[quote=Rich Toscano]
But, I think that a rising rate environment which is driven by decreasing confidence in govt debt would be just a generally bad environment for housing, both from the direct rate rise and indirectly from the negative economic effects — so I see an assumable loan as providing some protection against that potential outcome.[/quote]
Well thats really the question, isn’t it?
We don’t know what effect heavy debt in a major currency has.
We know what it looks like when Argentina or Iceland over-borrows and we know what it looks like when countries over-borrow in exogenous currency.
We don’t know what it looks like when a very big country (whose currency is the denomination for most global debt) over-borrows.
I am of the opinion that confidence is really more of a relative thing.
It functions on the being-chased-by-zombies logic.
Thats the idea that you don’t need enough bullets to kill all the zombies.
Instead, you just need to run faster than the dude next to you (maybe by putting your last bullet in his leg).
You don’t need to have a great currency (whatever that means).
You just need to have a more stable currency than Europe (who is having trouble holding its intestines in) or China (who is effectively tied to Europe, its biggest customer) or Japan (who is apparently the La Brea of economies).
Every other currency is small enough or weak enough that we win (until more zombies come along).
Bear in mind our credit got BETTER after the downgrade (eat lead..errr…leverage spread mutha fucka!!!!).
That gives us a hint of how fucked the rest of the world is with regard to debt and stability (and zombies).
We are still widely seen as the best risk for lending.
