture capitalists know it.
“One of the reasons people are raising all these funds isn’t because they want the money, but because they believe their own metrics are inflated at the moment, and they want to get that money before companies in their portfolios start crashing and burning,” he said. Some startups also are employing a similar strategy.
Video: Economic Bubbles Are Leaking. Once They Pop, Game Over
MSM ADMIT: The Fed is a Ticking Time Bomb!
The Federal Reserve has a big problem if it wants to raise rates again. It will have to pay U.S. and foreign banks enormous sums of money instead of U.S. taxpayers….
Quantitative easing was a Faustian bargain
The putative savior of the financial crisis, quantitative easing, was a Faustian bargain. The Fed got to inject trillions of dollars into the financial sector while simultaneously “sterilizing” the very same money. It did this by incentivizing banks to deposit their digital cash at the Fed, paying above-market interest rates.
Currently, the Fed pays 0.50% annually to banks to keep that money out of the economy. It might not seem like much, but the comparable rate paid by the U.S. Treasury for T-bills is 0.28%. In other words, the Fed pays banks nearly twice as much as the Treasury does.
But the Fed refuses to acknowledge this. Each year, the Fed Chair is required by law to testify twice in front of Congress. Both Ben Bernanke and Janet Yellen have used the word, “comparable,” to assert disingenuously that the Fed is paying an amount of interest similar to what banks could earn in the marketplace. It’s possible to “compare” apples to oranges, but it doesn’t mean they’re similar.
Currently, the Fed is paying banks about $12 billion per year in interest. If the Fed raises rates two times (by 0.25% each time) and the level of reserves stays the same, that number doubles to $24 billion. If we are to believe San Francisco Fed President John Williams, who targets an eventual 3.0% for short-term rates, then that’s $72 billion per year to the banks. This is a huge expenses for the Fed. Subtract from that the $90 billion (plus) per year in operating profits, and the amount of money the Fed pays to the Treasury gets pretty small.
The Fed is poised to take huge capital losses
But it gets worse. The Fed is taking capital losses on its $4.3 trillion bond portfolio, and those losses will eventually accelerate. When the bonds that the Fed holds mature, it realizes losses because it paid above-market prices for most of them to begin with.
The Fed is currently keeping its balance sheet the same size, purchasing new bonds when old ones mature. Should it decide to sell bonds, it would realize huge losses over a short space of time and would likely go into debt with the U.S. Treasury. According to Hall and Reis, it would take the Fed 6 to 10 years to work off the debt and get back in the green.
Bottom line: No matter how you slice it, the Fed payments to Uncle Sam will not only drop off a cliff someday, they could also go negative. That means, the taxpayers would be indirectly on the hook for Federal Reserve operating losses….