Housing Doom

“He who defends everything defends nothing.” – Frederick the Great

February 8th, 2010

“Well unrelease it,” Togneri said: Strange Gyres in Paradis as Canada Nearly Transparent

The document was an annual report on [minister Christian Paradis'] Public Works' massive real-estate portfolio, which contained factual information on high vacancy rates and weak returns on investment. Such reports had never been made public before. // The department's real-estate branch had consented to the full release, and the Access to Information office at Public Works had determined after extensive consultation that there was no legal basis to withhold any of the report. [however ...] – Canadian Press1

This rather creepy straw-in-the-wind showed up as front page news this morning on Doom North's snowy front doorstep.

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February 5th, 2010

Public Scrutiny for G7 Finance Ministers? They’ll have Nunavut

Jim Flaherty can serve seal heart to his buddies all day, and Greenpeace will never know ;)

Plus, they'll all come back with the answer to that eternal riddle — What colour was the bear?

Astute Doomers will note that the south coast of Baffin Island is actually 2 degrees (C) warmer than Doom North this morning …

… and look where's the only place in the country above (well above :( ) freezing. That's what happens when you turn governance over to the Conservative-Reform Alliance Party …


UPDATE: I just can't shake the feeling that our government is simply playing an elaborate practical joke on the rest of the world.  This from a story in the Globe & Mail.1

[Canadian Finance Minister] Mr. Flaherty spoke in front of a lit gas fireplace in a hotel nightspot with a white polar bear hide on the wall behind him. Above him, caribou antler chandeliers added to the image of an informal retreat setting that Mr. Flaherty has advocated.


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February 5th, 2010

Fed’s Got Slack: The Flatliners

China’s currency reserves grew by more than the gross domestic product of Norway in 2009. Its $2.4 trillion of reserves is a bubble all its own, one growing before our eyes with nary a peep out of those searching for the next big one. – Bloomberg4

… but perhaps not since mid-December. The level of foreign central bank holdings of Treasury Debt has barely budged for seven weeks, of Agency Debt for twenty. Sometimes silence speaks in a very loud voice, even if the noise and crosstalk often makes it difficult to interpret the message.

Nice shirt, Cresswell ;)

Twist's new treasuries-focus charts clearly show that an incipient top is continuing to form.



the Fed's own MBS holdings drifted back up $0.599 billion, canceling out a little more than half of last week's give-back, while the combined holdings by the cenbanks of US obligations moved just over a billion dollars, although the contrary moves of the two elements were modestly large. This week's Reuters report1 was, as usual, based on the weekly update from the NY Fed's H.4.1 table site.2 Here is Doom's updated CSV version3 of the agencies and treasuries foreign central bank holdings data set.


This week's treasuries buy was $4.150 billion, almost matching last week's selloff. The figure has edged down just $2.357 billion since December 16, 2009.


Agency Debt lost a significant $5.297 billion, but in the bigger picture we've had a mere $7.857 settling since September 16, 2009.


The combined holdings figure dropped a slight $1.147 billion.  For going on two months the cenbanks have been contributing very little support to America's bailout habit.

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January 10th, 2010

Does Mere Blogger Outrage Matter?

What you say about consensus among your colleagues would have more impact if you said what expertise your colleagues have. It’s not that I’m doubting them — I just don’t know (and readers here won’t know) what the basis is for your consensus. – Professor Chris MacDonald, St Mary’s University, Halifax, Canada1

Recently I was delighted to discover that Dr. MacDonald, an internationally respected ethicist teaching at the philosophy department of the same local university where I’ve been taking a smattering of courses, is in fact a fellow blogger.  Indeed he’s been posting for a bit longer than we have been here at Doom.

Anyway, on Saturday he posted a short article commenting on a Forbes piece (link at [1] below) by one of his colleagues, a former NYU Sterns Dean who’s deploying scatter plots (that Piggington’s Rich Toscano would die for) suggesting that generally speaking the compensation committees are doing pretty well, thank you, by shareholder value with how they are paying top management at financial and other big firms.

To which I replied, in part …

… Quantitative evidence for how well chosen compensation can enhance shareholder value is very good, but among my colleagues who are in general highly critical of management practice in Professor Cooley’s FIRE [== Fire, Insurance & Real Estate] sector, our consensus is simply that when it comes to greed, too much is too much.

Now my expertise in proposing a fair compensation package for Fortune 500 senior managment? zero. Twist’s? nil. Do you, Doom readers, have any expertise? (… and whether or not you do, did I at least generally represent faithfully our thoughts on this issue?)  I would assert that less than a year and a half after the AIG counterparties got bailed out, you don’t have to know much about the technicalities of it all to conclude that there’s got to be something very wrong with, e.g. record bonuses at Goldman and J.P. Morgan.3


LATER: As it happens, the comfortably domesticated syndicated curmudgeon who does the back page of our local Sunday Supplement weighed in4 on this issue today.

