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CrashConnoisseur

American Enterprise Institute: Financing A Society Of Property Owners.

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'Financing a Society of Property Owners'

http://www.aei.org/publications/pubID.24072/pub_detail.asp

Recursiveness and Financial Laws

What makes financial markets endlessly interesting is their recursiveness. They are full of feedback

oops, of past expectations already priced in, and of constant adjustments to changing expectations and new information. Financial markets turn subsidies into increased prices of the subsidized asset, risk support into increased risk taking, and [Government-Sponsored Enterprises] into what no one ever intended or imagined.

I would like to propose two laws and two corollaries for your after-dinner consideration:

Kindleberger's Law, from Charles Kindleberger, the economic historian: No matter how any government tries to control money, financial markets will create however much near-money they want.

Pollock's Corollary to Kindleberger's Law: No matter what any government or regulator does, in optimistic times financial markets will create however much risk they want.

Stanton's Law, after my friend, Tom Stanton, an expert in government credit programs: Risk always migrates to the hands least competent to manage it.

Pollock's Corollary to Stanton's Law: Clever insiders capture the subsidy, while transferring risk to the less competent and less informed.

Edited by Jeff Ross

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The clever money now is renting, having their lifestyles subsidised by muppet landlords who think property is currently a great investment, and leaving them to carry the risks of the biggest economic bubble in history.

It's a no brainer...

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  • 301 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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