O.k., so a meteor isn't going to wipe out life on earth? Fine. Just as long as that's clear, Wallstreet can breath a sigh of relief. BofA can continue to exceed expectations.
A financial in USSAR reporting a bad number, surely you are whispering and not afraid of comrade Paulson. TO the gulag for another 10 year plan. Pineapples in Siberia, brilliant.
We are in the deflation of this cycle and cash is king however the default on the US government debt is going to lead to a currency collapse within the next few years. Use this time wisely.
I thought that bore repeating. I "suspect" there is a countervailing force A-mouse under appreciates in the form of SIV's. But, as a general matter, I agree with his/her thinking.
default on the US government debt is going to lead to a currency collapse within the next few years
and i'll repeat: the US will never EVER default on its debt. EVER. Period. The dollar is the reserve currency, and that isn't changing. At least until after everyone alive today is dead.
It's true, it may not be all out like in Japan, but deflation is here, now. Cash is king, getting yourself tied up in ANYTHING is a bad idea, with debt at the top of that list.
What was the last period of time North America saw deflation??
ipodius writes:
default on the US government debt is going to lead to a currency collapse within the next few years
and i'll repeat: the US will never EVER default on its debt. EVER. Period. The dollar is the reserve currency, and that isn't changing. At least until after everyone alive today is dead.
... and I'll rejoin... that will only last for as long as it is profitable to the guys who own the debt.
Explicit default, implicit default, default by devaluation, default in anything but name. Yes, right, what-what, never (ever) a default. Wink-wink. Love these AAA bonds rated by TWO insurers, they must be good.
What was the last period of time North America saw deflation??
Ohhh ohhh oh! Pick me! I know!
My... quite a few people are really going to have a sucky retirement. How many boomers do you know who:
1. Were depending on their home equity to retire upon.
2. Are now underwater
3. Bonus group: On multiple properties they're underwater.
Too many... far too many.
Obviously the solution is a 1st time buyer tax credit that will save the market! [smithers | on] Those renters won't know what hits them when the "V" recovery is upon us. [smithers | off ]
query_tool
I tracked TIPS for a few months. My personal take away was that it doesn't track well. It follows major market moves, but with a muted response. There's a lot of not very complimentary research available just about anywhere you look on the web. .... and now you have exhausted my meager knowledge.
CR,
I strongly object to the "confessional" label for this post. Father O'SECular has dragged this bad boy by the ear into the sacristy and put the fear of Gawd in him. "Softening" in the CRE sector? They don't even go that far. BofA calls it softening of underlying asset value. GMAFB, the bottom has dropped out. This isn't a confession.
"Grant me the treasure of sublime poverty: permit the distinctive sign of our order to be that it does not possess anything of its own beneath the sun, for the glory of your name, and that it have no other patrimony than begging." -
St. Francis of Assisi
Neil, i honestly don't think that many people were counting on their houses to retire, or even investment properties. That's way over-done. The purpose of having a house paid off when you retire is to MINIMIZE your housing cost, not to sell it and go pay rent somewhere.
But the value of whatever portfolio you have for retirement is going to take a huge hit in deflationary times as the aggregate value of the investments goes down. So I think that's the issue for boomers. No more double-digit returns, and eroding value of whatever they have over the next few years. Not a happy thing either for those who save.
And actually it's not the boomers who are the issue. What happens to all those projections on retirement for people now in their 40's and 30's? Will they see only 4% for the next 5 to 10 years? Or even that overall?
Ipodius makes a good point. Savers have been "thrown under the bus". When was the last time you've heard anyone talk about getting higher rates to savers?
I remember being chastised for calculating retirement returns at only 8.5%. Ipodious's 4% seems more reasonable.
rut ro Rob Dawg,
You rubbed my prayer rug the wrong way and now you have to live with it:
Lord, make me an instrument of your peace.
Where there is hatred, let me sow love,
where there is injury, pardon;
where there is doubt, faith;
where there is despair, hope;
where there is darkness, light;
and where there is sadness, joy.
Grant that I may not so much seek to be consoled, as to console; to be understood, as to understand; to be loved as to love; for it is in giving that we receive; it is in pardoning that we are pardoned
ipodius writes:
I honestly don't think that many people were counting on their houses to retire, or even investment properties. That's way over-done. The purpose of having a house paid off when you retire is to MINIMIZE your housing cost, not to sell it and go pay rent somewhere.
Thank you for that perspective on the 1980s. I "gap" between owner occupied and owned by county residents in the 200 Census period was 20%. That means 20% more homes were owned by residents than were occupied by residents.
Rob Dawg, I thought the home builder losses "grew faster than expected" qualified as confessing. But in the bigger scheme, maybe that is just worth a couple of Hail Marys.
Peter Orszag, CBO director, said: It is the CBO view that Fannie Mae and Freddie Mac should be directly incorporated into the federal budget.
The Bush administration appeared to be caught by surprise. A spokeswoman for the Office of Management and Budget told the Financial Times: We are working through this issue with Treasury and other stakeholders.
The White House could take a different view on Fannie and Freddie and exclude them from its budgets. But this would be difficult because the CBO is regarded as the leading independent authority on US finances and its assessments guide spending decisions by Congress.
ipodius writes:
I honestly don't think that many people were counting on their houses to retire
My friend, if that is what you think, then you are out of contact with the real world... IMHO. You simply cannot ask Joe6pack to anticipate that the classic American Dream - - not merely would be stolen out from under him, but that he understood it would happen and laid in an alternate plan.
I'm sorry, but if you pretend to advance that theory, I must call you a fool.
Neil, i honestly don't think that many people were counting on their houses to retire, or even investment properties
this is of course hard to measure (sort of like the so-called ruthless defaulters). however, I do feel that there was a sea change in retirement planning that happened after 1997. I would guess that a lot of people felt that housing was a partial retirement fund starting in the late 1990's and continuing until today.
this was especially significant in the bubble areas IMO. it would seem that a lot of boomers had this retirement idea.
sure, they weren't going to sell and rent... but they were going to downsize and then use the difference in money for part of their retirement.
all of course, IMO, as there is no good way to measure this.
"BofA home builder losses grew faster than expected."
What did they expect? Idiots. Homebuilders are dead. Their losses will continue to accelerate as they go BK. Throw away your model. It was obviously put together by people who know nothing.
...the US will never EVER default on its debt. EVER. Period. The dollar is the reserve currency, and that isn't changing. At least until after everyone alive today is dead.
I bet Britain felt that way about the Pound about a century ago. I don't recall them actually defaulting on foreign debt, but they lost world reserve currency & Empire status nonetheless --and in a much shorter period than a human lifespan.
Ummmm...and what percentage of those are "boomers" and what percentage of those are counting on them ONLY for their retirement?
ipodius
You don't get it. In the 5 minutes since you tried to float your whole cloth fantasy that RE was not part of the boomer end game you've had at least 8 replies in the strongest language that your perspective is grossly outdated at best. Concede and try a different tack.
yearning, I'd agree. i personally know of no one that speculated on RE to retire. Maybe to make money with the IDEA that it would fund retirement, but then again, that's why people bought dot com stocks too. And tulips, and whatever else through the ages. Downsizing is natural and I will someday do that too. Which sort of makes you wonder about what the real value of all those 4000 sq ft houses is. But everything will be paid off by the time I do that, no matter what the property is worth.
but even if it is a quaint 80's sort of idea, the purpose of buying a place is that you pay for it in your best earning years and have no housing expense in the years where your earnings are fixed.
