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Peak Insiders
by
charleshughsmith
Executive Summary
- Why the momentum for household formation is still downwards, despite the gains in recent years
- Why "rental price fatigue" is putting today's increasingly rosy housing valuations at jeopardy
- Why the fiscal and monetary stimulus that has boosted the housing market in recent years cannot continue further
- How housing may turn from the “can’t lose” investment into an anchor of debt and a “now I can’t move to a better job” debacle
If you have not yet read Real Estate: Is the Bottom In, or Is This a Head-Fake?, available free to all readers, please click here to read it first.
In Part I, we reviewed the fundamentals that have been pushing housing prices higher in 2012. Many of these forces are the result of explicit real estate-supportive Federal and Federal Reserve policies, while others, such as restricting the number of defaulted properties on the market, are implicit policies of the financial cartel that has much to gain from a recovery in housing.
What, if anything, could derail this manufactured housing recovery?
Before we get to specifics, we should start by discussing unintended consequences. What happens when politically expedient policies are imposed with a simplistic goal?
Exhibit #1 is the Federal Reserve policy of lowering interest rates and increasing liquidity to boost “risk assets” such as stocks. This had the unintended consequence of inflating a stock bubble that burst with painful consequences in 2000-02.
Like all central-planning agencies, the Fed followed this policy error by doing more of what had failed: It lowered rates even more, enabling an unprecedented bubble in housing, which subsequently burst in 2007-08 with even more devastating consequences, as that implosion nearly took down the global financial system.
With FHA having replaced the bankrupt Fannie Mae and Freddie Mac agencies as the mortgage-guarantor of last resort, the Federal government has also doubled down on the failed subsidies that enabled the housing bubble.
What are the unintended consequences of pushing investors into the “crowded trade” of rental housing? If we answer this, we will be closer to understanding whether housing has bottomed or not.
Let’s start by reviewing the fundamentals of supply and demand that influence housing and rentals.
Forecasting the Future of Rental Housing and Home Valuations
PREVIEW by charleshughsmithExecutive Summary
- Why the momentum for household formation is still downwards, despite the gains in recent years
- Why "rental price fatigue" is putting today's increasingly rosy housing valuations at jeopardy
- Why the fiscal and monetary stimulus that has boosted the housing market in recent years cannot continue further
- How housing may turn from the “can’t lose” investment into an anchor of debt and a “now I can’t move to a better job” debacle
If you have not yet read Real Estate: Is the Bottom In, or Is This a Head-Fake?, available free to all readers, please click here to read it first.
In Part I, we reviewed the fundamentals that have been pushing housing prices higher in 2012. Many of these forces are the result of explicit real estate-supportive Federal and Federal Reserve policies, while others, such as restricting the number of defaulted properties on the market, are implicit policies of the financial cartel that has much to gain from a recovery in housing.
What, if anything, could derail this manufactured housing recovery?
Before we get to specifics, we should start by discussing unintended consequences. What happens when politically expedient policies are imposed with a simplistic goal?
Exhibit #1 is the Federal Reserve policy of lowering interest rates and increasing liquidity to boost “risk assets” such as stocks. This had the unintended consequence of inflating a stock bubble that burst with painful consequences in 2000-02.
Like all central-planning agencies, the Fed followed this policy error by doing more of what had failed: It lowered rates even more, enabling an unprecedented bubble in housing, which subsequently burst in 2007-08 with even more devastating consequences, as that implosion nearly took down the global financial system.
With FHA having replaced the bankrupt Fannie Mae and Freddie Mac agencies as the mortgage-guarantor of last resort, the Federal government has also doubled down on the failed subsidies that enabled the housing bubble.
What are the unintended consequences of pushing investors into the “crowded trade” of rental housing? If we answer this, we will be closer to understanding whether housing has bottomed or not.
Let’s start by reviewing the fundamentals of supply and demand that influence housing and rentals.
by
Gregor Macdonald
Executive Summary
- The criticality of innovating better storage solutions
- The pros & cons of investing in energy inputs (coal, oil, etc.) or new energy technologies
- The impact of increased carbon taxation & higher oil prices
- Watch where global energy demand is shifting
- The four ripe sigmoidal growth opportunities
- Why coal remains the king of fuel
If you have not yet read The New Future of Energy Policy, available free to all readers, please click here to read it first.
As oil went through a price revolution starting in 2004, the venture capital community embraced an array of greentech start-ups. But the first wave of these, which centered on biofuels and other liquid-based replacements for oil, were destined to fail – and fail they did. It has apparently taken a period of digestion and reflection for investors, innovators, and venture capital to quantify better which areas are more promising in the new energy landscape.
Just recently, for example, investment vehicles controlled by Peter Thiel and Bill Gates were among those who funded energy storage company LightSail, which is exploring the use of compressed air as a method for energy storage. This is meaningful.
It indicates an awareness that not only is global energy demand switching over to the grid, but also, that the grid of the future will need much greater flexibility. So, yes, the grid is the future. But storage – the ability to retain surplus electricity for release at a later time – will be crucial. The reason is that the blend or mix now developing: coal, nuclear, natural gas, hydro, utility-grade wind, and solar (including residential solar) will present a challenge to the grid with its enormous variability in supply.
Storage, to use an economics term, allows for intertemporal supply: the ability to spread power over time. Whether or not LightSail’s technology works and is commercially scalable is a question that awaits an answer. But to target investment in this area, rather than in algae fuels, is right on the mark.
