Based on this analytic structure, Trump may not just win the election in November--he might win by a landslide.

But suppose this election isn't about Trump or Hillary at all. Suppose, as political scientists Allan J. Lichtman and Ken DeCell claimed in their 1988 book, Thirteen Keys to the Presidency, that all presidential elections from 1860 to the present are referendums on the sitting president and his party. 

If the public views the sitting president's second term favorably, the candidate from his party will win the election. If the public views the sitting president's second term unfavorably, the candidate from the other party will win the election.

As I have noted before, there are very few ways left to stick your thumb in the eye of the elitist, predatory, self-serving Establishment that won't get you tossed in prison other than voting against their candidate, which in this election is Hillary Clinton.

DYI Comments:  If Donald Trump does not win it will be voter tabulation fraud. Why? Simple.  Trump's rallies all over the U.S. with all of his venues at maximum capacity along with several thousand out in the parking lot!  The best Hillary can pull off is one or two thousand with most well under 500 people!  Remember Bernie Sanders?  His rallies were significantly greater than Hillary's.  Not to the degree of Trumps but in the several multiple of thousands. 

 So.....1/3 of Bernie supporters will vote for Trump; 1/3 will vote for Hillary; and 1/3 will sit home, not go to the polls and watch the results on T.V.

Trump supporters are HIGHLY MOTIVATED!  They will not only get to the polls but will make sure friends, relatives, possibly coworkers as well.  The amount of newly registered voters for Trump are swelling his ranks and they will vote.  He is also making inroads to the African-American voters forcing Hillary to backpedal for support that once was "locked in."

Hillary Clinton's supporters are very low motivated as expressed by her dismal rallies.  Many will NOT go to the polls and simply watch the results on T.V.

Unless Hillary pulls off a miracle during the debates - Trump will win.  If Trump soundly defeats her(debates) - she will go down in flames - possibly losing all 50 States!

DYI    

Funny Money Accounting—-Why Social Security Will Be Bankrupt In 10 Years

by David Stockman • August 12, 2016

Except that is not what the report really says. On a cash basis, the OASDI (retirement and disability) funds spent $859 billion during 2014 but took in only $786 billion in tax revenues, thereby generating $73 billion in red ink. 

By the trustees’ own reckoning, in fact, the OASDI funds will spew a cumulative cash deficit of $1.6 trillion during the 12-years covering 2015-2026. 

Needless to say, this means there will be no general fund surplus to pay the OASDI shortfall. 

Uncle Sam will finance the entire $1.6 trillion cash deficit by adding to the public debt. That is, Washington plans to make social security ends meet by burying unborn taxpayers even deeper in public  debt in order to fund unaffordable entitlements for the current generation of retirees.

Funny Money Accounting—–Trust Fund “Assets” Are Pure Confetti 

By contrast, the funny money aspect comes in on the funding side. The latter starts with the $2.79 trillion of “assets” sitting in the OASDI trust funds at the end of 2014. 

In truth, there is nothing there except government accounting confetti. This figure allegedly represents the accumulated excess of trust fund income over outgo historically, but every dime of that was spent long ago on aircraft carriers, cotton subsidies, green energy boondoggles, prison facilities for pot smokers, education grants, NSA’s cellphone snoops, space launches and the rest of Washington’s general government spending machine.

DYI Comments:  The last paragraph - hopefully by now - everyone knows that the Social Security Trust Fund is nothing but IOU's earning fictitious interest from day one.  And when I say day one, I mean just that.  As soon as Franklin Roosevelt signed into law the act(Aug 14, 1935) Congress - BOTH PARTIES - began spending the excess.  Once the costs of WWII began to gin up the President and Congress looked with glee and relief for a funding source to prosecute the war. With a positive demographic growth rate - more babies than replacement of Mom & Dad - being accepted as the norm, tax receipts were seen as ever growing.  Since this was tax based upon existing dollars in circulation it is non inflationary.  A politicians Orwellian dream come true - spending without repercussion.