Ummmm...and what percentage of those are "boomers" and what percentage of those are counting on them ONLY for their retirement?
I agree with this. however, RE is one of the legs of the retirement stool. take it out and the stool wobbles.
there has been considerable research that seems to indicate that general household savings rate declined with increases in housing equity. this does not prove causation, far from it. but it is intriguing.
My own personal guess is that housing indirectly will really cause retirement pain because a fair number of older people have overspent on housing, leaving them less income with which to save. And the housing alligator needs to keep being fed.
so sure, there are a few people who were counting on "cashing out" their home to retire, and I agree that this number is not the majority. But there are a lot more people who needed to save more for retirement but who didn't... either because they didn't have the cash (due in part to high housing costs) or because they had a false sense of net-worth assurance.
When was the last time you've heard anyone talk about getting higher rates to savers?
you don't understand what is happening here. Paradoxically, to keep the ponzi scheme alive, we must NOT have high rates that entice savers to save.
Instead, what we need (to keep the ponzi alive) is rock bottom interest rates, that punishes the savers. this will force them to chase yield, which will push it where the capital is needed the most.
obviously, this is a sick economic policy, but it is what is being engineered.
The Fed wants savers to "invest" in Lehman/Fannie/Freddie stock and WaMu CDs and Mortgage Backed Securities etc. Raising savings rates will not accomplish this.
Ummmm...and what percentage of those are "boomers" and what percentage of those are counting on them ONLY for their retirement?
Many aren't thinking of counting on them for retirement, they are "assuming" that everything will work out for them at retirement. Very few people have done rigorous retirement planning.
but even if it is a quaint 80's sort of idea, the purpose of buying a place is that you pay for it in your best earning years and have no housing expense in the years where your earnings are fixed.
ipodius
Who the heck cares what you think the purpose of RE investing should be or used to be? Repeat after me: "the old rules of RE were thrown out in the 1990s."
be careful of what you wish. I'm with ipodius on this one. Many of us (including me) forget how much WE have PERSONALLY benefitted from this ponzi scheme as well.
without loose monetary/fiscal policy and bubble economics YOUR/MY job may not have been created. perhaps OUR salaries were actually misallocation of resources? you never know.
a rising tide lifts all boats... but a 7 year drought can ruin even the best yaught. and a hurricaine with surge and then ebb can ruin all the boats.
The three families that have moved into our block (this summer) are here to raise their families,,,dont care much about where house price goes now, they are looking prolly 20+ years out....small children,,,replacing retired families.
What I anticipate is that we will not know the limits to Fed lending until the Fed says no to a large, influential firm seeking help, Poole said.
Bets on who and when that's going to be?
Nemo | Homepage | 09.10.08 - 1:37 pm | #
It had better be WaMu, both to scare the bejeebers out of all the other institutions to straighten up and fly right, and so as not to set the precedent of all precedents.
"obviously, this is a sick economic policy, but it is what is being engineered."
Actually the Feds want desperately to entice people to chase yield. But the correct response is a one finger salute. J6P is sitting there saying to himself got burned by .com got burned by mortgage lending perhaps its time to return to basics. Depression era: take the sugur packets from the resturant kind of thing.
The American people if they had an iota of collectiove wisdom would start selling their 401K and piling into Treasury and or cash. You think that would send a message?
Small problem: drive interest rates up but at higher rates say double, it would cost taxpayers another 400B or so in debt service. But capital attraction would work to offset the benefit to savers. Net net there is no easy solution. Best solution for savers is to preserve capital becasue they are the only people who have capital> everyone else will watch their "wealth" get decimated. So on that basis maybe it is not so bad.
Yearning to Learn writes:
so sure, there are a few people who were counting on "cashing out" their home to retire, and I agree that this number is not the majority
Yearning,
I live in the mid-west {geographically right about the middle}. That is the majority thought here; and that is just a very scary fact.
but a 7 year drought can ruin even the best yaught
Noah Webster would be proud of you. Is this a Midwestern houseboat? As someone said (Morgan?)about his yacht, "If you have to ask, you can't afford it."
I will happily destroy the useless slobs around me in the battle to be a productive country again.
I am one of the few who has seen fit to make themselves educated and resourceful.
I have no family business to be handed to me, I have not made (directly or willfully) a penny from these masturbatory bubbles which have dominated our economy.
I currently hold a position which relies more on intellectual strength than physical, but maintain a very healthy, active lifestyle. I would welcome the chance for well paid physical labor. A job were I can see my progress and contribution to our society instead of wasting my precious hours and days surrounded by mindlessly unproductive parasites.
I'm not at all sure why I feel a need to ask for everyone's understanding for my outburst... There are simple some things I stand for, and that is just a fact. I yam what I yam.
When I hear stuff like this:
Rob Dawg writes:
CR,
I strongly object to the "confessional" label for this post. Father O'SECular has dragged this bad boy by the ear into the sacristy and put the fear of Gawd in him.
There is a trigger in me that just goes off. I respect everyone's choice on that issue... this is just my soft spot.
The American people if they had an iota of collectiove wisdom would start selling their 401K and piling into Treasury and or cash. You think that would send a message?
FRED | 09.10.08 - 1:48 pm | #
No. They'd interpret it as panic or mob behavior. You really want to send a message? Elect Ron Paul. He's the only truth-teller in the whole bunch.
"be careful of what you wish. I'm with ipodius on this one. Many of us (including me) forget how much WE have PERSONALLY benefitted from this ponzi scheme as well...."
Spot-on! ANY business/organization that benefitted from consumer spending has benefitted from wild, reckless disregard for sustainability. Now, it's pay-back time, and unfortunately, we're all going to be paying back.
"It is naive to believe that non-financial firms would never engage in a concerted political campaign to obtain Federal Reserve loans," he said in remarks to a seminar organized by research firm Macroeconomic Advisors.
Poole said that since the Fed stepped in to prevent the collapse of investment bank Bear Stearns in March, officials have not done enough to make clear the limits of the government safety net.
"The Fed and Treasury have done nothing to define limits to access to Fed resources," he said.
The failure of a large airline or car company could also be seen as broadly damaging to the economy, and therefore justify a government rescue, Poole said.
"With the Bear Stearns precedent, it will not be so easy to say no next time," Poole said. "The Fed and Treasury have not gone far enough to define the new regime.
But capitalism seems to have worked quite well in the past. Things just seem to have broken down more recently.
We had a formula that worked really well. Then we broke it. Maybe the thing to do is to go back to what worked instead of trying to completely re-invent the wheel.
In all likelihood, the limits to government protection will not be known until the Fed says no to a large, influential firm, Poole said.
The power of the government to provide protection is inherently limited. It's just a matter of whether the Fed says no before those limits are reached. If not then we'll likely see a crisis of credibility that affects the entire US government and all assets directly tied to it.
They had the a TV on where I just had lunch. With the various news stories about the financials, the Presidential candidates were laser focused on the following important debate:
"He called her a pig."
"No I didn't"
"Yes you did"
In all likelihood, the limits to government protection will not be known until the Fed says no to a large, influential firm, Poole said.
The power of the government to provide protection is inherently limited. It's just a matter of whether the Fed says no before those limits are reached. If not then we'll likely see a crisis of credibility that affects the entire US government and all assets directly tied to it.
Or as Popeye would put it - don't count on receiving a pass, as you are madly running downcourt, until you actually see a gesture putting the ball in the air.
The government knows that at least one of the big three is going south, never to return.
My guess is that it will be xsler, with GM or Ford being partially sold to the Chinese.
Just saying, that it will be obvious shortly which one is dead.
