On investing during housing reflation in the US and the fiscal drag in Europe and North America

I have two topics I want to highlight this morning. First, there are the US housing inflation numbers from Case Shiller, which are at a 7-year high. Then there is the fiscal drag in the US, Denmark, the UK, the Euro Zone and Canada. What I see everywhere here is continued faith in monetary policy and a lack of faith in fiscal policy. And I believe this is important in terms of predicting policy and economic outcomes.
First let's look at housing in the US. The larger composite-20 Case-Shiller house price index showed house prices up 10.9% year-on-year in the US. That is serious house price inflation. It well outstrips 1.1% CPI inflation from April 2012 to April 2013 for example.
Think about it this way: if you put 10% down on a house, you have just doubled your return in one year. If you ge...


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