The Birth Rate Drops

   

Country	2000	2001	2002	2003	2004	2005	2006	2007	2008	2009	2010	2011	2012	2013	2014
United States	2.06	2.06	2.07	2.07	2.07	2.08	2.09	2.09	2.1	2.05	2.06	2.06	2.06	2.06	2.01

Spending takes off not just the excess from Social Security along with almost continuous budget deficits.  Almost except for Dwight D. Eisenhower - a bright spot for fiscal sanity - had budget surpluses in 1956, 1957, and 1960 the remainder deficits were small by today's standards. But off to the races we go with WWII, Korean War, Vietnam War, Cold War, War on Poverty, Gulf War I & II, Afghanistan.  All the while our birth rate has declined from a lofty high peak of 3.5 to below replacement.  The gig is up.  The cost to fund Social Security at present levels is enormous requiring deficits that add to our ever growing national debt a burden that will be foisted upon generations NOT EVEN BORN YET!  Now that is what I call taxation without representation!

The insanity Worsens

 

Global central bankers, stuck at zero, unite in plea for help from governments

In a lunch address by Princeton University economist Christopher Sims, policymakers were told that it may take a massive program, large enough even to shock taxpayers into a different, inflationary view of the future. 

"Fiscal expansion can replace ineffective monetary policy at the zero lower bound," Sims said. "It requires deficits aimed at, and conditioned on, generating inflation. The deficits must be seen as financed by future inflation, not future taxes or spending cuts." 

It was not clear whether such ideas will catch on. But there was a broad sense here that the other side of government may need to up its game.

DYI:  I've never heard so much talk of inflation being a desired result.  Apparently our Princeton University professor Christopher Sims either doesn't know or doesn't care who pays the heavy price for these misguided(incompetent) policies.  The poor, working class, along with a portion of the middle class, who have no surplus to invest in an attempt to out run the ravages of inflation.  Those who have little or zero surplus will be in his squirrel cage running faster and faster never going any where financially.

Shock the Taxpayers

With policies designed to gin up the engine of inflation will have the taxpayers going for their political pitch forks.  Hitting the younger generations with a one - two punch of increasing taxes and ever increasing inflation.  Once Baby Boomers begin to exit the workforce in statistically significant numbers but still very much alive and consuming, the 2020's will be known as the roaring 20's.  High taxes, high inflation, and a LABOR SHORTAGE.  The tipping point demographically is 2023 as Boomer are gone from the work force in significant numbers(at least full time).

That is the Future - This is Now

The second article is an attention grabber.  It is an admission of guilt that quantitative easing didn't work nor has zero interest rate policy ZIRP along with our Europeans with negative interest rates. All this has done is distort our financial markets with investors, professional and amateur alike, desperate for yield.  In their zeal for yield has pushed or more like forced further out the risk spectrum.  The professional knows this; the amateur - John & Jane Doe - are in for a rude awakening the day interest rates normalize.

We are in a Bubble

Stocks and corporate bonds are now priced to the heavens totally out of bounds and devoid of value. The business cycle has not been repealed and when the next recession appears stocks and bonds will come crashing back to earth.  Deflation will reign, central banks will pursue aggressive QE along with obese fiscal spending that will shock the taxpayers no matter who is president!  DYI is expecting a run of the mill sell off from peak to trough of 45% to 60% for stocks.  The reason this is "run of the mill" valuations are staggering high!

PE10 as of 8-30-16 is 27.02

Better Values are Ahead

  Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 8/1/16

Active Allocation Bands (excluding cash) 0% to 60%

83% - Cash -Short Term Bond Index - VBIRX

17% -Gold- Precious Metals & Mining - VGPMX

 0% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

DYI

How I Was Blacklisted at CNN, and How Easily America Goes to War Now

Peter Van Buren 

Posted on

August 26, 2016

Two years ago a group of Yazidis, a minority spread across Iran, Iraq and Turkey, were being threatened by a group called ISIS few American were focused on. Obama declared a genocide was about to happen, and the U.S. had to act. US officials said they believed that some type of ground force would be necessary to secure the safety of the stranded members of the Yazidi group. The military drew up plans for limited airstrikes and the deployment of 150 ground troops.

