What Oil Shock and Repub. Cave Mean to Stocks and GDP; Investment & Finance Thread - Dec. 14

Weekly investment & finance thread ^ | Dec. 14, 2014 | Freeper Investors

[EVO X]

But if the debt is not liquidated, that is the worst of all worlds - because everyone “pretends”.....owners, borrowers and tax collectors.

If oil continues to tank, I think it is likely that extend and pretend will be invoked on these protects. I've read that nearly 25% of the student population comes from mideast oil countries..

[abb]

http://www.bloomberg.com/news/2014-12-14/oil-drops-near-60-a-barrel-as-opec-seen-resisting-cuts.html

(Brent) Oil Drops Near $60 a Barrel as OPEC Seen Resisting Cuts

[RFEngineer]

“I think it is likely that extend and pretend will be invoked on these protects.”

As absurd as “extend and pretend” is in the residential mortgage market today, the “extend and pretend” required to prop up bad oil debts and the collateral damage from that will take absurdity to a whole new level.....in academia - students from the ME with spending limits can sink a college town!

[expat_panama]

OPEC will resist output cuts even if prices slump as low as $40.

However if prices do slump as low as $40, well, no more Mr. Niceguy --they're going to up and resist cuts even if prices slump as low as $30!  That'll show 'em...

[EVO X]

When I went to college a bunch of years ago, one headed to the cheapest apartment complex after the mandated high cost stay at University housing during Freshman an Sophomore years. Why students would head to these multi million dollar complexes has me baffled..

[palmer]

As long as I see mortgages issued to Americans at inanely low rates, I’m going to assume the Fed it behind it somehow. They don’t need to buy the securities, then can, for exmaple, pay or coerce someone else to buy them.

[abb]

Back during the real estate bubble of the 2000s, I heard of some parents who would buy real estate (houses, condos) for their kids to stay in while going to school. Their plan was to ride the appreciation up for the 4 years, then sell afterwards.

I often wondered how many got caught in the downdraft.

[EVO X]

Back during the real estate bubble of the 2000s, I heard of some parents who would buy real estate (houses, condos) for their kids to stay in while going to school. Their plan was to ride the appreciation up for the 4 years, then sell afterwards.

That still goes on and the savvy ones are still doing it when it makes financial sense.

[RFEngineer]

“Why students would head to these multi million dollar complexes has me baffled..”

Perhaps they are the “Public Private Partnerships” that are the rage- To the detriment of no one except the poor kids that are going into debt for the rest of their lives in exchange for a degree.

[EVO X]

I think what happened is out of town money came in with cheap money. The locals said WTF and found out how to get in on the cheap money gravy train as well.

[expat_panama]

...going to assume the Fed it behind it somehow. They don’t need to buy the securities, then can, for exmaple, pay or coerce someone...

--and without leaving a trace they can control interest rates for the entire $57,981,800,000,000 American capital debt market?    I mean, I can like wearing tin-foil as much as the next guy but I'm thinking we're really going off the deep end here....

[proxy_user]

BP is the kind of stock I’m talking about. I think it may go down a little more. I’d be in a 37.5, but I already have too many oils.

If it goes under 35, however...

[expat_panama]

A very good Monday morning to everyone!  After everything futures traders are seeing stock indexes up 0.7% and metals down -0.64%!   Early announcements:

Empire Manufacturing
Industrial Production
Capacity Utilization
NAHB Housing Market Index
Net Long-Term TIC Flows
 

--and the news doesn't have a lot of good reasons for a stock rally today; but there's this from Yahoo:

...Bloomberg caught up with Apple cofounder Ron Wayne, who sold his 10% stake in Apple for $800 in 1976  (via @TheStalwart ).  Wayne told Bloomberg that over the past 40 years, he had kept most of his savings in gold...   ...10% of Apple is worth about $65 billion, while $800 of gold purchased in 1980 would be worth about $1,750... 

[palmer]

They aren’t controlling rates, just influencing them when necessary. There is plenty of demand for American debt without the Fed, especially considering how terrible a lot of the rest of the world’s debt is. But in a vacuum, an American debtor overpaying for a poorly built house, carrying other debt, with poor long term career prospects, living in a country with massive unfunded liabilities, etc. just does not seem to match up with 3% interest. Call me old fashioned.

[1010RD]

Poor Ron. That’s really rubbing it in.

[expat_panama]

Poor Ron

At least he didn't buy silver, at the Jan. 1980 price his $800 would now be worth $320.  The fact is that everyone has shoulda' coulda' woulda' stories so they don't matter.  What does matter is what we've learned and what we do now.

[Lurkina.n.Learnin]

“everyone has shoulda’ coulda’ woulda’ stories “

I had never read about him before so I went to Wikipedia. Interesting. It was actually pretty sound reasoning for him selling his stake. He was older and more established and had more to lose. In a partnership you can end up having to pay the debts the others incur. He had more to lose and only had a short time invested in Apple.

[expat_panama]

They aren’t controlling rates, just influencing them when necessary.

Agreed; it's how congress complies w/ Section 8 Art.III of the Constitution "to regulate the value" of the dollar.  People can say what they want but the Feds are doing pretty good in that department.

an American debtor overpaying for a poorly built house

There's a lot of America bashing going around but the fact is that the average American is fine and has been reducing his debt and getting richer --it's the federal government that's sinking wantonly into debt, not the average American.  Over the past seven years total private debt has actually fallen $0.3T to $13.4T --while the total federal debt has been doubling to $17.8T.

[expat_panama]

Didn’t know it was a partnership —yeah, those are super risky. In fairness we got to admit that in ‘76 he could have bot blue chips like GM, Braniff, Enron, PG&E, Lehman Brothers, and Chrysler.

[Grampa Dave]

“Forget Dollars, Start Buying Rubles” BOL, not yet my friend.

The good news is the Opecker Princes, South America Opeckers and Putin are getting kicked below the belt each day, when the price of oil drops again and again.

The Russian Ruble is getting stomped like a wounded snake on the ground

http://www.marketwatch.com/story/ruble-tanks-as-investors-fret-about-russian-corporate-defaults-2014-12-15

NEW YORK (MarketWatch) — The dollar rose to new record highs against the ruble Monday, as falling oil prices were compounded by fears that some of Russia’s largest companies could default on their dollar-denominated debts.

In recent trade, the dollar rose to 60.5983 rubles RUBUSD, -6.58% — its highest level ever — as the price of West Texas Intermediate crude oil for January delivery sunk below $58 a barrel Friday. The dollar was worth 58 rubles Friday.