Goldmine Sacks 2

Goldmine Sacks

The Making of a Housing Bubble

Bubbles remain hard to define, difficult to measure and, like recessions, can only be accurately assessed after they have burst. Economists have wrestled with bubbles for generations, but have yet to devise an adequate scientific means of analyzing them, comparing them or providing us with an early warning system that would safeguard from their worst effects.
But lately, bubbles – or bubble fears – seem to be everywhere. From Chinese real estate to U.S. Treasury bills to global commodities, analysts point to a flood of easy credit that has helped to inflate values.
Now, soaring prices are triggering bubble fright on the Canadian housing front.
For much of the global downturn and financial crisis – which was triggered by the bursting of the U.S. housing bubble – Canada stood as an island of calm. House prices never reached the stratospheric levels of the subprime era south of the border and their decline was nowhere near as precipitous when the Canadian economy weakened.
Most housing watchers insist Canada is not in a bubble just yet. But they acknowledge there is no precise science that determines exactly when a market shifts from merely heating up to bubbling over.
“If it walks like a duck and quacks like a duck … ” said David Rosenberg, chief economist and strategist with Gluskin Sheff and Associates in Toronto.
Mr. Rosenberg pronounced Canadian housing in a bubble late last year, fuelled by the usual culprits: tight supply, extreme valuation, and dramatic credit expansion.
Mix in easy mortgage conditions luring more people to jump into home ownership – the current national rate of 68.4 per cent stands at an almost 40-year high and a full percentage point above the U.S. level – and you have the recipe for a classic bubble.
“Housing values are anywhere between 15 and 35 per cent above the levels that I would label as being consistent with fundamentals.”
When it comes to housing bubbles, Mr. Rosenberg's opinions carry some weight. He began his career as a housing economist.

CTV News

Grease

Goldman Sachs helped the Greek government to mask the true extent of its deficit with the help of a derivatives deal that legally circumvented the EU Maastricht deficit rules. At some point the so-called cross currency swaps will mature, and swell the country's already bloated deficit.

Greeks aren't very welcome in the Rue Alphones Weicker in Luxembourg. It's home to Eurostat, the European Union's statistical office. The number crunchers there are deeply annoyed with Athens. Investigative reports state that important data "cannot be confirmed" or has been requested but "not received."

Creative accounting took priority when it came to totting up government debt.Since 1999, the Maastricht rules threaten to slap hefty fines on euro member countries that exceed the budget deficit limit of three percent of gross domestic product. Total government debt mustn't exceed 60 percent.

The Greeks have never managed to stick to the 60 percent debt limit, and they only adhered to the three percent deficit ceiling with the help of blatant balance sheet cosmetics. One time, gigantic military expenditures were left out, and another time billions in hospital debt. After recalculating the figures, the experts at Eurostat consistently came up with the same results: In truth, the deficit each year has been far greater than the three percent limit. In 2009, it exploded to over 12 percent.

Der Spiegl

Vizio

That Prick NAMA

Chicago Spire developer Garrett Kelleher's effort to build the nation's tallest building in Chicago is threatening the viability of one of his Ireland-based firms.
Clarinabbey Ltd., a subsidiary of Kelleher's Shelbourne Property Group, lost $197.2 million for the year ended March 31, with much of the loss tied to an intracompany transfer of funds for the Spire. It compares with a loss of almost $11.4 million in March 2008.
The company said it made a provision of $187.8 million against money due it from sister companies because it was unsure that those funds would be recovered. That sum includes advances and loans made in 2008 totaling $153.4 million to Shelbourne entities associated with the Spire.
The annual financial accounting of the company was released Jan. 28 in Ireland.
The report said most of the covenants tied to the company's bank loans are "technically in breach" and that Kelleher and other directors are seeking a "standstill agreement" with its banks. Those lenders include Anglo Irish Bank Corp. Ltd., the Royal Bank of Scotland and Bank of Scotland Ltd.
If such an agreement cannot be reached, the directors' report submitted with the financial statements said "there exists a fundamental uncertainty over the company's ability to meet its obligations as and when they fall due."
Work on the Spire has been stalled for more than a year. In August, Bank of America Corp. sued Shelbourne Development Group and Kelleher, accusing the developer of defaulting on a loan and saying $4.9 million was due. Shelbourne since has countersued the bank.
Meanwhile, Shelbourne continues to seek alternative sources of financing to raise its Santiago Calatrava-designed twisting skyscraper from the hole in the ground at 400 N. Lake Shore Drive. Late last year, the company was seeking investment from the pension funds of construction trades unions whose members would directly benefit from the project.
Those discussions have yielded no agreements and ULLICO Inc., a labor-owned insurance and financial services firms with $5.4 billion in assets under management, turned down Shelbourne, confirmed Joe Harmening, the project's director of development.
Harmening said the company continues to have conversations with potential investors.
"The status hasn't changed," he said. "The conversations are continuing."

Chicago Tribune

Bankster Porn