As the Yazidi situation was unfolding, I was invited to tape a discussion there alongside the usual retired US military colonel. I was asked a single question, explained in my answer that the US was in fact using the Yazidi “humanitarian crisis/faux genocide” as an excuse to re-enter the Iraq quagmire, and equated it to George W. Bush’s flim-flam about weapons of mass destruction in 2003.

The host literally said I was wrong. I was not asked another question, though the colonel was given several minutes to explain the urgency of the situation, demand America act where no one else would, and assure the public that Obama planned only limited, surgical strikes and that was it, one and done.

My question was edited out, the colonel’s lengthy answer was played on air, and my very brief moment in the glow of CNN was ended even though I wore a nice suit and a tie. Oh well, we still have each other here, and hey, CNN, my number’s still the same if you wanna call.

 DYI Comments:  So typical of the mainstream press and especially of CNN.  Only 6% to 10% of Americans believe what is said by the mainstream with the internet press going viral.  A battle for the 1st amendment is on the horizon as these companies push their political hacks to "clamp down" on the internet.  This is coming very soon.  If Hillary Clinton becomes President the internet will come under harsh controls bringing in back door tyranny. 

DYI

Venezuelan Exodus Accelerates

Most of those who can afford to leave the country have already left. The problems in Venezuela started with the takeover of the government by Marxist Hugo Chavez in 1999: First to feel the crunch were many of the 20,000 oil men that Chavez fired from their positions at the state-owned oil company. (Chavez replaced them with incompetent political cronies.) Then businessmen left the country to escape the currency controls imposed by Chavez. They were followed by students who saw the handwriting on the wall. In the last 17 years, an estimated 1.8 million Venezuelans have left the Chavez/Maduro socialist paradise. 

 

In short, the average Venezuelan lives in a prison forged by the socialism imposed by Chavez and Maduro. The country more and more resembles a concentration camp where the guards are deliberately starving the inmates.

DYI Comments:  Another failed state where freedom is suppressed along with socialists economic policies that are now starving their country.   Maduro from what I've read is the worst kind of socialist - THE TRUE BELIEVER.  He will double and triple down attempting to force a successful socialist state always blaming foreign powers(U.S.) his own people(agitators) but never himself as everything fails! 

Maduro will have a recall election most likely he will stuff the ballot boxes in order to win.  To use a common expression - not if but when - there will be multiple coups.  By the time Venezuela is once again stable many years from now don't be surprised that their population reduced by 20% to 30%as their citizens flee tyranny!

DYI

How Beijing’s breach of One Country Two Systems’ gave birth to the Hong Kong independence movement

By Oiwan Lam.

Following the disqualification of pro-Hong Kong independence candidates from the upcoming Legislative Council election, the Hong Kong government now wants to stop discussions on Hong Kong independence in schools. 

While a majority of Hongkongers agree that independence for Hong Kong is politically impossible, more and more claim to support independence simply to agitate Beijing. 

But the barring of pro-independence candidates from the Legco election has only stimulated people to talk about Hong Kong independence more often, culminating in the city’s first pro-independence rally on August 5. 

According to the “one country, two systems” principle underwritten in the Sino-British Joint Declaration, Hong Kong’s previous capitalist system and its way of life would remain unchanged for a period of 50 years until 2047.

DYI:  The easiest way for Beijing to maintain sovereignty over Hong Kong is to extend the Joint Declaration from 50 years(2047) to FOREVER.    This would have the immediate effect of disarming the independence movement.  

But Beijing has been showing signs of impatience in recent years, encroaching more and more on Hong Kong’s internal affairs. 

DYI:  Unfortunately the fascists control freaks from Beijing are too afraid of a little freedom. They need to get their heads out of their rear ends with the help from Beijing Hong Kong would be a world wide center for insurance, banking, investment trading houses, and real estate able to compete with New York and London.

To clamp down on pro-independence discussions, Hong Kong’s Secretary for Education Eddie Ng Hak-kim asked 30 public school principals to ban Hong Kong independence activities in their schools and threatened that teachers may lose their qualifications if they do not carry out the order. 

