And its insolvent banking system.
Just look at the most recent Fed figures on household net worth - $50 trillion - with only about 20% of that attributable to homeowner equity. The average American household has about 57% equity in their home. Americans' total debts, including mortgages, are dwarfed by their liquid assets.
Yes, we have lots of 401K chock full of "high quality" Fannie Mae bonds, money market funds full of Fannie repos, and stock in Fannie's derivative counterparties like Citigroup and JPM. We have massive equity in homes whose value is inflated by GSE money pumps.
Hey, when was the last time FNM posted reliable earnings? And when do you reckon commodity prices are going to stop rising?
Doomers regularly cite Japan's high personal savings rate as an example of what we should be doing oblivious to the the fact that we possess tremendous liquid wealth.
we have lots of 401K chock full of "high quality" Fannie Mae bonds, money market funds full of Fannie repos, and stock in Fannie's derivative counterparties like Citigroup and JPM.
So now accounting woes at Fannie Mae are going to bring down our economy? $11 billion in accounting errors, (smoothing) to ensure maximum bonuses were earned, is going to bankrupt the system and kill originations? Well, like you say, time will tell.
We have massive equity in homes whose value is inflated by GSE money pumps.
Only 20% of our net worth is in our homes. Do you totally ignore the demand side of the equation when looking at the housing market? When was the last time the housing market in this country showed a year over year decline in aggregate values?
Hey, when was the last time FNM posted reliable earnings?
All those years will be restated and some will show profits and some will show losses. This house will get cleaned but it will not create the disaster you portend.
And when do you reckon commodity prices are going to stop rising?
You, being ahead of the curve, should know this. Individual commodities are extremely volatile and bull markets come in short durations. Better hope your crystal ball is working.
Many think that demand from China will continue to drive this but you know that even in a long term bull market there is significant down side risk.
Commodities bottomed out around 2000 and hit their lowest point, adjusted for inflation, in our history. I'd say they were long overdue for an upward run.
Do you think this will mean a return to the 70's when commodities rose and financial assets dropped? Do commodities always trend inversely to equities? There's always the possibility that rapidly rising commodity prices will lead to that historically proven war cycle. Nothing like a lot of world tension and unrest to send Gold skyrocketing. Once again, time will tell.