Last week, we spoke about one of Toronto's failures when it comes to new "missing middle" housing, namely our inability to look forward to the Toronto of tomorrow, as opposed to only thinking about the Toronto of today. But let's not forget that there are greater biases at play here influencing these outcomes.
Beneath our concerns about not enough parking (how dare you wage a war on the car?) and congruency with neighbourhood character is a deeply rooted aversion toward higher-density apartment living; one that is arguably most prevalent in the English-speaking world.
Consider Toronto's response to the handsome Spadina Gardens apartment building at the start of the 20th century. We were certain that only people of questionable moral fibre would ever want to live in a four-storey apartment block!
Since then, we've become far more open-minded, but survey people in the Anglosphere about whether they'd like to live in an elegant Parisian block, and you'll often discover a stark preference for detached housing. In contrast, survey people on the European continent, or in Asia, and you'll often see different preferences.
Combine these preferences with the common law system prevalent throughout English-speaking countries — where individuals can more easily object to and block projects if, you know, the "vibe" is off — and the broad result is very different housing outcomes. There's data to suggest that civil law countries tend to build more housing.
Cover photo by Clarisse Croset on Unsplash
London has an ambitious housing target of 88,000 new homes per year — yes, per year — over the next decade. This is part of a broader national goal to create upwards of 1.5 million homes in the UK. It's an admirable goal, but the city appears destined to fail. According to a recent FT article by John Burn-Murdoch (their chief data reporter), London saw just 5,891 housing starts last year, which is 94% below its annual target and which represents a 75% year-over-year decline. When compared to many other global cities, London now ranks at or near the bottom when it comes to new homes per 1,000 residents:
Stablecoins, as we have talked about, seem to be the first cryptocurrency use case that has achieved product-market fit. According to this recent piece by Chris Dixon in the Financial Times (which was later republished here), stablecoins moved over $12 trillion in value last year, even after filtering out stuff like bot activity. This is closing in on the $17 trillion in transactions that Visa processed last year; but crucially, stablecoin transactions are made at a fraction of the cost.
It also doesn't matter if people recognize that they're using crypto or not. The backend is continuing to be abstracted:
People all over the world will barely recognise when they’re using stablecoins when making transactions supported by them. Most people will assume they’re just using dollars. And they will be, because the differences between a stablecoin and a dollar are becoming an abstraction for the end user.
And the great promise is the following:
This isn’t just about payments. It’s a realignment of global finance. The internet gave us borderless communication. Stablecoins give us borderless value transfer. With clear rules and market structure in place, they can become both the pipes and the pillars of a new financial system.
What's also interesting, though, is that this shift seems to be strengthening US dollar dominance, as opposed to undermining it:
Stablecoin adoption also has an underappreciated second-order effect: The tokens reinforce dollar dominance in a multipolar world, creating a strong new source of demand for US debt. Leading stablecoin issuers like Circle and Tether already have nearly $140bn in direct holdings of short-term government debt, making them a top 20 holder of US debt today.
If you're looking to invest alongside this shift — and, oh boy, this is definitely not investment advice! — well, then, buying some Ether (ETH) may not be the worst idea. The majority of stablecoin transactions settle on Ethereum or on an Ethereum Layer 2, meaning that every time a transaction is completed, some amount of ETH is burned or destroyed. (
Last week, we spoke about one of Toronto's failures when it comes to new "missing middle" housing, namely our inability to look forward to the Toronto of tomorrow, as opposed to only thinking about the Toronto of today. But let's not forget that there are greater biases at play here influencing these outcomes.
Beneath our concerns about not enough parking (how dare you wage a war on the car?) and congruency with neighbourhood character is a deeply rooted aversion toward higher-density apartment living; one that is arguably most prevalent in the English-speaking world.
Consider Toronto's response to the handsome Spadina Gardens apartment building at the start of the 20th century. We were certain that only people of questionable moral fibre would ever want to live in a four-storey apartment block!
Since then, we've become far more open-minded, but survey people in the Anglosphere about whether they'd like to live in an elegant Parisian block, and you'll often discover a stark preference for detached housing. In contrast, survey people on the European continent, or in Asia, and you'll often see different preferences.
Combine these preferences with the common law system prevalent throughout English-speaking countries — where individuals can more easily object to and block projects if, you know, the "vibe" is off — and the broad result is very different housing outcomes. There's data to suggest that civil law countries tend to build more housing.
Cover photo by Clarisse Croset on Unsplash
London has an ambitious housing target of 88,000 new homes per year — yes, per year — over the next decade. This is part of a broader national goal to create upwards of 1.5 million homes in the UK. It's an admirable goal, but the city appears destined to fail. According to a recent FT article by John Burn-Murdoch (their chief data reporter), London saw just 5,891 housing starts last year, which is 94% below its annual target and which represents a 75% year-over-year decline. When compared to many other global cities, London now ranks at or near the bottom when it comes to new homes per 1,000 residents:
Stablecoins, as we have talked about, seem to be the first cryptocurrency use case that has achieved product-market fit. According to this recent piece by Chris Dixon in the Financial Times (which was later republished here), stablecoins moved over $12 trillion in value last year, even after filtering out stuff like bot activity. This is closing in on the $17 trillion in transactions that Visa processed last year; but crucially, stablecoin transactions are made at a fraction of the cost.