Cerberus is going to run out of money to keep propping up xsler without universal healthcare.
Leh is being dismantled as we speak, with the profitable parts put on the block. The remant company with it's real estate moron fest will bk.
Just differing methods really, the end result is the same, just no need to hurry a shotgun wedding. Nobody needs to act as fast as when BSC died, so they want all of the value and none of the manure like JPM got with BSC.
In other words, no net residual value, so slow dismemberment and decent into failure.
Allen,
I agree. The fate of Cerberus is a conundrum. All of their links to power potentially expire in the upcoming election. Clearly, they are the one's gasping at this point - on the other hand - and as much as I dislike Republicans {which is a lot} - Cerberus has enough current clout to ensure that it won't be the one clobbered. But that's just my humble guess.
And he was talking about McCain's policies. The saying is in the general vernacular, and if they can't see that...
Who cares? She can be a pitbull by her own description but not a pig by someone else's? Anyone you're gonna explain it to is too bought into the conflict to hear a word you say.
November and December will be stunningly bad months for economic news. That may, I repeat, may constitute the bottom for this cycle, and a new administration may bring some optimism back to the markets.
On the other hand, there is a lot of dead equity out there that needs to disappear in writeoffs.
ipodius writes:
the old rules of RE were thrown out in the 1990s."
Just like in fashion, what's old is new again. And it's not going to change for a long time...hemlines in housing are down.
.... and we almost became friends. LOL. I'm sorry pal, that understanding of what's happening just does not have contact with real earth. Enjoy your pipe dream.
the clock says it is about 6:25 and a period of economic recovery follows a visit to the trough...do you think all homebuyers are shorting the market? where's rent vs buy in two months? the pickets are numbing, but still having their impact.
Ipodius,
With respect, I suggest that while you may be accurately assessing J6pac's understanding of the market - you may have underestimated his potential for anger.
Welcome to Monkey Grease. Say "Hi" to Jas and Seb for me.
I'm not understanding what you are saying rob and popeye. there is no coming back for RE anytime in the near or even not-so-near future. None. So any idea that RE is going to be anyone's nest egg is now gone.
And besides, the idea that X is going to fund retirement is business as usual, isn't it? It is human nature to look at some windfall or get rich quick scheme. RE was just the last one, they'll be another and then everyone will forget about what they lost in RE.
Myself, I know Social Security is going to be what will fund my retirement....
It's fascinating to me, that so many of you continue to believe this can be managed. Gleefully, you continue to pretend the cash strapped, over leveraged, {admittedly sleeping} consumer class will continue to support your high expectations. Opps, did I miss something like Joe6pac is 2/3rds of this economy ? No, I covered that. Are you boys counting on exports ?? If so, you better take a careful look at your potential buyers because they are hurting too - incidentally, you better check your available cash.
popeye, it's just a sheer numbers game here. consumers HAVE to spend. and the sheer number of consumers in the US (of all asset classes) will keep spending at a very high static level. what will be removed are certain areas of spending, NOT spending itself. people act as if, suddenly, everyone is going to stop spending. they aren't. stuff wears out, and just the sheer numbers make this economy a formidable force on just replacements and new people coming into the market.
and this is the argument for deflation. if you don't have access to cheap credit, and you need something, what do you do? you buy the cheapest thing you can to get you through. if the credit markets don't stop contracting soon, it's going to force prices down because demand is going to shift BIG TIME. And this is bad for the market because the pricier goods are the most profitable ones. there goes corporate profits.
so the key is the credit markets here. all leverage isn't bad. but when you get an event like this, you take out the good credit with the bad, and that's the destructive aspect.
Reverse mortgages:
There was a 56% increase in these types of loan in 2006 from the prior year. The Federal government in December 2007 removed the restrictions on the number of outstanding reverse mortgage loans they would underwrite at any given time. Prior to the new legislation, the original limit was 275,000.
"but even if it is a quaint 80's sort of idea, the purpose of buying a place is that you pay for it in your best earning years and have no housing expense in the years where your earnings are fixed."
The problem is that there were enough people speculating in housing to cause a deflationary collapse. Like all of California.
And regardless of whether or not housing local, banking is not.
FNM/FRE just now, BSC 6 months ago, Indymac 1 month ago and WAMU in a couple of weeks are going under simply because of the bubble mentality in California.
To sum it up, it doesn't matter what mentality house-owners used in your neck of the woods, the crash is still happening.
The two-year benchmark notes, which mature Oct. 12, 2010, were priced to yield 2.896 percent, or 70 basis points more than U.S. Treasuries of similar maturity, the Washington-based company said in a statement sent by e-mail. That was the lowest spread in a two-year sale by Fannie since June. Earlier today, the company sold $2 billion of short-term bills at lower yield spreads in a weekly auctio
Ipodius,
I have maintained two propositions in my trading - after I grew up. The first is that the mind works much faster than the market does. That eventually leads to an understanding that most market oriented discussions revolve around a difference in "time frames" - as opposed to objective events. And, therein, my friend the devil lies.
The second proposition is simply this: the market goes up and the market goes down.... that can you are kicking down the road contains sardines. {if you catch my drift}
"Asian investors bought 12 percent of the latest issue, while European investors purchased 8 percent, down from 39 percent and 17 percent in the July sale, according to company data. Central banks bought 27 percent, down from 57 percent."
popeye, i'm not one of those "all credit is evil" types. if it weren't for credit, i wouldn't have and undergrad and two grad degrees. nor would have have property. nor transportation. all of which get paid off. so there is no "can kicking" as long as people pay it off. the issue is when you use credit to fund things you really can't afford. that's the distinction i make.
but in this contraction there is no distinction. and that's the destructive part. the other destructive part is now paying off the debt, so killing off discretionary purchases. that's going to take most people a couple of years to work off. but spending will not stop.
Ipodius writes: the issue is when you use credit to fund things you really can't afford. that's the distinction i make.
I make that distinction as well. It's timing Impodius. For how long did that mispricing take place ? Assuming, arguendo, that was the only factor at work here, I submit that it has not yet been priced in.
I have two relatives, one woman 86, the other woman is 92, who are moving out of their assisted living apartment and into a house they own because they're losing money on their investments (stock market) and are afraid they won't have enough money to last the rest of their lives. They live in Florida. They couldn't sell their home in Florida, so they've decided to move into it instead. They will be more isolated (their minds and thinking are clear, but they don't drive, no nearby markets, the bus stop is three blocks from their house, no friends or relatives in the area, and they are fragile - this is not a good move for them.)
Your story pisses me off...That's why I'm betting against this regime....
They pigmen are hurting the seniors bad...These fuc$ing greedy bastards don't care about anybody except themselves....
And that's not America.....
Damn if they were within 10 miles from me in California I would offer to take them to store or pick up thier groceries for them...
I'm tired of this..anybody seen the movie "into the wild" 40 foot sloop here I come....
ipodius,
Have to disagree. The amount of debt in this ponzi-scheme economy is way too much.
Sure, people will spend, but on what?
-Food
-Gas
-Housing, if it is cheap enough
Heck, sleeping in the car, if owned, or on the friend's couch is always apossibility.
The fact that the economy is 9% manufacturing, 70% consumerism and goobermints at all levels make up more jobs than any other sector COMBINED with the fact that there are trillions in debts to be repaid =
America is BROKE
I understand you are in a good sitch, so am I.
However, the chickens are coming home to roost after 25 years of loose lending, stagnant wages vs. inflation, no M3 reporting, and a staggering amount of debt.
ONCE AGAIN...
