Friday May 25, 2012
Here are some anecdotal obsertations about the value of a silver dollar. Clearly we are nowhere near a national mania.
In the early 1980s there were billboards in San Antonio declaring that one of every seven adults was a realtor. Now that is a mania. Everyone was convinced real estate could only increase in value. In college about 1969 I recall on economics professor wondering if his wife and he would ever be able to afford a silverware, knives and spoons made of real silver. That is a mania.
A Canadian writer claims 'it can't happen here' that is a collapse in Canadian Real Estate. Never mind the $2m detached 2,000 sf homes for sale, things are cheap compared to China you see. And the Chinese pay cash!
Over the next two years unwinding these over priced markets will bring a final deflationary wave around the world.
And just today, Aussie Miners make a pitch for Texas Workers. Remember when Butch Cassidy took Sundance to the tin mines in Bolivia? In 1981 hapless Michigan auto workers were literally pitching tents in West Texas to cash in on the oil boom. That didn't last long either. such stories about Canadian real estate that can't collapse and the idea that the mining boom will last in Australia until 2020 are signs of a true mania.As we have noted the Pacific rim companies all lean up against China. China with its government financed housing boom is slowing. Jobs are coming back to the US. The party slows.
Speaking of manias, is there anyone who thinks the Euro is going lower who is not already short the Euro? Surely not. Facebook investors learned they were the last to get on board the FB train, only to discover there were no more 'investors' interested at $38. Tops and bottoms in markets are caused by the market having catered to the insatiable demand for a product, long Facebook or short the Euro. But sooner or later we run out of participants. Then the market reverses. The only question is when.
And as Jesse reminds us, we are all backstopping JPM now, heads they win, tails we pay.
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