The Economic Analyst

The dangers of mass psychology (or why overwhelming majorities are always wrong)

SEPTEMBER 08, 2010

Hello again

The Great Connection…

OCTOBER 05, 2010

One of the big goals of this blog is to examine the relationship between Canadian house prices, consumer spending, employment, and the Canadian economy in general. If you've been reading this blog for any time at all now, you'll know that I believe that real estate in much of Canada is significantly overvalued when compared to historical measures of fundamental value.

Consumer confidence, leading indicators both falling

OCTOBER 22, 2010

As noted before, perhaps the greatest difference between the US and the Canadian economy is not our 'sound' banking system nor out 'conservative' consumers, but rather the fact that we still have confidence in our short term economic prospects, while they don't.

Ford sacks Toronto….and other signs of the times

OCTOBER 25, 2010

Yesterday I made the following statement: "We will see austerity either willingly by our elected officials or in a roundabout manner through higher bond yields on our debt, consuming more of our tax base. The accompanying attempt to curb public sector salaries or benefits will set the stage for nasty protests a la Greece, France, UK, Spain, and now in the US." Today we hear that self proclaimed fiscal conservative Rob Ford has taken the liberal stronghold of Toronto.

Why the big banks have to lie through their teeth

OCTOBER 27, 2010

I noted in a post a couple days ago that CIBC recently concluded that real estate is about 12% overvalued in Canada. Now this is a country mile from what the big banks were saying last year at this time, and it's a country mile from what they'll be saying next year at this time.

We’re different!

OCTOBER 29, 2010

I was unable to find the time to write up a post yesterday, despite some interesting data points worth discussing. Luckily, others in the blogosphere were on the ball, so I'm not going to discuss topics that have been well covered elsewhere.

Mainstream!

OCTOBER 20, 2010

Suggested reading

NOVEMBER 03, 2010

Yesterday I mentioned that my view on the sustainability of our debt-based economy in general, and real estate in particular has largely been shaped by a handful of books. I've received quite a few emails asking me for the titles of the books. Rather than emailing everyone, I'll instead list a handful of the important books that influenced my macro economic views, in no particular order. I've also included some commentary on the books and on how they've shaped my convictions in certain areas. Irrational Exuberance (2000)- Robert Shiller

A quick tour through the board stats- October 2010

NOVEMBER 03, 2010

By now many of the big real estate boards have reported their October numbers. Ottawa, Winnipeg, and Montreal being the notable exceptions as well as the national board, CREA. Let's take a quick tour across the country from west to east and see how things are shaping up using information directly form the horse's mouth (board press releases). Let's also watch for examples of the spin machines being put into overdrive! Victoria (VREB.org): Real estate sales rise in October

Housing starts down...but at least debt's not an issue

NOVEMBER 08, 2010

Lots of good info out today. Housing starts decline If you haven't yet read the primer on the importance that real estate plays to the health of the broader economy, you need to. Let me remind you of the experience of our neighbours to the south. When people stopped buying houses, it had wide-spread economic impacts on consumer spending, consumer confidence, economic growth, and employment.

Rate of US home price decline parallels Great Depression

NOVEMBER 10, 2010

We found out earlier today that the trade deficit in Canada rose significantly in September, largely on the back of meager demand south of the border. US home price declines accelerate...approach Great Depression levels

Lessons from the now toothless Celtic Tiger

NOVEMBER 12, 2010

Quick side note: As I noted yesterday, "If jitters persist in Euro-land, expect a strengthening greenback to take some substantial steam out of the rapidly rising commodity markets."

CNN article- "Canada's coming housing bust; MSM still swallowing CREA's spin; Swallowing the tough medicine

NOVEMBER 13, 2010

I came across a couple of articles worth mentioning: From CNN-Canada's coming housing bust

Canadian home prices should be ringing alarms

NOVEMBER 17, 2010

Yet more evidence that the presence of a significant housing bubble in Canada is blatantly obvious to every economist on the planet BUT those whose livelihoods depend on its continued existence. Dean Baker of the Centre for Economic and Policy Research has warned that Canadian home prices are unsustainable:

Housing and the future of Canada's economy

NOVEMBER 28, 2010

Why are you here? This is far from a philosophical question. This lowly blog is not yet three months old, yet readership continues to grow at a rate that has me pleasantly surprised. This site now frequently receives 2500 daily page views, nearly double from a month ago.

Video Primer: Does Canada have a housing bubble?

DECEMBER 01, 2010

My brother has finished his second video using information contained in the primers on this site. This one explores whether or not the Canadian housing market on aggregate is supported by measures of fundamental value. While some of the data is now slightly aged (particularly the housing starts, which we recently found out have plunged of late), it still serves as a standing challenge to the real estate bulls to formulate a rational argument as to why residential real estate in most centres represents a good near-term investment. Anecdotes don't count! Check it out!

China’s property bubble at risk?; What is driving oil prices?; Greek bond yields explode as Germany states support for restructuring

APRIL 16, 2011

Hat tip to the fine folks over at MacroBusiness Australia for these links… China property bubble at risk? Moody’s Investor Services downgraded China’s property sector to negative from stable citing deteriorating credit conditions over the next 12-18 months.

Bias, denial, and our warped perception: Why the obvious can be so difficult to see

SEPTEMBER 11, 2011

Why are we always the last to clue in? When you’re surrounded by crazy, it starts to seem normal.  It often takes someone on the outside looking in to be able to see the craziness for what it really is.

Comparing house prices and rents....again: More signs of a peaking market?

SEPTEMBER 23, 2011

Another wild one!  Another day, another flight to safety.  Gold has now officially suffered its worst week since 1983, while silver was crushed today.  The TSX sold off, weighed down by the plunging metals.  Meanwhile, the USD gained a bit more against the loonie. At the same time, new data was coming out suggesting that China may well be slowing, while the G20 and IMF gave more unimpressive lip service to the problem of mounting tensions in sovereign debt markets.