As chief executive officer of Thomson Reuters Corp., Glocer is No. 1 on a list of Canada’s 100 highest-paid CEOs in 2008. Economist Hugh Mackenzie compiled the rankings for the Canadian Centre for Policy Alternatives, and it reveals that — in a year when hundreds of thousands of Canadians lost their jobs, life savings, and much of their hope for their children — the average income of those 100 fat cats was no less than $7.3 million.

It would appear that our outrage at compensation may get touched off at a slightly lower snack-bracket than would be typical in NYNY ;)


But does the good Professor have a point? Do we lack impact and weight precisely because we are amateurs? And on a related note, this2 WaPo article casts doubt on whether even direct citizen action (as proposed by the uber-blogger, Adrianna Huffington herself) on bank policies would ever have any impact on the institutions. Compared with even massive numbers of ordinary folk, those guys are just too big.

Or, to sum up … 1) Why bother? … 2) How bother?

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December 29th, 2009

How Bay Street Blew Up The World

The OSC says that based on Coventree’s unexpectedly high exposure to subprime debt, “certain dealers reduced or temporarily eliminated their market-making lines and adjusted their inventory holdings of Coventree-sponsored ABCP, in order to minimize their exposure to losses in the third-party ABCP market.” – Globe&Mail1

What’s amusing about that little snippet is we’re talking about a period 3 weeks ahead of when all hell broke loose on August 13, 2007.  To get an idea of the size of the resulting **SPLAT** Doomers can check out Zimmerman’s commentary around his slides 10 and (especially) 11 from AEI subprime transcript II, a couple of months into the resulting world-wide credit crunch.

So a good deal of the blame for the recent meteor strike would seem to lie, after all, at the feet of a bunch of rocket scientists (real or imagined) at the Caisse, of all places.  Cute.

Ah the power of forced and precipitous balance sheet consolidation.  Waiter!  Another round of QSPE forbearance for everybody, please.

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November 16th, 2009

AEI Subprime VI: Complete Annotated Transcript

1:36:34 … This crisis was caused by massive government subsidies to purchase homes by people who couldn’t really afford them. So what does Congress do? They pass an $8,000 tax credit for people who can’t really afford to buy a home to buy one. I mean, how stupid can you get? – John Makin

Doom Transcripts: Index & Guide

Housing Doom is pleased to present a complete unauthorized annotated transcript for the American Enterprise Institute’s October 22, 2009 event "The Deflating Bubble, Part VI: The Lessons of the Bubble and Crisis".1 The event site has a variety of resources including both an audio and a video of the proceedings. There is as yet no official transcript.

Table of Contents

[link navigation works best when full article displayed]

  1. 0:00:00 – Alex Pollock intro (preview post)
  2. 0:11:43 – Tom Zimmerman presentation (preview post)
  3. 0:26:50 – Chris Whalen presentation (preview post)
  4. 0:37:03 – Nouriel Roubini presentation (preview post)
  5. 0:54:19 – John Makin presentation (preview post)
  6. 1:08:20 – Desmond Lachman presentation (preview post)
  7. 1:21:56 – Panel discussion (preview post)
    1. 1:22:08 – Roubini discussion
    2. 1:22:59 – Whalen discussion
    3. 1:23:57 – Lachman discussion
    4. 1:25:24 – Makin discussion
    5. 1:28:01 – Whalen question
      1. 1:28:18 – Makin response
      2. 1:29:19 – Pollock response
    6. 1:29:51 – Pollock (with Roubini) aside on Canada
  8. 1:31:26 – Q&A (preview post)
    1. 1:32:00 – Bert Ely question
      1. 1:33:04 – Zimmerman (with Roubini) response
      2. 1:34:29 – Whalen response
    2. 1:34:58 – Brian Gardner question
      1. 1:35:43 – Makin response
      2. 1:36:59 – Whalen response
    3. 1:38:18 – Steve Votaw question
      1. 1:38:59 – Lachman response
      2. 1:40:38 – Roubini response
      3. 1:41:22 – Zimmerman response
      4. 1:41:49 – Pollock response
    4. 1:42:11 – Jack Phelps[ph] question
      1. 1:42:54 – Makin response
      2. 1:43:24 – Whalen response
    5. 1:44:40 – John Serrapere question
      1. 1:46:02 – Roubini response
    6. 1:46:27 – Andrea Psoras question
      1. 1:47:44 – Whalen (with Pollock) response
      2. 1:48:44 – Roubini response
      3. 1:49:52 – Makin response
    7. 1:50:42 – Barry Wood question
      1. 1:51:12 – Roubini response
      2. 1:54:36 – Whalen response
    8. 1:55:02 – Christine Eisner[ph] question
      1. 1:55:24 – Zimmerman response
    9. 1:57:22 – Dale Kinsella[ph] question
      1. 1:57:55 – Makin response
    10. 1:58:44 – Pollock brief wrap-up
  9. 1:59:06 (end)

