Posted on 09/23/2006 9:38:39 AM PDT by GodGunsGuts
I'm glad you admit that emotional garbage coming from me would truly come as a shock to you. You are absolutely correct IMHO d:op
I think the authors point went right over your head and parted your hair. Read it again.
Returns to earth are often painful.
According to some on this thread, what goes up, stays up...forever.
http://www.schwab.com/public/file?cmsid=P-1536370&filename=5.gif
Is that in Pasadena, by any chance?
"The coming drastic reduction in purchasing of exports by suffering members of middle class- and soon to be former middle class Americans- will have global impact."
Maybe "made in USA" will make a comeback.
Now there's a thought! I wouldn't say that too loud on this thread. Some might find it un-patriotic!
It's like when our local city council gets a $25M property tax increase instead of a $28M increase and one of the coucil members throws a fit because of "budget cuts"
It's like when our local city council gets a $25M property tax increase instead of a $28M increase and one of the coucil members throws a fit because of "budget cuts"
What zip code is that house in? You know, location, location.
What he is saying is that the housing prices have become unaffordable for first time buyers or for buyers with little equity who earn what he earns today.
Your argument makes his house "affordable" only because he already owns the house which he bought at good value in 1991 and you calculate the equity as part of his net worth. Your argument also assumes that he has not mortgaged his equity away by taking out a home equity loan.
Gimmick loans have flooded the market with dollars that the borrowers will not be able to repay once the interest-only grace period expires, the increased interest rates kick in and the principle repayment is compressed all into the remaining term of the loan.
That easy money has artificially inflated prices way beyond the actual value.
The situation is analogous to banks loaning everybody in a small town $3 million at terms they cannot repay and then seeing the price of a gallon of milk go up to $75 per gallon at the local supermarket and people in that town calculating their "net worth" by how many $2,500 pairs of Docker's slacks they own and by how their kid just bought a $100,000 mutt puppy dog by exchanging him for two $50,000 mutt kittens that the kid next door wanted to sell.
The only way you can afford to buy houses today is to either enter into an extremely foolish loan arrangement or pay for the new house with money that you received from someone that has entered into an extremely foolish loan arrangement.
Those "greater fools" are now in extremely short supply and the last ones who entered the Ponzi scheme are now getting fried.
Those of us who bought our houses at good value and have not mortgaged our equity away will do just fine.
We bought value. We did not buy a lifetime of mortgage slavery.
Long term rates have been going down for months, and that trend is going to continue. Foreign central banks have already pulled back their purchases of bonds. Guess what? There have have been plenty of other buyers and rates keep going down.
Yup.
What if the Mullah's incinerate D.C.?
Beleive me, I've heard the argument ad nauseum and memorized it. My point, supply and demand works. If something is overpriced, don't buy it, and don't take out a ridiculous loan to leverage something you can't afford. Buy something small and out of the way and you'll do fine. Unlike the doomsayers, there is plenty of real estate under $150,000. Plenty. And if you can't find it in the place you want, well, when the dreaded "crash" comes, there will be.
I believe its located in the inner city area of Long Beach, in Los Angeles County.
doom
Here's what Trader Dan from JSMineset has to say on the subject:
Net Flows and Treasury Purchases
Dear Jim,
Attached are two charts – the first details the balance of trade and compares it to net capital flows for each month. As you can clearly see, this morning’s report on net flows was abysmal. The shortfall was the largest in the last 3 years detailed on this chart, coming in at - $35 billion.
The second chart details the rate of purchase of Treasuries by the big three Asian economies, China, Japan and S. Korea. I have also included Great Britain since I believe there are some “funny” goings on there with hedge fund buying of US paper going through London. Needless to say, they have been carrying the slack in the US debt market. Look at the huge percentage increase coming from Great Britain for the last two months when compared to 12 months ago.
In another one of those “counterintuitive” and “perverse” moves in the dollar that we are becoming accustomed to of late, the dollar basically shrugged off the data and instead, participants chose to focus instead of the G7 communique which was viewed as less “threatening” to the Asian currencies and thus dollar bullish.
As long as the interest rate differential between the yen and the dollar is where it is, the yen carry trade will remain in full force. This could help to explain the huge surge in Treasury buying out of London but I am convinced there is more to that than meets the eye. Regardless, the yen has become the whipping boy against the Euro and the dollar as a result. It seems as if everyone and their mother is selling the hapless thing. The Japanese monetary authorities must be jumping up and down in uncontrollable joy.
Best wishes from your pal,
Dan
Two PDF charts:
http://www.jsmineset.com/cwsimages/Miscfiles/3422_Charts_for_09-18-2006.pdf
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.