People making 100K a year should not be buying 500, 600, or 700K homes, let alone million dollar McMansions.
Sure, you (someone) made or saved that 200K savings and bought that spacious 199K home in Montana for cash. Now you work as a mechanic or on a ranch.
That's nice, but for most of America that dream will never occur.
Roubini has gone mad. He didn't sound like it at the Rose Round Chuck table Monday night. Nefarious tight end, that guy.
See, last I heard, US gubment owns FRE, FNM securities like JP6 owns his house. The FRB holds the note, and the FRB is not a US government agency. It's a trade association of private, publicly traded banks. And not one US government agency is a "core bank," regional, national bank subsidiary "affiliate," or even "community" reserve bank with its snout to the income bucket.
So all I'm seeing like maybe JP6 would if he could is USD going out to the bank, and no cash coming in. One can argue that that flow resembles USSR, Red China political economy. But to call the Big Vig a "nationalized" asset is plain spanking bollocks.
Hell, didn't Paulson cancel the Fannies' tax obligations yesterday?
Arguing with Popeye is a slippery slope that is a dead end and can only end in invalidation & frustration from having to take a lot of coy verbal gaming and put-downs while wasting your time trying to have an honest exchange.
i honestly don't think that many people were counting on their houses to retire, or even investment properties. That's way over-done.
I'm gonna argue against this one, too.
My late brother-in-law was an estate-planning attorney. He knew the financial situations people were in but did not give investment advice. He saw the trend towards houses-as-main-investment among the lower-middle and middle-classes starting in the early 90's. Nobody saw it as speculation, they merely saw it as better than money in the bank. He didn't see it as a bad thing until he had a gun pointed at his head (cancer) and realized his own financial planning leaned too heavily toward his house.
Thanks Ren..Trying my best to remain simple, true and honest..Hard to do in the good ole US right now..
I'm not worried about money, I'm worried about my mother, daughter and so many good people who didn't buy into this discarded like trash on the side of freeway....
The RE crush will affect MOST boomers, if not directly is asset deflation, than indirectly as massive interest rates increases on the home they are going to downsize to. Not to mention the MBS and CDO's hidden in 401K and IRA funds everywhere.
ipodius writes:
"I honestly don't think that many people were counting on their houses to retire"
what do you mean?? not only they did, but they thought perpetually seeling each other houses until the end of times was the way to get rich... which is why they hit the bid a bit too heavily for their means
the problem is not so much they looked for a get rich quick scheme, but get rich without have to think too much.
I honestly don't think that many people were counting on their houses to retire
Even if we take ipodius' belief as 100% honest, it really doesn't matter. Anyone who had a modest amount of worth in a house 20 years ago saw the house increase in value and the value of their savings and other low-risk investments decrease in value to the point where the house now comprised more than a third of their worth. People saw their savings being eaten away by inflation and comforted themselves by the appreciation in their house. So even if people were sensibly NOT counting on their houses to retire, eventually they had little choice but to do so.
1st ?
It's about time.
O.k., so a meteor isn't going to wipe out life on earth? Fine. Just as long as that's clear, Wallstreet can breath a sigh of relief. BofA can continue to exceed expectations.
Must be the spinach.
you must have eaten your spinach!
BofA. methinks, is going to have a horrible Q3 and Q4. Just a hunch.
This should help as well to keep their books healthy, or ....not:
Business, financial, personal finance news - CNNMoney.com
A financial in USSAR reporting a bad number, surely you are whispering and not afraid of comrade Paulson. TO the gulag for another 10 year plan. Pineapples in Siberia, brilliant.
At the end of the last thread, Anonymous wrote:
We are in the deflation of this cycle and cash is king however the default on the US government debt is going to lead to a currency collapse within the next few years. Use this time wisely.
I thought that bore repeating. I "suspect" there is a countervailing force A-mouse under appreciates in the form of SIV's. But, as a general matter, I agree with his/her thinking.
oops, I meant SIF's.... my bad. Sovereign Investment Funds. my bad.
default on the US government debt is going to lead to a currency collapse within the next few years
and i'll repeat: the US will never EVER default on its debt. EVER. Period. The dollar is the reserve currency, and that isn't changing. At least until after everyone alive today is dead.
WaaaaaHoooo!
Oh wait, same story, different bank.
Got Popcorn?
Neil
It's true, it may not be all out like in Japan, but deflation is here, now. Cash is king, getting yourself tied up in ANYTHING is a bad idea, with debt at the top of that list.
What was the last period of time North America saw deflation??
I'm having trouble wrapping my brain around this one.
How good are TIPS or the TIP ETF in straddling the question of whether we're headed for massive deflation or massive inflation?
In an inflationary environment, I know the gov't plays tricks with the CPI, but wouldn't TIPs still perform better than CDs and other cash accounts?
What is the downside to owning them in a deflationary environment? Any difference between actually owning TIPS or owning the TIP ETF?
Thanks,
qt
Ken Lewis Bonus.... Very Pretty!
ipodius writes:
default on the US government debt is going to lead to a currency collapse within the next few years
and i'll repeat: the US will never EVER default on its debt. EVER. Period. The dollar is the reserve currency, and that isn't changing. At least until after everyone alive today is dead.
... and I'll rejoin... that will only last for as long as it is profitable to the guys who own the debt.
Explicit default, implicit default, default by devaluation, default in anything but name. Yes, right, what-what, never (ever) a default. Wink-wink. Love these AAA bonds rated by TWO insurers, they must be good.
Bear Weevil, hey, after you loose everyone's respect for yourself as well as your own... why not say something outlandish ?
What was the last period of time North America saw deflation??
Ohhh ohhh oh! Pick me! I know!
My... quite a few people are really going to have a sucky retirement. How many boomers do you know who:
1. Were depending on their home equity to retire upon.
2. Are now underwater
3. Bonus group: On multiple properties they're underwater.
Too many... far too many.
Obviously the solution is a 1st time buyer tax credit that will save the market! [smithers | on] Those renters won't know what hits them when the "V" recovery is upon us. [smithers | off ]
Got Popcorn?
Neil
...leaves stage.
Neil... it was 1990 or 91
But won't that Countrywide purchase bail them out?
Do you all think the dollar will survive as the reserve currency?
I figure we will be at a basket of currencies by the end of this, which really, is probably a better way to go.
query_tool
I tracked TIPS for a few months. My personal take away was that it doesn't track well. It follows major market moves, but with a muted response. There's a lot of not very complimentary research available just about anywhere you look on the web. .... and now you have exhausted my meager knowledge.
CR,
I strongly object to the "confessional" label for this post. Father O'SECular has dragged this bad boy by the ear into the sacristy and put the fear of Gawd in him. "Softening" in the CRE sector? They don't even go that far. BofA calls it softening of underlying asset value. GMAFB, the bottom has dropped out. This isn't a confession.
"Grant me the treasure of sublime poverty: permit the distinctive sign of our order to be that it does not possess anything of its own beneath the sun, for the glory of your name, and that it have no other patrimony than begging." -
St. Francis of Assisi
Neil, i honestly don't think that many people were counting on their houses to retire, or even investment properties. That's way over-done. The purpose of having a house paid off when you retire is to MINIMIZE your housing cost, not to sell it and go pay rent somewhere.
But the value of whatever portfolio you have for retirement is going to take a huge hit in deflationary times as the aggregate value of the investments goes down. So I think that's the issue for boomers. No more double-digit returns, and eroding value of whatever they have over the next few years. Not a happy thing either for those who save.