Alex Pollock: [0:00:00] Good afternoon ladies and gentlemen. [slide2 1]

When in the course of financial events we have a huge bubble and the inevitable succeeding huge bust, a decent respect for the the opinions of mankind requires that we try to learn something useful from the painful experience. That’s the point of these deflating bubble series of AEI conferences, which you all have so kindly supported with your participation. So welcome to Deflating Bubble Roman numeral VI, "The Lessons of the Bubble and Crisis."

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November 3rd, 2009

AEI Subprime VI: Panel Discussion

So, you know, there’s nothing for safety and soundness like a comfortable oligopoly. We might think about that and … we’re planning, for those of you who are interested, a conference, coming up in a few months, contrasting the Canadian house finance and financial system with the American system. So there’s a little advert — little preview.

Doom Transcripts: Index & Guide

Well, that certainly got my attention :)

Housing Doom is pleased to present a seventh selection from our under-construction transcript of the American Enterprise Institute’s October 22, 2009 event "The Deflating Bubble, Part VI: The Lessons of the Bubble and Crisis".1

The event site has a number of resources, including an audio and video of the proceedings. There is as yet no official transcript.

Most of AEI’s "team bear" participated in a brief but lively discussion after the presentations.


Alex Pollock: [1:21:56] Thank-you, Desmond.  Having heard five really interesting presentations, let me give the panelists, if they want, a chance to add something, or react to the others.  Nouriel?

Nouriel Roubini: Just a comment on the last point that Desmond made. In this crisis, regulated banks got in trouble, but also a lot of non-regulated financial institutions — were broker/dealers like Bear and when bust. And so in some sense, suppose we go back to Glass-Steagall and not against it? What does it rule out? And then you’re going to have a bunch of broker/dealers or non-bank Shadow Banks that are going to become too big to fail. They’re going to do crazy things and eventually we’ll have to bail them out.

So do we need to really go back to Glass-Steagall? Or we need to break up every financial institution and make it so small that it can fail and who cares? And we don’t have to bail them out. What’s the appropriate policy choice on that? And I think that’s an open question for everybody else on the panel.

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October 26th, 2009

SHOCK!HORROR!NEXT! CBC Radio News Abducted by Aliens

… or in the Mothership’s own words: Welcome to the new World Report

When I hit "sleep" on the old clock radio for 7AM ADT I got what sounded like a blast of FOX as rendered by a gang of interns from Oral Roberts U.  It’s as if James K. Glassman and a commando unit consisting of old Bush public diplomacy types had invaded Toronto and taken anyone who’d been in the UK for more than 3 months (or could distinguish among more than 4 flavours of vowel) to the basement and shot them.

The theme music was different (CBC changes that, traditionally, on the eve of a fresh war) and the stories came in disconcerting little lumps.  Haven’t experienced anything like it since I sampled the CNN news update loop at my sister’s in NH some years ago.

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October 9th, 2009

My Halifax

As Doomers can imagine, I’ve got extremely serious reservations about this story,1 but for the purposes of the present project those are going to be laid aside.

Google Street View has just come online in Halifax, and I’m very pleased with having just discovered an improved walking route between our digs and the campus of St Mary’s.  As it happens, the Armoury Square condo project featured in the article lies just about halfway along the route, and can serve as one of the focal points as I build a picture of my world over the next several weeks.  When we hit the 2nd leg of the downturn (in about 3 weeks?) all this new stuff is likely to blow up …

but meanwhile, let’s just enjoy some untypical non-Doomish Realtor overoptimism ;)

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September 30th, 2009

Instant Perfection — All Aboard for 666

Starbucks promises I won’t be able to tell the difference.  Yeah, from the stuff I was swilling the last time I was on The Ocean.

Our crack team of Doomish researchers has already solved the riddle of how these top-notch marketing geniuses managed to come up with a uniquely Doomed-in-Canada campaign.  Look carefully at what led them astray — the subliminal flash in this 2-decades-old TV spot.  In case you’re not fast enough to interpret it, we’ve reproduced the image under "Read More" below.

Doomers should carefully study the second link in my comment from yesterday.  That, folks, is a last call for the lemmings presently in the profitless safety of debt to transfer across to a whole other platform. (But the banks are going to need all the fresh common equity sucker-money they can get their hands on to survive Shiela’s looming shakedown, and the victims at least will have the comfort that it’s all in a good cause.  I figure the process will take about 4 more weeks.)

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