1. Econbrowser (here) discusses in detail a new research paper that asks whether people knew about the housing bubble or were lulled into some sense of security. The paper’s approach is to look at the actual real estate transactions of important people in the mortgage and securitization business. If anybody suspected the bubble and its bursting it would be these guys. But no, the paper finds that their transactions were similar to everyone else, they also bought more homes and more expensive homes. Clever, and compelling. Read this old post for a refresher on housing bubbles. The approach in this paper is somewhat reminiscent of an old research study I often relate in class about IPO underpricing which looked at underpricing in investment banking IPO’s.
2. Of two minds (here) provides compelling arguments for why global supply and demand will continue to drive the dollar higher. It is a succinct, well written piece that lays out things in a simple manner. A must read for all of you. Makes me wonder about my gold holdings.