After making the comment, Ng then departed to Beijing.

DYI:  Beijing decides to double down by sending a political hack using heavy handed approach taking their ideas of independence by threatening teachers, which will anger the students along with their parents.  Beijing's Education Secretary has provided more emotional fodder for independence pushing this movement further.

China is on the precipice due to their massive debt bubble.  The possibility for sections of this empire breaking away is very possible.  The communist party - which is now more fascist - is very aware of this possibility.  When this bubble bursts all hell will break loose with other political subdivisions wanting to achieve independence.  

Notice how many autonomous regions there are.  This is NOT a single country but an empire teetering under a MASSIVE DEBT BUBBLE.  Not if but when it bursts Beijing will clamp down using draconian measures in their attempt to keep autonomous regions from forming new countries. If this is unsuccessful Hong Kong, Macau, Shanghai will follow.  North Korea will loose China as their benefactor dropping this failed state completely into the abyss leading to reunification.  This will give Taiwan the moxie for full independence.

We live in scary times as well.  Here are five possibilities that could spawn regional if not global war.

1.)  Global financial panic

2.)  General Mideast war

3.)  War between Pakistan and India

4.)  Civil war in China

5.)  China attacks Taiwan, Philippines, Vietnam, OR THE UNITED STATES.

DYI

1st Amendment

Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

University of Chicago To Incoming Freshman: Don't Expect "Safe Spaces" Here

“Our commitment to academic freedom means that we do not support so-called “trigger warnings,” we do not cancel invited speakers because their topics might prove controversial, and we do not condone the creation of intellectual “safe spaces” where individuals can retreat from ideas and perspectives at odds with their own,” the letter states. 

The warning from Chicago stands in sharp contrast to many other American universities that have gone out of their way to coddle students by protecting them from ideas they may find offensive or disturbing. 

So-called trigger warnings have been issued over everything from newspaper opinion pieces to art exhibits to reading assignments so that students who might find the content distressing or disturbing can avoid being exposed to it. 

Safe spaces, where students can shelter from ideas or expression they find discomforting, are the other trend du jour on some campuses. Brown University last year turned a room on campus into a safe space by outfitting it with cookies, coloring books, soft music, pillows and a video of frolicking puppies, along with trauma counselors, after students complained that a speaker invited to campus would be too upsetting. 

The University of Chicago is having none of it. To drive home the point, the letter to students includes a link to a report on freedom of expression issued by the university in January 2015. 

The report quotes a former president of the University, Hanna Holborn Gray, as saying that “education should not be intended to make people comfortable, it is meant to make them think.

DYI Comments:  In their comment section from HeatStreet web site here is what Orange Candy had to say:

University of Chicago?! Wow!! I am impressed beyond belief. It is about time that a university stood up against the nonsense coming out of the wacky millennial kooks who can't seem to handle reality without a blankie and a binkie. Kudos to the first school to express what a university is all about - encountering new and often opposing ideas and situations and learning from them.

I hope the University of Chicago is true to their word, if they are, then America and the 1st Amendment is alive another day.  The only way tyranny can be beaten back is eternal vigilance. Hopefully the remainder of the Bill of Rights will come into vogue at this University.  It all begins with one step, and in this case the 1st step(Amendment).  We can only hope.

DYI   

Venezuela crushes 2,000 guns in public, plans registry of bullets

DYI Comments:  Every time the socialist arrive they always go after the guns.  Why?  In order to put their collectivists dreams into play they must rely upon totalitarian rule.  When the populous is armed tyranny can be resisted.  Once Venezuelans are disarmed don't be surprised when some version of forced labor camps arrive.  Free(forced) labor, just as the Soviet Union had to rely upon, will be the only way Venezuela will survive socialism.  In the end the country will go into complete collapse with 20% to 30% of the population emigrating to other countries.  Along the way their will be multiple coups, you can bet on it!

DYI     

Why one prominent hedge-fund boss is calling this ‘the biggest bond bubble’ ever

The “biggest bond bubble” ever. That is how Paul Singer, one of Wall Street’s most prominent hedge-fund managers, referred to the fervor to scoop up fixed-income investments, like government bonds. 

