Posted on 05/23/2004 1:22:06 PM PDT by inquest
OK, hopefully some financially knowledgable Freepers will show up to this thread to help me understand this, because I make no pretensions to being a guru (or even a journeyman) on this kind of stuff.
Why in tarnation would Greenspan recommend, at a time when interest rates (from what I hear) are at historic lows, that people switch to adjustable-rate mortgages? It makes absolutely no sense to me. Does anyone out there seriously think this would be good advice?
A better question would be: Why does a single political appointee feel it's his prerogative to micromanage the worlds largest and most vibrant economy with unsubstantiated comments and opinions, and why does that economy jump like lemmings at his every utterance, when it claims to be the pinnacle of self-autonomous, self-regulating economic systems ever devised?
Now that I can see doing. Fortunately, I personally am not needing to buy just yet. I just saw that statement from him and it left me scratching my head. But thanks for the links.
Surprised to see so many responses to the thread, especially on a Sunday. Shows you how much I hang out in the business section of FR.
That single appointee has done a fantastic job, and much of our economic prosperity and stability is due to his savvy. Greenspan bashing is for the sans culottes IMO. I suspect Greenspan's comments were taken out of context, because without various and sundry qualifications, they were ill advised, and Greenspan is rarely ill advised.
Where is your control group?
Because his house is already paid for and he will never buy another new one?
If you can find a low fixed rate assumable, you have a point. But none of the fixed rate loans I've seen are assumable, and I am sure there is a premium on them if they are.
IMO it is a continuation of the type of bad advice Robert McTeer gave about everyone should go out and buy an SUV to keep the economy going.
The Federal Reserve and the government are petrified that people will stop buying houses. When they do, the enormous debt bubble and the US dollar will start to unwind in an uncontrollable manner.
Greenspan knows that with adjustable mortgages people can afford a bigger house on paper, therefore the bubble is goosed that much more. We are living in the largest credit bubble in the history of man, thanks to Alan Greenspan.
I strongly disagree. Did you realize the constitution recommended the death penalty for anyone debasing the silver/gold currency? The Federal Reserves creation was unconsitutional and remains that way today.
Here is what the constitution says about gold/silver as money:
Section. 10.
Clause 1: No State shall enter into any Treaty, Alliance, or Confederation; grant Letters of Marque and Reprisal; coin Money; emit Bills of Credit; make any Thing but gold and silver Coin a Tender in Payment of Debts; pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts, or grant any Title of Nobility.
He KNOWS rates are going to SKYROCKET and he is protecting the entire banking system from us po' folks.
"assumable mortgage "Some mortgages allow future buyers of your home to take over the remaining loan balance of your mortgage. If you need to sell your house but interest rates are high, having an assumable mortgage may be handy. You may be able to offer the buyer your assumable loan at a lower interest rate than the current going interest rate. Most assumables are adjustable-rate mortgages -- fixed-rate, assumable mortgages are nearly extinct these days because lenders realize that they lose a great deal of money on these types of mortgages when interest rates skyrocket."
Free lunches are really hard to find these days. Life sucks.
What portion of our national debt is short term? Seems to me the clinton admin restructured the national debt to short term.
Actually, I don't see where you disagreed with my point. There is not enough gold in the world to base our money on. Whether it is Constitutional or not is different issue.
In the last 24 years, we have owned six homes, with various fixed rate and adjustable mortgages. In every case, including the ones where my husband insisted on a fixed rate, we would have been better off with an adjustable. The only reason we don't have one now is we don't owe enough to do another no-cost re-fi so we have a ten-year fixed. We've done five no-cost re-fi's in the nine years we've had our current home (which we will probably retire in).
Also, as "low" as rates seem now, they are actually "high" historically compared to current inflation. With global overcapacity in almost every area, I don't see any big inflation coming soon. Adjustables make sense for most people.
Actually gold AND silver could be used as currency...as they have throughout history. For the past 4000 years gold was used for "large" denominations, and silver (and sometimes copper) for the smaller denominations. When we are again forced to go back on the gold/silver standard, there is plenty of precious metals around to accomodate this.
My point is that throughout history, whenever governments took their countries off the gold/silver standard and created "fiat" money, that money inevitably became worthless. And their countries suffered greatly after a short-term fiat money created "boom".
In every case, including the ones where my husband insisted on a fixed rate, we would have been better off with an adjustable.
Hind site is better than fore site.........
It could have been the other way around. The rules of the game are changing daily. How much risk are people willing to take?
Fiat money is the road to ruin. That's because the people who stand to benefit by inflating the currency are the same ones in charge of the currency.
The best currency is a fiat currency with wise governmental management.
The next best currency is a precious metals backed currency.
The absolute WORST currency is a fiat currency with unwise management!
the better question is where is the constitutional authority for Congress to delegate its responsibility to issue currency and regulate the value thereof
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