And the need for storage is already becoming critical. The “variability problem” is especially a concern…
Investing Strategies for the New Energy Era
PREVIEW by Gregor MacdonaldExecutive Summary
- The criticality of innovating better storage solutions
- The pros & cons of investing in energy inputs (coal, oil, etc.) or new energy technologies
- The impact of increased carbon taxation & higher oil prices
- Watch where global energy demand is shifting
- The four ripe sigmoidal growth opportunities
- Why coal remains the king of fuel
If you have not yet read The New Future of Energy Policy, available free to all readers, please click here to read it first.
As oil went through a price revolution starting in 2004, the venture capital community embraced an array of greentech start-ups. But the first wave of these, which centered on biofuels and other liquid-based replacements for oil, were destined to fail – and fail they did. It has apparently taken a period of digestion and reflection for investors, innovators, and venture capital to quantify better which areas are more promising in the new energy landscape.
Just recently, for example, investment vehicles controlled by Peter Thiel and Bill Gates were among those who funded energy storage company LightSail, which is exploring the use of compressed air as a method for energy storage. This is meaningful.
It indicates an awareness that not only is global energy demand switching over to the grid, but also, that the grid of the future will need much greater flexibility. So, yes, the grid is the future. But storage – the ability to retain surplus electricity for release at a later time – will be crucial. The reason is that the blend or mix now developing: coal, nuclear, natural gas, hydro, utility-grade wind, and solar (including residential solar) will present a challenge to the grid with its enormous variability in supply.
Storage, to use an economics term, allows for intertemporal supply: the ability to spread power over time. Whether or not LightSail’s technology works and is commercially scalable is a question that awaits an answer. But to target investment in this area, rather than in algae fuels, is right on the mark.
And the need for storage is already becoming critical. The “variability problem” is especially a concern…
by
Alasdair Macleod
Executive Summary
- Germany is unlikely to break solidarity with the rest of the Eurozone while Merkel remains in charge. But she may not last as long as she'd like.
- France's economy is deteriorating at an alarming rate.
- Most of France's "stability" to date is due to inflows of money fleeing Spain and Italy. That will stop soon – and then what?
- The UK is suffering from many of the same ills as the U.S. However, its banks are too dependent on Eurozone debt for it to take drastic counter-measures, and so it is handcuffed to the future of the Continent.
- All is well as long as no one defaults or no one leaves the Eurozone. With each player's position deteriorating, how long can the status quo last?
If you have not yet read Europe Is Now Sinking Fast, available free to all readers, please click here to read it first.
In previous articles, I have given Peak Prosperity's enrolled members the lowdown on the weak Eurozone governments and looked at the crisis from Germany’s point of view. With respect to Germany, all that can be added is that her political elite is still frozen in inaction and show no signs of snapping out of it. Mrs Merkel, particularly, is still pursuing the out-of-date Euroland ideal. It is as if she has decided that she has no alternative. Come what may, it will have to succeed in the end, and she is not going to be the one who calls “uncle.”
I don’t know how these things work in Germany, but in the UK there comes a point where “the men in grey suits” metaphorically tap the leader on the shoulder and politely instruct him or her to resign. It happened to Mrs Thatcher, and unless she has a change of heart, it could happen to Mrs Merkel before next November’s German elections. And when that happens, the withdrawal of Germany from the euro can be expected to begin.
In this article we will update the deteriorating situation in two other key players on Europe's chessboard: France and the United Kingdom. And we'll reveal why the current system is like a Mexican standoff: Everything is stable until someone makes a move. Then all hell breaks loose…
Europe’s Mexican Standoff
PREVIEW by Alasdair MacleodExecutive Summary
- Germany is unlikely to break solidarity with the rest of the Eurozone while Merkel remains in charge. But she may not last as long as she'd like.
- France's economy is deteriorating at an alarming rate.
- Most of France's "stability" to date is due to inflows of money fleeing Spain and Italy. That will stop soon – and then what?
- The UK is suffering from many of the same ills as the U.S. However, its banks are too dependent on Eurozone debt for it to take drastic counter-measures, and so it is handcuffed to the future of the Continent.
- All is well as long as no one defaults or no one leaves the Eurozone. With each player's position deteriorating, how long can the status quo last?
If you have not yet read Europe Is Now Sinking Fast, available free to all readers, please click here to read it first.
In previous articles, I have given Peak Prosperity's enrolled members the lowdown on the weak Eurozone governments and looked at the crisis from Germany’s point of view. With respect to Germany, all that can be added is that her political elite is still frozen in inaction and show no signs of snapping out of it. Mrs Merkel, particularly, is still pursuing the out-of-date Euroland ideal. It is as if she has decided that she has no alternative. Come what may, it will have to succeed in the end, and she is not going to be the one who calls “uncle.”
I don’t know how these things work in Germany, but in the UK there comes a point where “the men in grey suits” metaphorically tap the leader on the shoulder and politely instruct him or her to resign. It happened to Mrs Thatcher, and unless she has a change of heart, it could happen to Mrs Merkel before next November’s German elections. And when that happens, the withdrawal of Germany from the euro can be expected to begin.
In this article we will update the deteriorating situation in two other key players on Europe's chessboard: France and the United Kingdom. And we'll reveal why the current system is like a Mexican standoff: Everything is stable until someone makes a move. Then all hell breaks loose…
Total 1761 items
by sand_puppy 
