Canadian Housing Prices - Bubble?

Canadian House prices seemed to have peaked in the Spring of 2010 (see nice chart here)  and some observers, including myself, think that real estate in Canada is poised for a much bigger fall. A very detailed analysis of the Canadian housing market, courtesy of Alexandre Pestov, can be found here.

Economic Sugar High Fading Fast - Revised Aug 24

A recent raft of indicators support the view that the sugar-high from massive stimulus (sovereign printing, borrowing) programs has begun to fade rapidly and that the U.S. economy along with many others is re-entering a nose-dive.
Today the Federal Reserve Bank of Philadelphia released a humdinger. The following chart says it all:

Of course, there are many other indicators from various sources, like the following:

So, hold onto your hats, we're going for a heck of a ride! Oh, and get ready for more sugar coming from Tim and Ben.

New: Existing-home sales plunge 27.2% - Released August 24th, 2010

Mutual Fund Equity Outflows

Recently, in spite of attempts to talk the economy up (see my previous post), various indicators are highlighting increasing stress in monetary, financial, equity and real estate. A potentially very serious problem relates to the 3 plus month consecutive outflow from equity funds which seems not to have been reflected in actual stock price levels. This begs the question of who, then, has been buying or how have the markets managed to stay level. A good commentary on this issue from Zerohedge here suggesting manipulation, HFT, etc., although I personally believe that the federal Reserve/Treasury, through its agents, are also supporting the markets at crucial times as well.

Keynes versus Hayek

The debate over deficit spending versus austerity continues globally. Both camps ultimately converge on the necessity of bringing spending, deficits and debt under control. Keynesians just don't think now is a good time whereas the von Hayek crowd wonders when have Keynesians ever thought it was a good time. The Brits under Cameron have seemingly joined Germany in the austerity camp. The U.S. under Obama is firmly in the "let's spend our way out of this mess" camp. Of course, spending one's way out of debt would probably cause even (or maybe especially) a 12 year old to be frightened by such logic. "Dad, I know you've already given me a year's advance on my allowance, but you see, I'm currently a little out of sorts so now would not be the best time to cut back on my spending and start paying you back and, besides, I'm hoping to spend my way out of my problems". H'mmm.

To me, the problem with Keynesians is that most are dishonest. They are supposed to spend more during tough times (deficits) and sock assets away (surpluses) for the rainy days in good times. The first part is easy. The second part rarely happens because it is the tough part and very unpopular. So there are few true Keynesians. Same goes for Communists. Most believe in sharing when it is the other fellow who is giving.

Anyway, some great discussion on the Keynes (deficit spending) versus Hayek (austerity) by Brady Willett and Dr. Todd Alway here.