It also doesn't matter if people recognize that they're using crypto or not. The backend is continuing to be abstracted:
People all over the world will barely recognise when they’re using stablecoins when making transactions supported by them. Most people will assume they’re just using dollars. And they will be, because the differences between a stablecoin and a dollar are becoming an abstraction for the end user.
And the great promise is the following:
This isn’t just about payments. It’s a realignment of global finance. The internet gave us borderless communication. Stablecoins give us borderless value transfer. With clear rules and market structure in place, they can become both the pipes and the pillars of a new financial system.
What's also interesting, though, is that this shift seems to be strengthening US dollar dominance, as opposed to undermining it:
Stablecoin adoption also has an underappreciated second-order effect: The tokens reinforce dollar dominance in a multipolar world, creating a strong new source of demand for US debt. Leading stablecoin issuers like Circle and Tether already have nearly $140bn in direct holdings of short-term government debt, making them a top 20 holder of US debt today.
If you're looking to invest alongside this shift — and, oh boy, this is definitely not investment advice! — well, then, buying some Ether (ETH) may not be the worst idea. The majority of stablecoin transactions settle on Ethereum or on an Ethereum Layer 2, meaning that every time a transaction is completed, some amount of ETH is burned or destroyed. (
Burn-Murdoch cites a multitude of factors responsible for this suboptimal performance: onerous new safety standards following the horrific 2017 Grenfell Tower fire, more stringent environmental regulations (compared to other European countries), the disappearance of international buyers in the residential buy-to-let market, and increased demand for non-residential uses. What is obvious is that building safety is paramount and nothing like what happened with the Grenfell Tower should ever happen again. But with ~281,000 new homes approved but financially unviable, there does appear to be a desire to balance safety with supply.
His third point is an interesting one in that parallels have played out in Toronto's new condominium market. The pejorative narrative of "foreigners taking homes away from locals" is commonplace in cities all around the world, which is why Canada ultimately moved to temporarily ban foreign buyers. But what we start to see here is the impact on overall housing supply. Indeed, a 2017 study from LSE (cited in the above FT article) found that international capital and residential pre-sales are essential ingredients in de-risking high-density projects and promoting greater housing supply.
Tying this all together, what has happened is the creation of an interdependency: we have made new housing developments so complicated and onerous to construct that the only financially feasible way to build them is to amortize all of the required time and money across bigger projects. Then, given the scale and cost of these projects, they have become dependent on investors and international capital to provide financing. Raise interest rates, remove the capital source, and then all of a sudden you have far less housing than 88,000 new homes per year.
It is for reasons like these that I get frustrated when critics simply blame developers or investors for shortcomings in a housing market. Finding villains is a lot easier than doing the difficult work of unpacking what's really going on and coming up with solutions.
Cover photo by Gonzalo Sanchez on Unsplash
Chart from the Financial Times
The bull case for ETH is that it will simultaneously become (1) the mandatory collateral and fuel for a new financial system, and (2) a deflationary asset, where more ETH is generally getting burned than is being created to reward network validators. Whether this will happen and boost the price of ETH, of course, remains to be seen. But in my view, the writing is very obviously all over the wall. Stablecoins have become part of the mainstream. The question is: where will all the value accrue in this new world?
Cover photo by Kanchanara on Unsplash
Burn-Murdoch cites a multitude of factors responsible for this suboptimal performance: onerous new safety standards following the horrific 2017 Grenfell Tower fire, more stringent environmental regulations (compared to other European countries), the disappearance of international buyers in the residential buy-to-let market, and increased demand for non-residential uses. What is obvious is that building safety is paramount and nothing like what happened with the Grenfell Tower should ever happen again. But with ~281,000 new homes approved but financially unviable, there does appear to be a desire to balance safety with supply.
His third point is an interesting one in that parallels have played out in Toronto's new condominium market. The pejorative narrative of "foreigners taking homes away from locals" is commonplace in cities all around the world, which is why Canada ultimately moved to temporarily ban foreign buyers. But what we start to see here is the impact on overall housing supply. Indeed, a 2017 study from LSE (cited in the above FT article) found that international capital and residential pre-sales are essential ingredients in de-risking high-density projects and promoting greater housing supply.
Tying this all together, what has happened is the creation of an interdependency: we have made new housing developments so complicated and onerous to construct that the only financially feasible way to build them is to amortize all of the required time and money across bigger projects. Then, given the scale and cost of these projects, they have become dependent on investors and international capital to provide financing. Raise interest rates, remove the capital source, and then all of a sudden you have far less housing than 88,000 new homes per year.
It is for reasons like these that I get frustrated when critics simply blame developers or investors for shortcomings in a housing market. Finding villains is a lot easier than doing the difficult work of unpacking what's really going on and coming up with solutions.
Cover photo by Gonzalo Sanchez on Unsplash
Chart from the Financial Times
The bull case for ETH is that it will simultaneously become (1) the mandatory collateral and fuel for a new financial system, and (2) a deflationary asset, where more ETH is generally getting burned than is being created to reward network validators. Whether this will happen and boost the price of ETH, of course, remains to be seen. But in my view, the writing is very obviously all over the wall. Stablecoins have become part of the mainstream. The question is: where will all the value accrue in this new world?
Cover photo by Kanchanara on Unsplash
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