Don’t Call it a Bubble…

I jumped on the housing market recovery back in 2011.

Homebuilders had been locked in purgatory for more than five years. They overbuilt (massive understatement there, I know) during boom times. When demand fell off a cliff, they were forced to sit around and lick their wounds.

So they waited. Some even strategically bought land at a deep discount. And when homebuilders looked to be bottoming in late 2011, I turned bullish. The decision sparked a lot of hate mail. There’s no new housing boom… The bottom’s going to fall out again… How could I be so stupid?

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True?…or Not True?

Let’s play a little game of “True/Not true.” We ask the question and you answer, “True” or, “Not true.”

1) Two police officers in Colorado lost their jobs and face felony charges for shooting an elk.
2) Two police in Washington State lost their jobs and face felony charges for shooting a man in his bed 16 times.
3) America spends more money on the TSA each year than the nation of Nicaragua earns.
4) Pubic “crabs” are becoming endangered by Brazilian bikini waxes.
5) The sequester that began last Friday will cut the national debt by $85 billion this year.
6) Witches read The Daily Reckoning.

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S&P On the Kill List

“Paybacks are a bitch,” as they say.

What was Standard & Poor’s thinking back in August 2011, when the ratings agency took the Red, White, and Blue’s AAA rating away? A rating the most powerful government in the history of the world had held for 70 years. S&P downgraded long-term US debt to AA-plus. That score ranks lower than over a dozen governments, including Liechtenstein’s, and is level with Guernsey’s and France’s.

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Insured Lives Sometimes Commit Suicide

Moral hazard is a term with specific meaning in the financial community.

Originally the phrase was mainly used to describe a phenomenon within the insurance industry related to the uncertainty about the honesty of those insured.

Premium writers have at times noticed that a few who buy insurance lose any incentive to minimize risk, correctly thinking this has been laid off on the company writing their policy.

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Inflation Control: Mission Not Accomplished

Central bankers in the United States and Europe have had a primary mission to keep inflation under control. They may have well proclaimed “mission accomplished” with inflation having consistently averaged less than 3 percent in the last 10 years, only to be rudely awakened. Like a doctor judging an athlete by muscle tone and not internal organs or functions, our underlying condition went undetected.

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