Who can blame Singer? MarketWatch has mentioned this before, but central banks around the globe have rolled out unprecedented measures, including purchasing corporate and government bonds, in an effort to shock their wobbly economies to life and end a period of low inflation. 

As a result, yields on trillions worth of bonds around the globe have been pushed into negative territory as central banks purchase debt and other securities in an attempt to drive down borrowing costs, push investors into riskier assets and spur economic growth.

Central Banks Could Be This Market’s Pets.com

The stock market is partying like it’s 1999, and for exactly the opposite reason. Last week the S&P 500, Dow Jones Industrial Average and Nasdaq Composite hit a synchronized high for the first time since the eve of the millennium. America’s most valuable company is a tech stock (Apple today, Microsoft back then). The tech sector is back above a fifth of S&P 500 market capitalization, and just as then bears worry that the market is overvalued, although not by anywhere near as much. 

In 1999, wild optimism was elevating the market as investors piled into anything with “.com” after its name—leading to a rash of stock-price-boosting name changes. Investors punished dividend payers for not having enough ways to spend money on transformative tech. The number of clicks beat cash flow as an investment tool. 

The contrary is true this year. Wild pessimism about the global economy has led investors to chase dividend payments, demand buybacks and punish companies that invest. Cash is king.

One big difference between the excess of 1999 and today is for those who think that he’s wrong, and low yields are unsustainable. In 1999 it was easy to find alternatives to wildly overvalued tech, media and telecom stocks. With dividend-paying stocks out of fashion, their yields were well above the wider market; more than 180 members of the S&P 500 paid a dividend yield at least twice that of the index. Now, that figure is just 26, as dividends are in demand. 

It amounts to further evidence that it is harder to find anywhere to hide today, as the great central-bank monetary experiment makes everything expensive.

DYI Comments:  DYI's model portfolio remains with its conservative stance.  Yes, stocks and bonds are in a bubble.

  Updated Monthly

AGGRESSIVE PORTFOLIO - ACTIVE ALLOCATION - 8/1/16

Active Allocation Bands (excluding cash) 0% to 60%

83% - Cash -Short Term Bond Index - VBIRX

17% -Gold- Precious Metals & Mining - VGPMX

 0% -Lt. Bonds- Long Term Bond Index - VBLTX

 0% -Stocks- Total Stock Market Index - VTSAX

[See Disclaimer]

The Great Wait Continues

DYI

German central bank suggests raising retirement age to 69

BERLIN (AP) -- Germany's central bank is arguing that the country's retirement age should ultimately be lifted another two years to 69, a call that received a frosty response from the government. 

The government decided a decade ago to raise the retirement age from 65 to 67. The increase is being introduced gradually and will apply to all retirees by 2029. 

Since then, there have been periodic calls for people in Europe's biggest economy to work even longer. In its monthly report Monday, the Bundesbank said consideration should be given to raising the retirement age to around 69 by 2060 to make sure the pension system is viable as the population ages.

DYI Comments:  The retirement age for Social Security will be raised here in the States in an effort to place the program back into balance.  The most likely is a stage in move moving up the retirement age by two to three years.  To be blunt the real objective is to increase the number of participants who will pass away before collecting retirement benefits along with an increased number who's benefit stream shortened do to death.  Government programs are so grand[that's sarcasm folks]!

DYI

Imperial Washington Has Meddled In Ukraine Enough—–Why Crimea Doesn’t Matter

by Ron Paul • August 23, 2016

Though the US media pins the blame exclusively on Russia for these tensions, in reality there is plenty of blame to go around. We do know that the US government has been involved with “regime change” in Ukraine repeatedly since the break up of the Soviet Union. The US was deeply involved with the “Orange Revolution” that overthrew elected president Viktor Yanukovych in 2005. And we know that the US government was heavily involved in another coup that overthrew the same elected Yanukovych again in 2014. 

How do we know that the US was behind the 2014 coup? For one, we have the intercepted telephone call between US Assistant Secretary of State Victoria Nuland and US Ambassador to Ukraine, Geoffrey Pyatt. In the recording, the two US officials are plotting to remove the elected government and discussing which US puppet they will put in place. 