And actually it's not the boomers who are the issue. What happens to all those projections on retirement for people now in their 40's and 30's? Will they see only 4% for the next 5 to 10 years? Or even that overall?
Ipodius makes a good point. Savers have been "thrown under the bus". When was the last time you've heard anyone talk about getting higher rates to savers?
I remember being chastised for calculating retirement returns at only 8.5%. Ipodious's 4% seems more reasonable.
rut ro Rob Dawg,
You rubbed my prayer rug the wrong way and now you have to live with it:
Lord, make me an instrument of your peace.
Where there is hatred, let me sow love,
where there is injury, pardon;
where there is doubt, faith;
where there is despair, hope;
where there is darkness, light;
and where there is sadness, joy.
Grant that I may not so much seek to be consoled, as to console; to be understood, as to understand; to be loved as to love; for it is in giving that we receive; it is in pardoning that we are pardoned
O.K. I'm done.
ipodius writes:
I honestly don't think that many people were counting on their houses to retire, or even investment properties. That's way over-done. The purpose of having a house paid off when you retire is to MINIMIZE your housing cost, not to sell it and go pay rent somewhere.
Thank you for that perspective on the 1980s. I "gap" between owner occupied and owned by county residents in the 200 Census period was 20%. That means 20% more homes were owned by residents than were occupied by residents.
Neil, i honestly don't think that many people were counting on their houses to retire, or even investment properties. That's way over-done.
Sample of 2... my mom and my dad... both trying to selling their townhouses into this market to fund their boomer retirements
Rob Dawg, I thought the home builder losses "grew faster than expected" qualified as confessing. But in the bigger scheme, maybe that is just worth a couple of Hail Marys.
Best Wishes.
OT:
looks like a windy week-end in the Dallas area
Tropical Storm GRACE
BofA starting new Ghetto portfolio.
Seeking capital in South America.
I don't know about prayers or confessionals, but MER is stuck at -6.66% on my screen.
It's definitely a sign.
Peter Orszag, CBO director, said: It is the CBO view that Fannie Mae and Freddie Mac should be directly incorporated into the federal budget.
The Bush administration appeared to be caught by surprise. A spokeswoman for the Office of Management and Budget told the Financial Times: We are working through this issue with Treasury and other stakeholders.
The White House could take a different view on Fannie and Freddie and exclude them from its budgets. But this would be difficult because the CBO is regarded as the leading independent authority on US finances and its assessments guide spending decisions by Congress.
FT.com / US / Economy & Fed - Cost of US loans bail-out emerging
Uh-Oh we can't get that off budget like SS and Medicare?
boa buys CW cheap...boa reports better than analysts' expected earnings...boa reports concerns...here kitty, kitty...
Time to dump and flush and re-invent capitalism -- but first, what about getting rid of the crooks that brought us to this point???????????????????
ipodius writes:
I honestly don't think that many people were counting on their houses to retire
My friend, if that is what you think, then you are out of contact with the real world... IMHO. You simply cannot ask Joe6pack to anticipate that the classic American Dream - - not merely would be stolen out from under him, but that he understood it would happen and laid in an alternate plan.
I'm sorry, but if you pretend to advance that theory, I must call you a fool.
Neil, i honestly don't think that many people were counting on their houses to retire, or even investment properties
this is of course hard to measure (sort of like the so-called ruthless defaulters). however, I do feel that there was a sea change in retirement planning that happened after 1997. I would guess that a lot of people felt that housing was a partial retirement fund starting in the late 1990's and continuing until today.
this was especially significant in the bubble areas IMO. it would seem that a lot of boomers had this retirement idea.
sure, they weren't going to sell and rent... but they were going to downsize and then use the difference in money for part of their retirement.
all of course, IMO, as there is no good way to measure this.
Where is the volatility I was promised?!
"gap" between owner occupied and owned by county residents in the 200 Census period was 20%.
Ummmm...and what percentage of those are "boomers" and what percentage of those are counting on them ONLY for their retirement?
"BofA home builder losses grew faster than expected."
What did they expect? Idiots. Homebuilders are dead. Their losses will continue to accelerate as they go BK. Throw away your model. It was obviously put together by people who know nothing.
...the US will never EVER default on its debt. EVER. Period. The dollar is the reserve currency, and that isn't changing. At least until after everyone alive today is dead.
I bet Britain felt that way about the Pound about a century ago. I don't recall them actually defaulting on foreign debt, but they lost world reserve currency & Empire status nonetheless --and in a much shorter period than a human lifespan.
Is the USD "sound as a Pound"?
if BAC drops below 28,,,i will by again.....
"I'm sorry, but if you pretend to advance that theory, I must call you a fool."
Ditto.
Ummmm...and what percentage of those are "boomers" and what percentage of those are counting on them ONLY for their retirement?
ipodius
You don't get it. In the 5 minutes since you tried to float your whole cloth fantasy that RE was not part of the boomer end game you've had at least 8 replies in the strongest language that your perspective is grossly outdated at best. Concede and try a different tack.
". When was the last time you've heard anyone talk about getting higher rates to savers?
that the something for nothing thought process...
saving implies savings account... dead money... you want a higher , ragte, put it to work
OK, which one of you is keeping Dow above 11300?
Enough already!
Wall$treet $tool - $ample writes:
Time to dump and flush and re-invent capitalism -- but first, what about getting rid of the crooks that brought us to this point???????????????????
We should agree up front that taxes are not to be used to pay dividends on government-backed private investments.
Or, at least not to much taxes.
yearning, I'd agree. i personally know of no one that speculated on RE to retire. Maybe to make money with the IDEA that it would fund retirement, but then again, that's why people bought dot com stocks too. And tulips, and whatever else through the ages. Downsizing is natural and I will someday do that too. Which sort of makes you wonder about what the real value of all those 4000 sq ft houses is. But everything will be paid off by the time I do that, no matter what the property is worth.
but even if it is a quaint 80's sort of idea, the purpose of buying a place is that you pay for it in your best earning years and have no housing expense in the years where your earnings are fixed.
Ummmm...and what percentage of those are "boomers" and what percentage of those are counting on them ONLY for their retirement?
I agree with this. however, RE is one of the legs of the retirement stool. take it out and the stool wobbles.
there has been considerable research that seems to indicate that general household savings rate declined with increases in housing equity. this does not prove causation, far from it. but it is intriguing.
My own personal guess is that housing indirectly will really cause retirement pain because a fair number of older people have overspent on housing, leaving them less income with which to save. And the housing alligator needs to keep being fed.
so sure, there are a few people who were counting on "cashing out" their home to retire, and I agree that this number is not the majority. But there are a lot more people who needed to save more for retirement but who didn't... either because they didn't have the cash (due in part to high housing costs) or because they had a false sense of net-worth assurance.
Interesting comments by William Poole:
What I anticipate is that we will not know the limits to Fed lending until the Fed says no to a large, influential firm seeking help, Poole said.
Bets on who and when that's going to be?
The Hidden Bailout Of $1.4 Trillion In
Fannie / Freddie Credit-Default Swaps
"The Hidden Bailout Of $1.4 Trillion In Fannie / Freddie Credit-Default Swaps" by Daniel R. Amerman, FSU Editorial 09/10/2008
If there are no takers,,,the fed knows how to proceed
JP, sorry about that, my father was an Episcopalian minister... it was just a triggered response.
When was the last time you've heard anyone talk about getting higher rates to savers?
you don't understand what is happening here. Paradoxically, to keep the ponzi scheme alive, we must NOT have high rates that entice savers to save.
