Articles from February 12 show

Jumbo Mortgage ‘Serious Delinquencies’ Rise to 9.6%

Greek Ouzo crisis escalates into global margin call as confidence ebbs


Five warning signs of a bubble

Germany backs Greek bail-out as EU creates 'economic government'

SCENARIOS-What the EU and IMF could do to help Greece



WORLD FOREX: Euro Declines; Investors Await Greek Aid Clarity


Greece's 2009 Budget Deficit Was Just Revised From 12.2% To 16% Of GDP


PIGS’ in Rescue Lipstick Are Uglier Than Default: Mark Gilbert

Danske Market European Perspectives: Debt On A Dangerous Path

Greece: How the Bond Vigilantes Left It in Ruins

Articles from 20 Minutes with Mark and the Markets

Links to news articles

Recession prompts suburban gold rush as women trade in old jewellery

Copper Market Set for ‘Catastrophe,’ Threlkeld Says

Fund charges exposed as fees outstrip returns

Moody's Sees US Rating Under Pressure After $3.8 Trillion Budget

ABC Consumer Index Drops To Lowest Reading Since Fall, Divergence From UMich Propaganda Reading At Record

Portugal Bund Spreads Even Wider Following Substantially Reduced Bill Auction And Much Higher Auction Yield, CDS Hits Record

Andrew Cuomo To File Civil Securities Fraud Charges Against Ken Lewis and BofA CFO Joe Price Even As The SEC Proves Its Incompetence Yet Again

US Default Protection Surges To Widest Levels Since March

Greater Vancouver sales 23.5 per cent decline in January 2010

Awash in a sea of debt

B.C. leads nation in personal debt concerns: surveys

.....you will never be punished for being wrong!

That includes Time too.

On February 15th 1999, Alan Greenspan, Larry Summers, and Robert Rubin made the cover of Time also. These men planted the seed for the meltdown in the fall 2008. In 10 years from now, it will be someone else who will lead us to a crisis.

Canada's Housing Bubble

Last week, a very interesting report called 6th Annual Demographia International Housing Affordability Survey was released by Demographia. If you have been listening to the show, you know that I believe the Canadian real estate market is in a bubble. This report points out that on average, median house price of 3.0 time median household income.

Here is a chart I found on Mish's blog:

Notice that cities in BC make up the top of the list, Vancouver actually tops it. Toronto is further down the list at 5.1 (anything over 5.1 is considered severely unaffordable).

Canadians have made the same mistakes as the Americans have. First, low-interest rates(under what the market would have set) have created the fuel for the bubble. Second, CMHC has been buying low-grade mortgages, Canadian version of the GSEs (Government sponsored entities) Fannie Mae and Freddie Mac, packaging them up and selling them on the market as guaranteed MBS (mortgage backed securities). This allows the banks to have fresh capital to lend more money, without the risk of past loans.

A perfect storm is now about to hit the Canadian housing market:

• the Olympics will be over in a few weeks and that will, I believe, burst the bubble in BC with supply pouring onto the market,
• Canadians are at 145% debt for income, and they are beginning to get worried,
• and long-term interest rates will probably start moving up because of long-term concerns over Canada's total debt vs GDP.
  

Unfortunately, we have painted ourselves into a corner and some pain is the only way out.