When the mainstream media discusses Crimea they are all lockstep: that’s the peninsula Putin annexed. Never do they mention that there was a referendum in which the vast majority of the population (who are mostly ethnic Russians) voted to join Russia. The US media never reports on this referendum because it produced results that Washington doesn’t like. How arrogant it must sound to the rest of the world that Washington reserves the right to approve or disapprove elections thousands of miles away – meanwhile we find out from the DNC hacked files that we don’t have a lot of room to criticize elections overseas. 

What should we do about Ukraine and Russia? We should stop egging Ukraine on, we should stop subsidizing the government in Kiev, we should stop NATO exercises on the Russian border, we should end sanctions, we should return to diplomacy, we should send the policy of “regime change” to the dustbin of history. The idea that we would be facing the prospect of World War III over which flag flies above a tiny finger of land that most US politicians couldn’t find on a map is utterly ridiculous. When are we going to come to our senses?

DYI Comments:  The reason the alliance [U.S. U.K. NATO EU] are placing so much pressure onto the Russians is their attempt to chase their navy out of the Black Sea. This is nothing more than an oil/gas grab orchestrated by the alliance.  Once cleared of the Black Sea fleet oil/gas rich countries Azerbaijan, Turkmenistan, Uzbekistan, and Kazakhstan can be placed under the alliance sphere of influence bringing in western oil and gas exploration/development corporations.

Russia is very aware of the alliance's objectives and are pursuing diplomatic measures to block the aggressive moves made by the alliance.  This is geopolitics being played in a very dicey game.  If the alliance pushes too hard and too fast Russia will have their backs up against the wall and will resort to war.  Looking at this from the Russians perspective if the Ukraine and Kazakhstan are brought into NATO this would put a squeeze play on the Caucasus' and one of their principal cities Volgograd(see map below).

   

Ron Paul is correct in stating: "The idea that we would be facing the prospect of World War III over which flag flies above a tiny finger of land that most US politicians couldn’t find on a map is utterly ridiculous."  Not only that this is Russia's sphere of influence and has been for over 500 years.   The problem is that the world is headed for natural resource wars especially over oil and gas.  Until some clever inventor/engineer invents a real game changer energy device that can compete with oil and gas expect resource wars to continue.

DYI 

August 22, 2016

Looking Ahead to a Bullish Outlook 

(and What Will Define It)

John P. Hussman, Ph.D.

Current market conditions place our evaluation of the expected market return/risk profile in the most negative classification we identify. Following the British vote to exit the European Union, global economic concerns, coupled with weakness in the Japanese economy, drove interest rates in Britain, Europe and Japan to fresh lows, prompting a burst of yield-seeking speculation that has driven the S&P 500 Index a few percent above its May 2015 peak. At its core, the attempt of central banks to remove any lower bound on yields is an attempt to remove any upper bound on speculation. We expect that materially negative yields will be extremely difficult to sustain, not only for political and economic reasons, but also because the cheap alternative of placing physical currency in a safe creates an arbitrage constraint. 

The latest yield-seeking euphoria has flattered speculators into believing that imprudence is merely sound investing. As valuations rise, prospective future returns fall, and our 12-year projection for S&P 500 nominal total returns has now dropped to just 1.4% annually. But to reward risk-taking artificially, and for too long, is to amplify the amount of systemic risk that is created. Along with the steepest equity valuations in U.S. history outside of 1929 and 2000 (on measures that are actually reliably correlated with subsequent market returns), private and public debt burdens have reached the most extreme levels in history. 

My impression is that the market is heaving its last gasp in the extended two-year top formation of the third financial bubble since 2000.

Paul Singer fund: Market 'breakdown' to be 'sudden, intense, and large'

Too much power has been ceded to central banks, the letter adds, the value of money has been debased, inflation is probably inevitable, and when it happens, it could be swift and impossible to tamp down. 

In one wry aside, the letter suggests a safety warning be attached to the $12 trillion government bond market now trading at negative yields: "Hold such instruments at your own risk; danger of serious injury or death to your capital!" 