Instead, what we need (to keep the ponzi alive) is rock bottom interest rates, that punishes the savers. this will force them to chase yield, which will push it where the capital is needed the most.
obviously, this is a sick economic policy, but it is what is being engineered.
The Fed wants savers to "invest" in Lehman/Fannie/Freddie stock and WaMu CDs and Mortgage Backed Securities etc. Raising savings rates will not accomplish this.
I can haz new financial system?
Ummmm...and what percentage of those are "boomers" and what percentage of those are counting on them ONLY for their retirement?
Many aren't thinking of counting on them for retirement, they are "assuming" that everything will work out for them at retirement. Very few people have done rigorous retirement planning.
Speaking of Ann Taylor, "manna" and the earlier discussion about computer-generated finance...
A Stock-Killer Fueled by Algorithm After Algorithm - The Lede Blog - NYTimes.com
How United almost suffered Death by Google.
but even if it is a quaint 80's sort of idea, the purpose of buying a place is that you pay for it in your best earning years and have no housing expense in the years where your earnings are fixed.
ipodius
Who the heck cares what you think the purpose of RE investing should be or used to be? Repeat after me: "the old rules of RE were thrown out in the 1990s."
I can haz new financial system?
be careful of what you wish. I'm with ipodius on this one. Many of us (including me) forget how much WE have PERSONALLY benefitted from this ponzi scheme as well.
without loose monetary/fiscal policy and bubble economics YOUR/MY job may not have been created. perhaps OUR salaries were actually misallocation of resources? you never know.
a rising tide lifts all boats... but a 7 year drought can ruin even the best yaught. and a hurricaine with surge and then ebb can ruin all the boats.
The three families that have moved into our block (this summer) are here to raise their families,,,dont care much about where house price goes now, they are looking prolly 20+ years out....small children,,,replacing retired families.
What I anticipate is that we will not know the limits to Fed lending until the Fed says no to a large, influential firm seeking help, Poole said.
Bets on who and when that's going to be?
Nemo | Homepage | 09.10.08 - 1:37 pm | #
It had better be WaMu, both to scare the bejeebers out of all the other institutions to straighten up and fly right, and so as not to set the precedent of all precedents.
Popeye, no apology required.
And my father is a smartass, so it triggered a response as well.
"obviously, this is a sick economic policy, but it is what is being engineered."
Actually the Feds want desperately to entice people to chase yield. But the correct response is a one finger salute. J6P is sitting there saying to himself got burned by .com got burned by mortgage lending perhaps its time to return to basics. Depression era: take the sugur packets from the resturant kind of thing.
The American people if they had an iota of collectiove wisdom would start selling their 401K and piling into Treasury and or cash. You think that would send a message?
Small problem: drive interest rates up but at higher rates say double, it would cost taxpayers another 400B or so in debt service. But capital attraction would work to offset the benefit to savers. Net net there is no easy solution. Best solution for savers is to preserve capital becasue they are the only people who have capital> everyone else will watch their "wealth" get decimated. So on that basis maybe it is not so bad.
check him out
RGE - Comrades Bush, Paulson and Bernanke Welcome You to the USSRA (United Socialist State Republic of America)
Yearning to Learn writes:
so sure, there are a few people who were counting on "cashing out" their home to retire, and I agree that this number is not the majority
Yearning,
I live in the mid-west {geographically right about the middle}. That is the majority thought here; and that is just a very scary fact.
Would be curious to know how much of that builder dreck is inherited Countrywide book of business.
but a 7 year drought can ruin even the best yaught
Noah Webster would be proud of you. Is this a Midwestern houseboat? As someone said (Morgan?)about his yacht, "If you have to ask, you can't afford it."
I will happily destroy the useless slobs around me in the battle to be a productive country again.
I am one of the few who has seen fit to make themselves educated and resourceful.
I have no family business to be handed to me, I have not made (directly or willfully) a penny from these masturbatory bubbles which have dominated our economy.
I currently hold a position which relies more on intellectual strength than physical, but maintain a very healthy, active lifestyle. I would welcome the chance for well paid physical labor. A job were I can see my progress and contribution to our society instead of wasting my precious hours and days surrounded by mindlessly unproductive parasites.
I'm not at all sure why I feel a need to ask for everyone's understanding for my outburst... There are simple some things I stand for, and that is just a fact. I yam what I yam.
When I hear stuff like this:
Rob Dawg writes:
CR,
I strongly object to the "confessional" label for this post. Father O'SECular has dragged this bad boy by the ear into the sacristy and put the fear of Gawd in him.
There is a trigger in me that just goes off. I respect everyone's choice on that issue... this is just my soft spot.
The American people if they had an iota of collectiove wisdom would start selling their 401K and piling into Treasury and or cash. You think that would send a message?
FRED | 09.10.08 - 1:48 pm | #
No. They'd interpret it as panic or mob behavior. You really want to send a message? Elect Ron Paul. He's the only truth-teller in the whole bunch.
"So let them be shamed in public for their hypocrisy and zealotry that has caused so much financial and economic damage." Roubini
I think that has been going on here for several years already.
"be careful of what you wish. I'm with ipodius on this one. Many of us (including me) forget how much WE have PERSONALLY benefitted from this ponzi scheme as well...."
Spot-on! ANY business/organization that benefitted from consumer spending has benefitted from wild, reckless disregard for sustainability. Now, it's pay-back time, and unfortunately, we're all going to be paying back.
"It is naive to believe that non-financial firms would never engage in a concerted political campaign to obtain Federal Reserve loans," he said in remarks to a seminar organized by research firm Macroeconomic Advisors.
Poole said that since the Fed stepped in to prevent the collapse of investment bank Bear Stearns in March, officials have not done enough to make clear the limits of the government safety net.
"The Fed and Treasury have done nothing to define limits to access to Fed resources," he said.
The failure of a large airline or car company could also be seen as broadly damaging to the economy, and therefore justify a government rescue, Poole said.
"With the Bear Stearns precedent, it will not be so easy to say no next time," Poole said. "The Fed and Treasury have not gone far enough to define the new regime.
In all likelihood, the limits to government protection will not be known until the Fed says no to a large, influential firm, Poole said.
UPDATE 1-Ex-Fed Poole-Nonfinance firms may seek Fed loans
| Reuters
Anon, I read that as a bow shot the automakers.
Don't call the fed unless you are really important to the financial system.
The UAW< ford, gm, and xsler are not important.
Same to you Cerberus.
Someday this war's gonna end...
Time to dump and flush and re-invent capitalism
But capitalism seems to have worked quite well in the past. Things just seem to have broken down more recently.
We had a formula that worked really well. Then we broke it. Maybe the thing to do is to go back to what worked instead of trying to completely re-invent the wheel.
Margin call or afternoon pump?
"You really want to send a message?"
Pull all of your money out of the banking system including retierment accounts, stop paying you bills and call your boss and tell him to get F@*ked.
AllenM aka Joliet Jake writes:
Anon, I read that as a bow shot the automakers.
Allen, I'll put some faith in that notion right after they flush LEH. In the mean time, you are hoping.
(reading Roubini with hands over eyes.) Ooh, I can't not look.
"masturbatory bubbles" - quote of the week! Good one, Anon.
In all likelihood, the limits to government protection will not be known until the Fed says no to a large, influential firm, Poole said.
The power of the government to provide protection is inherently limited. It's just a matter of whether the Fed says no before those limits are reached. If not then we'll likely see a crisis of credibility that affects the entire US government and all assets directly tied to it.
They had the a TV on where I just had lunch. With the various news stories about the financials, the Presidential candidates were laser focused on the following important debate:
"He called her a pig."
