Posted on 01/22/2008 5:29:53 AM PST by Perdogg
Federal Reserve makes emergency rate cut.
(Excerpt) Read more at msnbc.msn.com ...
Yea, I know how the CPI is computed off imputed rents and all that nonsense. Utter twaddle.
Again, I go back to my central premise: Look at what *money* is doing. Here’s a little something from today’s WB conf-call:
“Part of one of the challenges is, and we’ve mentioned this before, a lot of this current losses have been coming out of California and it’s — they’ve been from people that have otherwise had the capacity to pay, but have basically just decided not to because they feel like they’ve lost equity, value in their properties, and so in a way, we may have — it’s hard to know right now, but we may have seen somewhat of an acceleration problem loans as people have reached that conclusion and we’re just going to have to see how the patterns unfold here.”
That’s part of how people act during housing deflation. They realize that they’re upside down and think that they’d be better off to quit paying their mortgage because they think they’ll never see the upside again.
We’ve seen this mortgagor behavior at least twice before - in the oil patch in the 80’s (which led to the S&L crisis) and in the 30’s. In the 80’s, I had friends who just walked into the S&L, tossed their keys on the banker’s desk, said “It’s yours — see ya!” and walk out — because they were 20% under water on the note and they thought there was no way to get above water.
People’s actions are driven by money. Money, money, money. Lots of little bits of green paper.
People are, in the majority, utterly unmoved by government statistics.
If you choose your land carefully and if you hold on for the long term, yes.
If you want to see how it is done, study the actions of JR Simplot in Idaho, Oregon and Nevada. He didn’t buy just any land and he didn’t just buy it to look at it.
Swiss UBS will be used as milestone, i.e. the first bank to collapse. There is nothing mysterious about it.
So there should be nothing unclear about why the “disarm the citizens” agenda has been just now completed in Switzerland...
Yup. The guy Saddam whacked at the beginning of the war.
He is just one example of Saddam’s sanctuary state for terrorists.
100 million “regular” Americans are invested in the market directly or thru pension and retirement funds.
I tend to agree- the market should set interest rates
Named after Peter Cooper the engineer?
He was a brilliant man.
I walked past Cooper Union just a couple weeks ago.
Also consider the fact most people in the US and abroad have tapped out their 'bank of last resort' i.e. mortgaged their property. Because of this consumer spending is bound to continue its decline for the foreseeable future. And then add the Boomers retiring to the equation....
But he was an anti-israeli terrorist, not Al-queada, and killing a guy doesn’t seem like sanctuary to me.
There's nothing nonsensical about using imputed rents to compute the CPI. Using home prices to compute the CPI would result in grossly inaccurate measures of inflation, since: (1) Only a tiny fraction of homes are being bought and sold at any given time (why use home prices as a measure of inflation when changes in home prices have no effect on the vast majority of homeowners?); and (2) for the vast majority of homeowners, home ownership is more of a long-term financial process than a single transaction, in which interest rates and mortgage terms have a bigger impact than the actual price of the home (e.g., a $250,000 home financed for 15 years at 7.5% actually "costs more" over a 12-month period of time for which the CPI is measured than a $400,000 home financed for 30 years at 5.5%).
That’s part of how people act during housing deflation. They realize that they’re upside down and think that they’d be better off to quit paying their mortgage because they think they’ll never see the upside again.
Agreed. But that's not "housing deflation" at all. That's simply a matter of housing prices returning to earth from a height that made no sense in the first place.
We’ve seen this mortgagor behavior at least twice before - in the oil patch in the 80’s (which led to the S&L crisis) and in the 30’s. In the 80’s, I had friends who just walked into the S&L, tossed their keys on the banker’s desk, said “It’s yours — see ya!” and walk out — because they were 20% under water on the note and they thought there was no way to get above water.
Exactly. But that wasn't because of deflation in the U.S. dollar. They didn't walk into the supermarket and return a can of tomato soup because it had lost value over the course of a week, did they?
To sum it all up here . . . Nobody ever really gives a damn about "deflation" of their assets if they've paid cash for them, do they? Do you think it's just a coincidence that this "deflationary" pressure is only evident in the one sector of our economy where long-term financing is the norm?
That is anecdotal. No one I know is having more problems than normal.
PUH-ease, that kind of hyperbole on a supposedly conservative website is getting really tired. You think ONE AND A HALF PERCENT INFLATION is bad??To be fair, someone else did bring up the 1.5% inflation before that so you may have just been responding to that post.
I'm a little bit younger that you, but my personal experiences certainly agree. Ford and Carter was very much down trodden personalities and the absolute worst choice to be leaders during a time where confidence in the economy was vital.
That’s a matter of perspective. BAAAAAD to me would be a 600 point plunge which would likely have happened like our overseas friends relative stock market plunges if not for the rate cut.
Futher, the Fed, Wall St. and Washington are still only talking about treating the symptoms, not the cause. Want to solve the credit crunch problem (you may as really call it a lack of investor confidence problem)? Ask the two or three dozen of the above group that actually KNOW the real numbers behind door number three and disclose them. Then, as ugly as those numbers are, investment might just simply stagnate instead of fleeing America until managers with integrity, balls and brains step up to fix it.
Unfortunately, those who can disclose the real numbers might face hard time at worst of international embarrassment at best so we’ll keep playing this charade. That is until this fiat economy inflated by decades of consumer/government overspending collapses.
You nailed it. Open door number three boys and let the real men who understand accountability and global value propositions take over. Wishful thinking I guess :)
CPI #s haven’t been really cooked unless energy cost are like 20%-30% of your budget and food is another 20% (It’s 8% and 5% for me respectively). CPI has gone up close to 3% every year for the last few years and “core” cpi without food/energy is about 2%. Besides if you used the old CPI #s, the 90s would have shown significant deflation as food & energy prices dropped significantly from 1990 to 2000 and we’d be basically just catching up. If you live in a huge city that saw housing prices soar, you probably think inflation is a lot worse than it really is. Most of the country did not see double digit increases every year for the last 10 years.
I’d love to see taxes included. You and I both know that would never happen though.
bella1
Who did you lock in at with 5.1%??? I have been shopping, too and haven’t found rates quite that low. I have a $117,000 balance at 5.625% now and would like to refi.
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