Among other things, the letter adds, the hedge fund is seeing opportunity in the distressed-energy sector despite the rebound of oil and gas prices from their lows. The fund also has been building up its gold position "in a conditional format," to ebb losses "should prices fall back from their recent strength."

The Marginal Buyer Holds The Pin That Pops Every Asset Bubble

Bubble Territory

The takeaway from the above is that prices are set by two things: the upper limit that the marginal buyer is willing to pay, and how intensely the competition from other buyers pushes him towards that limit. 

This is just as true for stocks and housing as it is for fine art. 

And we're now seeing some concerning signs that the marginal buyers, as well as their competitors, are beginning to go on strike across those asset classes. 

Let's look at the stock market. For the past 5 years, stock prices have been powering higher. Good, right? Well, not so good when you look at the volume underlying these prices. Volume has been in decline over this period, and the rate of decline has accelerated since the beginning of this year. This means fewer buyers -- less competition -- pushing the marginal buyer to spend more. Which likely explains why the S&P 500 index is roughly unchanged from where it was 2 years ago.

DYI 

Vancouver Housing Market Implodes: Average Home Price Plunges 20% In 1 Month - "The Market Is Devastated"

Three weeks ago, when we looked at the long-overdue sudden change in the Vancouver housing market, long a receptacle for Chinese hot and laundered money, we found that as a result of the implementation of the 15% property tax implemented by British Columbia (something we recommended over a month earlier), that the Vancouver housing bubble has burst.

 “A lot of people have said to me quietly that they hope there is a substantial housing crash.”

Well, it appears they got what they wanted. Now the only question is what happens once Vancouver "corrects" by 30%, 40% or more - will the Chinese buyers stay away permanently or, like a good S&P 500 algos, simply BTFD. We will have the answer in a few months.

DYI Comments:  Foreign hot money comes into play, in the case of Vancouver, at the tail end of a mania NOT the cause of it! Markets go through four phases:

1.)  Accumulation Stage. This is the period of time AFTER the crash has been fully played.  An example would have been gold prices that peaked in January 1980 at $850 then went into a secular bear market until gold bottomed at $287.80 in 1998.  Gold didn't begin to rally until 2002; this time period is the value players paradise allowing a 4 year window to accumulate physical gold/silver and/or precious metals mining shares at give - away - prices!  No where is to be found foreign buyers in significant numbers, except for the minority contrarian/value players.

2.)  Investment Stage.  The liftoff for prices has begun bringing in more value players along with traditional institutional investors appealing to their need to diversify into an asset that is in a bull market.  They shun the accumulation stage, especially institutional money managers as that money would be seen as "dead money."  An asset not going any where, neither up or down placing a drag on their performance, along with the loss of his or her job!  Every correction is correctly seen as an opportunity to further build their position, positioning themselves for future profits.  Foreign money will come into play now in larger amounts managed in a conservative manner seeking addition returns and to diversify.

3.)  Speculative Stage.   Here is where the foreign hot money comes in.  The reason is simple and time immemorial - LARGE PROFITS ARE SEEN AS EASY!  Not just foreign money this will include average John & Jane Doe chasing hot performance.  Profits are easy(at least in the beginning) so it is time to swing for the fences and get RICH!  Remember the U.S. housing market mania there were at its peak 220 T.V. programs dedicated to real estate with "Flip this House" marking the insanity.  At this stage common sense is thrown out.  In order to pursue the dream of getting rich borrowed money pyramids to the point of insanity!  A debt bubble tied to this asset class waiting for a pin.  Contrarian value players use rallies to sell down their positions.  Systematically reducing until they have nothing left to sell.  If they sell too early - so be it - they have been in since the accumulation stage many years earlier and will end up with the bulk of the profits.

4.)  The Crash.    The bubble pops!  The hot foreign money drys up faster than the driest desert.  The banks seeing losses piling up for their speculators clamp down on future loans further reducing buying power.  A full retreat is in progress.  Prices may bottom in a few short years or go into a secular(long term) decline.  Contrarian value players sold out way before the crash who are spectators watching the carnage.  They have moved on to other undervalued assets.