"No I didn't"
"Yes you did"
I personally like Roubini's 3-scotch screed. Make that 4-scotch.
What ac and Man-moth said...
Quote of the week was definitely:
When life hands you Lehmans, make Lehman aid.
Feckless Ness:
That would be kinda hard, as he''s only ballot qualified in 2 states..
MT on the Constitution Party Line, and LA under the LA Taxpayers Party line..
ac writes:
In all likelihood, the limits to government protection will not be known until the Fed says no to a large, influential firm, Poole said.
The power of the government to provide protection is inherently limited. It's just a matter of whether the Fed says no before those limits are reached. If not then we'll likely see a crisis of credibility that affects the entire US government and all assets directly tied to it.
Or as Popeye would put it - don't count on receiving a pass, as you are madly running downcourt, until you actually see a gesture putting the ball in the air.
BofA's $13B home builder portfolio "not pretty"
"Not pretty", huh? Maybe they just need to doll it up and pimp it out.
Re: the Lipstick Line..
And he was talking about McCain's policies. The saying is in the general vernacular, and if they can't see that..
popeye,
The government knows that at least one of the big three is going south, never to return.
My guess is that it will be xsler, with GM or Ford being partially sold to the Chinese.
Just saying, that it will be obvious shortly which one is dead.
Cerberus is going to run out of money to keep propping up xsler without universal healthcare.
Leh is being dismantled as we speak, with the profitable parts put on the block. The remant company with it's real estate moron fest will bk.
Just differing methods really, the end result is the same, just no need to hurry a shotgun wedding. Nobody needs to act as fast as when BSC died, so they want all of the value and none of the manure like JPM got with BSC.
In other words, no net residual value, so slow dismemberment and decent into failure.
Someday this war's gonna end...
Anon - We can haz write-in pleez?
I could use some Lehman Aid to wash down my GSE_shit_sammich
2 hours left for a boneshaking reversal. Will there be red?
i'm still laughing at retirement stool.
that seems to be what a lot of people will get, although they earned it if they were relying on r/e to fund their dreams.
Allen,
I agree. The fate of Cerberus is a conundrum. All of their links to power potentially expire in the upcoming election. Clearly, they are the one's gasping at this point - on the other hand - and as much as I dislike Republicans {which is a lot} - Cerberus has enough current clout to ensure that it won't be the one clobbered. But that's just my humble guess.
the old rules of RE were thrown out in the 1990s."
Just like in fashion, what's old is new again. And it's not going to change for a long time...hemlines in housing are down.
OMG!! I laughed so hard, Lehman Aid just came out my nose!
dis iz sum wacky weed mkt... boooyaaachutterputter
And he was talking about McCain's policies. The saying is in the general vernacular, and if they can't see that...
Who cares? She can be a pitbull by her own description but not a pig by someone else's? Anyone you're gonna explain it to is too bought into the conflict to hear a word you say.
popeye, they are dead right after the election.
November and December will be stunningly bad months for economic news. That may, I repeat, may constitute the bottom for this cycle, and a new administration may bring some optimism back to the markets.
On the other hand, there is a lot of dead equity out there that needs to disappear in writeoffs.
Someday this war's gonna end...
Henry M. Paulson, Jr. writes:
OMG!! I laughed so hard, Lehman Aid just came out my nose!
What are you doing drinking lehman aid.. you haven't paid for it.... yet!
ipodius writes:
the old rules of RE were thrown out in the 1990s."
Just like in fashion, what's old is new again. And it's not going to change for a long time...hemlines in housing are down.
.... and we almost became friends. LOL. I'm sorry pal, that understanding of what's happening just does not have contact with real earth. Enjoy your pipe dream.
the clock says it is about 6:25 and a period of economic recovery follows a visit to the trough...do you think all homebuyers are shorting the market? where's rent vs buy in two months? the pickets are numbing, but still having their impact.
Think you know who is going to win the election?
If you are right, you can double your money in less than two months.
P.S. Today marks the first time the McCain contract has traded above 50%, ever.
Why is there NOTHING about LEH on TBP today???
May be doesn't want to piss in the wheaties???
Now he's featured on one of the worst shows going....at least he hasn't shilled for Cramer......yet.
Ritholz=Jumped the shark
Ciao
MS
Ipodius,
With respect, I suggest that while you may be accurately assessing J6pac's understanding of the market - you may have underestimated his potential for anger.
Respectfully submitted,
Popeye
K. Ackermann writes:
BofA starting new Ghetto portfolio.
Seeking capital in South America.
We're all ghetto now Señor Ackermann.
ipodius writes:
"the old rules of RE were thrown out in the 1990s."
Just like in fashion, what's old is new again. And it's not going to change for a long time...hemlines in housing are down.
Welcome to Monkey Grease. Say "Hi" to Jas and Seb for me.
wacky the man said!
Welcome to Monkey Grease. Say "Hi" to Jas and Seb for me.
I'm not understanding what you are saying rob and popeye. there is no coming back for RE anytime in the near or even not-so-near future. None. So any idea that RE is going to be anyone's nest egg is now gone.
And besides, the idea that X is going to fund retirement is business as usual, isn't it? It is human nature to look at some windfall or get rich quick scheme. RE was just the last one, they'll be another and then everyone will forget about what they lost in RE.
Myself, I know Social Security is going to be what will fund my retirement....
It's fascinating to me, that so many of you continue to believe this can be managed. Gleefully, you continue to pretend the cash strapped, over leveraged, {admittedly sleeping} consumer class will continue to support your high expectations. Opps, did I miss something like Joe6pac is 2/3rds of this economy ? No, I covered that. Are you boys counting on exports ?? If so, you better take a careful look at your potential buyers because they are hurting too - incidentally, you better check your available cash.
Trade well - but think
popeye, it's just a sheer numbers game here. consumers HAVE to spend. and the sheer number of consumers in the US (of all asset classes) will keep spending at a very high static level. what will be removed are certain areas of spending, NOT spending itself. people act as if, suddenly, everyone is going to stop spending. they aren't. stuff wears out, and just the sheer numbers make this economy a formidable force on just replacements and new people coming into the market.
and this is the argument for deflation. if you don't have access to cheap credit, and you need something, what do you do? you buy the cheapest thing you can to get you through. if the credit markets don't stop contracting soon, it's going to force prices down because demand is going to shift BIG TIME. And this is bad for the market because the pricier goods are the most profitable ones. there goes corporate profits.
so the key is the credit markets here. all leverage isn't bad. but when you get an event like this, you take out the good credit with the bad, and that's the destructive aspect.
yesterday was fade leh sep5p's.
today , the sep10p's
Housing as a retirement investment?
Reverse mortgages:
There was a 56% increase in these types of loan in 2006 from the prior year. The Federal government in December 2007 removed the restrictions on the number of outstanding reverse mortgage loans they would underwrite at any given time. Prior to the new legislation, the original limit was 275,000.
wiki/Reverse_mortgage
"but even if it is a quaint 80's sort of idea, the purpose of buying a place is that you pay for it in your best earning years and have no housing expense in the years where your earnings are fixed."
The problem is that there were enough people speculating in housing to cause a deflationary collapse. Like all of California.
And regardless of whether or not housing local, banking is not.
FNM/FRE just now, BSC 6 months ago, Indymac 1 month ago and WAMU in a couple of weeks are going under simply because of the bubble mentality in California.
To sum it up, it doesn't matter what mentality house-owners used in your neck of the woods, the crash is still happening.
Jeez, wake up and smell the coffee.