1.)  The Accumulation Stage.  Contrarian value players watch all asset categories waiting until they have entered into the accumulation stage this may take a few short years or a long arduous process.

Canadian real estate has been in bubble for years and is now in the process of bursting moving from one Province to the next.  Vancouver single family homes most likely from peak to trough will drop 50% on average with condos dropping from peak to trough 75%.  This will be first hit with a crash of around 25% a bit of a bounce then the long grind downward over many years.  This decline will need to be measured on a after inflation basis.  Mark my words, the Canadian central bank will reduce interest rates significantly and very likely print money (QE).

Where is Canadian RE on our sentiment indicator?

  

Market Sentiment

Smart Money buys aggressively!
Capitulation
Despondency
Max-Pessimism *Market Bottoms*Short Term Bonds
Depression MMF
Hope
Relief *Market returns to Mean* Gold

Smart Money buys the Dips!
Optimism
Media Attention
Enthusiasm

Smart Money - Sells the Rallies!
Thrill
Greed
Delusional
Max-Optimism *Market Tops* Long Term Bonds
Denial of Problem U.S. Stocks - Canadian Real Estate
Anxiety
Fear
Desperation

Smart Money Buys Aggressively!
Capitulation

DYI

Is College Worth It? The $1.4 trillion question gets harder to answer as a record number of Americans attend universities.

DYI Comments:  Due to the non-stop escalating costs for a college degree the cost benefit analysis is now beginning to dip against university studies.  ON balance do college grads earn more than a high school grad?  The answer is yes.  However don't buy into the norm over a lifetime an average of $1.2 million.  The range is $400,000 to $1,200,00 lifetime increase; all dependent upon type of degree and how aggressive the individual is in the workforce.

If loans are kept in the $10,000 to $20,000 range most mildly aggressive grads will do better than his high school grad counterpart.  Those who have a basic degree, English, History, Government, Management etc. and have graduated with student loans in the $50,000 range will need to more than just mildly aggressive in the work force to over come the debt drag.  At the $75,000 plus range typical of Ivy league schools, on balance, most would have been better off going to a lesser school or simply ditching college all together.  I've personally seen, in this case an Amherst grad with student loan debt of $120,000 as a history major.  Unless this individual has one hell of fire under their ass to succeed in the work force their financially toast.

What about the high school grad who goes to a short term trade school or better still in apprenticeship programs.  Today comparing a plummer, electrician, carpenter, auto mechanic, etc to a college grad on balance the trades have the upper hand especially those college grads with debt loads exceeding $50,000.  At $75,000 plus range comparing both at the same level of aggressiveness financially a person in the trades will win hands down.  This is not an opinion it is simply math.

              
A tradesman who can move up into the $40.000 to $50,000 range and has little or no student debt has the other added advantage of time.  Time to put more dollars into investments and purchase a house far earlier.  Larger the student loans less time and money for investments and/or house.

Bottom line....If you are going the college route do so as cheaply as possible.  College level examination program, on line studies, community college then transfer, etc.  Keeping student loans under $10,000 then you are in the cat bird seat.  Have a bit of a fire under your posterior you will out do the high school grad hands down.  And you will be on your way to out doing the tradesman as well.

DYI       

 

Russia deploys advanced S-400 air missile system to Crimea: agencies

DYI Comments:  While everyone has their eyes on the Presidential election the cold war with Russia is heating up!  The military industrial complex will have their wish list ready no matter who is President.  Hopefully if Trump becomes President he will put a stop to this nonsense.

What is being played the alliance [U.S. U.K. NATO EU] is attempting to chase the Russians out of the Black Sea.  Then in turn make a play for the oil/gas reserves in Azerbaijan, Turkmenistan, Uzbekistan, and Kazakhstan all for the benefit of the alliance.  The grand prize is to break Russia up with the loss of the Caucasus', the Laplands in the extreme north and all of the political subdivisions east of the Ural Mountain forming new countries under the control of the alliance.  This is Geopolitics at its core fighting over natural resource especially oil and gas. 

DYI