Won't be too much longer and we'll start seeing the headlines like in Asia: Traders see signs of government intervention.
annie Raises $7 Billion in Largest Single Debt Sale
Fannie Raises $7 Billion in Largest Single Debt Sale (Update2) - Bloomberg.com
Fannie Mae raised $7 billion in its largest individual sale of senior debt, after a government takeover of the company led to a record drop in yields relative to benchmarks.
The two-year benchmark notes, which mature Oct. 12, 2010, were priced to yield 2.896 percent, or 70 basis points more than U.S. Treasuries of similar maturity, the Washington-based company said in a statement sent by e-mail. That was the lowest spread in a two-year sale by Fannie since June. Earlier today, the company sold $2 billion of short-term bills at lower yield spreads in a weekly auctio
Wow...Just can't say much more...Sir I'll take the "Stunning reversal while the sh$T is hitting fan" special...
Myself, I know Social Security is going to be what will fund my retirement....
ipodius | 09.10.08 - 2:31 pm |
There is just so much wrong with this statement I've no idea where to begin.
Good luck with that....you'll need it
Ciao
MS
Ipodius,
I have maintained two propositions in my trading - after I grew up. The first is that the mind works much faster than the market does. That eventually leads to an understanding that most market oriented discussions revolve around a difference in "time frames" - as opposed to objective events. And, therein, my friend the devil lies.
The second proposition is simply this: the market goes up and the market goes down.... that can you are kicking down the road contains sardines. {if you catch my drift}
"The dollar is the reserve currency, and that isn't changing."
Yeah its "contained".
Why-o-why can't we all be filthy rich?
MoT,
Money quote from your link:
"Asian investors bought 12 percent of the latest issue, while European investors purchased 8 percent, down from 39 percent and 17 percent in the July sale, according to company data. Central banks bought 27 percent, down from 57 percent."
popeye, i'm not one of those "all credit is evil" types. if it weren't for credit, i wouldn't have and undergrad and two grad degrees. nor would have have property. nor transportation. all of which get paid off. so there is no "can kicking" as long as people pay it off. the issue is when you use credit to fund things you really can't afford. that's the distinction i make.
but in this contraction there is no distinction. and that's the destructive part. the other destructive part is now paying off the debt, so killing off discretionary purchases. that's going to take most people a couple of years to work off. but spending will not stop.
Can someone post a link of a website about how to "game the system"? Preferably with real-time updates..
What is the saying? If you can't beat them ... join them?
damn I feel better after all these announcements about financial losses and expectations today..Buy..Buy...
ipodius,
You misread my post. Please note that I address you as an honest and intelligent person. And then, read what I said again.
Ipodius writes: the issue is when you use credit to fund things you really can't afford. that's the distinction i make.
I make that distinction as well. It's timing Impodius. For how long did that mispricing take place ? Assuming, arguendo, that was the only factor at work here, I submit that it has not yet been priced in.
I have two relatives, one woman 86, the other woman is 92, who are moving out of their assisted living apartment and into a house they own because they're losing money on their investments (stock market) and are afraid they won't have enough money to last the rest of their lives. They live in Florida. They couldn't sell their home in Florida, so they've decided to move into it instead. They will be more isolated (their minds and thinking are clear, but they don't drive, no nearby markets, the bus stop is three blocks from their house, no friends or relatives in the area, and they are fragile - this is not a good move for them.)
ew thread is up
o need to qualify with argueno
its all arguendo here
Maggie,
Your story pisses me off...That's why I'm betting against this regime....
They pigmen are hurting the seniors bad...These fuc$ing greedy bastards don't care about anybody except themselves....
And that's not America.....
Damn if they were within 10 miles from me in California I would offer to take them to store or pick up thier groceries for them...
I'm tired of this..anybody seen the movie "into the wild" 40 foot sloop here I come....
cd
Hang in there. You and other decent people are needed. If we go to a zero trust society, then we are all fatally screwed.
ipodius,
Have to disagree. The amount of debt in this ponzi-scheme economy is way too much.
Sure, people will spend, but on what?
-Food
-Gas
-Housing, if it is cheap enough
Heck, sleeping in the car, if owned, or on the friend's couch is always apossibility.
The fact that the economy is 9% manufacturing, 70% consumerism and goobermints at all levels make up more jobs than any other sector COMBINED with the fact that there are trillions in debts to be repaid =
America is BROKE
I understand you are in a good sitch, so am I.
However, the chickens are coming home to roost after 25 years of loose lending, stagnant wages vs. inflation, no M3 reporting, and a staggering amount of debt.
ONCE AGAIN...
People making 100K a year should not be buying 500, 600, or 700K homes, let alone million dollar McMansions.
Sure, you (someone) made or saved that 200K savings and bought that spacious 199K home in Montana for cash. Now you work as a mechanic or on a ranch.
That's nice, but for most of America that dream will never occur.
Roubini has gone mad. He didn't sound like it at the Rose Round Chuck table Monday night. Nefarious tight end, that guy.
See, last I heard, US gubment owns FRE, FNM securities like JP6 owns his house. The FRB holds the note, and the FRB is not a US government agency. It's a trade association of private, publicly traded banks. And not one US government agency is a "core bank," regional, national bank subsidiary "affiliate," or even "community" reserve bank with its snout to the income bucket.
So all I'm seeing like maybe JP6 would if he could is USD going out to the bank, and no cash coming in. One can argue that that flow resembles USSR, Red China political economy. But to call the Big Vig a "nationalized" asset is plain spanking bollocks.
Hell, didn't Paulson cancel the Fannies' tax obligations yesterday?
Arguing with Popeye is a slippery slope that is a dead end and can only end in invalidation & frustration from having to take a lot of coy verbal gaming and put-downs while wasting your time trying to have an honest exchange.
i honestly don't think that many people were counting on their houses to retire, or even investment properties. That's way over-done.
I'm gonna argue against this one, too.
My late brother-in-law was an estate-planning attorney. He knew the financial situations people were in but did not give investment advice. He saw the trend towards houses-as-main-investment among the lower-middle and middle-classes starting in the early 90's. Nobody saw it as speculation, they merely saw it as better than money in the bank. He didn't see it as a bad thing until he had a gun pointed at his head (cancer) and realized his own financial planning leaned too heavily toward his house.
Thanks Ren..Trying my best to remain simple, true and honest..Hard to do in the good ole US right now..
I'm not worried about money, I'm worried about my mother, daughter and so many good people who didn't buy into this discarded like trash on the side of freeway....
Good luck to you and your family....
Ipodius.
The RE crush will affect MOST boomers, if not directly is asset deflation, than indirectly as massive interest rates increases on the home they are going to downsize to. Not to mention the MBS and CDO's hidden in 401K and IRA funds everywhere.
ipodius writes:
"I honestly don't think that many people were counting on their houses to retire"
what do you mean?? not only they did, but they thought perpetually seeling each other houses until the end of times was the way to get rich... which is why they hit the bid a bit too heavily for their means
the problem is not so much they looked for a get rich quick scheme, but get rich without have to think too much.
sorry fot typos... too many to correct
I honestly don't think that many people were counting on their houses to retire
Even if we take ipodius' belief as 100% honest, it really doesn't matter. Anyone who had a modest amount of worth in a house 20 years ago saw the house increase in value and the value of their savings and other low-risk investments decrease in value to the point where the house now comprised more than a third of their worth. People saw their savings being eaten away by inflation and comforted themselves by the appreciation in their house. So even if people were sensibly NOT counting on their houses to retire, eventually they had little choice but to do so.