Effect of the Mega Bailout on home prices

[Coronita]

…Well, considering that the Fed owns Fannie and Freddie, for practical considerations AIG, and just about every bad mortgage that there will be, what do you think will happen? You think the Fed is going to led home prices crater overnight? You think the Fed isn’t going to step in again and again?What started out to be a slow decline appears now to going to be even slower and slower and slower.

I wouldn’t be surprised if they start making these ridiculous low payment plans to keep people in homes longer to prolong the foreclosure issue (rather than one big bang, it’s a slow and now slower decline). I wonder what rates are going to look like soon. I have a feeling they are still going to stay low at least in the short term.

Personal reason, this is precisely why I don’t dick around considering my primary home being an investment. I’m not smart enough to time the markets and figure out when when the Fed is going to stop pissing into the wind. Inflation is eating “safe” savings, and we’re finding out things really aren’t that “safe”. And now fed keeps intervening in the housing/financial markets, who knows when we’ll see that additional 40% decline that some have claimed is yet to start.

NOTE: Selfishly, I hope I can refinance into a 2% 30 year fixed loan soon. Or maybe soon, it will be a -1% 30 year fixed loan, in which the Fed rebates me back to buy a home with a mortgage. Yeah, that would do it for me. 🙂

But more alarming (echoing Running Bear), I weep for our children who are going to be on the hook for this. I hope before than it either miraculously gets fixed OR my child decides to live in a better environment somewhere else.

[Running Bear]

fat_lazy_union,

This will go on as long as foreign Governments lend us cheap money. Our Gov’t now doesn’t control its own destiny. It can say and do all it wants to bail out every aspect of this credit bubble. But once foreign Governments want higher rates for the money they lend to us, we will go into a death spiral. It’s that simple. I can give you tons of examples of what this will lead to, but the simple fact is in our lifetimes we will see a point where our Gov’t will no longer be able to service its debt. You can imagine what will happen when the US defaults on its debt.

The rest of the world isn’t stupid. They will play along for a time because they will hope that we can figure a way out of this mess. Because when we default, they are going to feel a lot of pain as well. However, eventually they will see the writing on the wall and that our Government is basically insolvent and will be unable to recover.

What we just saw over the last year on Wall Street was a perfect example. We have been trying to bail out our financial system with never before seen facilities and programs to the tune of hundreds of billions of dollars. But the end result was already determined because the system was insolvent. We have now made our Governments balance sheet insolvent. The rest of the world for a time will attempt to keep us afloat because it is in their best interest. However, the final outcome will be the same as it was for our financial system…..a crash.

Our quality of life here in the coming decades will be very different then the one we enjoy now.

I hope and pray that what I see ahead is proven false. Nothing would make me happier then to look back 5 years from now and chuckle at this post for being tinfoil. However, I don’t see a way out of what we are in. Our economy was the once unsinkable Titanic and we just struck the iceberg. Those with understanding and means are headed for the boats while the vast majority of the public is in the ballroom dancing and being told the jolt they just felt was nothing to be concerned about.

My2Cents

[Running Bear]

fat_lazy_union,

This will go on as long as foreign Governments lend us cheap money. Our Gov’t now doesn’t control its own destiny. It can say and do all it wants to bail out every aspect of this credit bubble. But once foreign Governments want higher rates for the money they lend to us, we will go into a death spiral. It’s that simple. I can give you tons of examples of what this will lead to, but the simple fact is in our lifetimes we will see a point where our Gov’t will no longer be able to service its debt. You can imagine what will happen when the US defaults on its debt.

The rest of the world isn’t stupid. They will play along for a time because they will hope that we can figure a way out of this mess. Because when we default, they are going to feel a lot of pain as well. However, eventually they will see the writing on the wall and that our Government is basically insolvent and will be unable to recover.

What we just saw over the last year on Wall Street was a perfect example. We have been trying to bail out our financial system with never before seen facilities and programs to the tune of hundreds of billions of dollars. But the end result was already determined because the system was insolvent. We have now made our Governments balance sheet insolvent. The rest of the world for a time will attempt to keep us afloat because it is in their best interest. However, the final outcome will be the same as it was for our financial system…..a crash.

Our quality of life here in the coming decades will be very different then the one we enjoy now.

I hope and pray that what I see ahead is proven false. Nothing would make me happier then to look back 5 years from now and chuckle at this post for being tinfoil. However, I don’t see a way out of what we are in. Our economy was the once unsinkable Titanic and we just struck the iceberg. Those with understanding and means are headed for the boats while the vast majority of the public is in the ballroom dancing and being told the jolt they just felt was nothing to be concerned about.

My2Cents

[Running Bear]

fat_lazy_union,

This will go on as long as foreign Governments lend us cheap money. Our Gov’t now doesn’t control its own destiny. It can say and do all it wants to bail out every aspect of this credit bubble. But once foreign Governments want higher rates for the money they lend to us, we will go into a death spiral. It’s that simple. I can give you tons of examples of what this will lead to, but the simple fact is in our lifetimes we will see a point where our Gov’t will no longer be able to service its debt. You can imagine what will happen when the US defaults on its debt.

The rest of the world isn’t stupid. They will play along for a time because they will hope that we can figure a way out of this mess. Because when we default, they are going to feel a lot of pain as well. However, eventually they will see the writing on the wall and that our Government is basically insolvent and will be unable to recover.

What we just saw over the last year on Wall Street was a perfect example. We have been trying to bail out our financial system with never before seen facilities and programs to the tune of hundreds of billions of dollars. But the end result was already determined because the system was insolvent. We have now made our Governments balance sheet insolvent. The rest of the world for a time will attempt to keep us afloat because it is in their best interest. However, the final outcome will be the same as it was for our financial system…..a crash.

Our quality of life here in the coming decades will be very different then the one we enjoy now.

I hope and pray that what I see ahead is proven false. Nothing would make me happier then to look back 5 years from now and chuckle at this post for being tinfoil. However, I don’t see a way out of what we are in. Our economy was the once unsinkable Titanic and we just struck the iceberg. Those with understanding and means are headed for the boats while the vast majority of the public is in the ballroom dancing and being told the jolt they just felt was nothing to be concerned about.

My2Cents

[Running Bear]

fat_lazy_union,

This will go on as long as foreign Governments lend us cheap money. Our Gov’t now doesn’t control its own destiny. It can say and do all it wants to bail out every aspect of this credit bubble. But once foreign Governments want higher rates for the money they lend to us, we will go into a death spiral. It’s that simple. I can give you tons of examples of what this will lead to, but the simple fact is in our lifetimes we will see a point where our Gov’t will no longer be able to service its debt. You can imagine what will happen when the US defaults on its debt.

The rest of the world isn’t stupid. They will play along for a time because they will hope that we can figure a way out of this mess. Because when we default, they are going to feel a lot of pain as well. However, eventually they will see the writing on the wall and that our Government is basically insolvent and will be unable to recover.

What we just saw over the last year on Wall Street was a perfect example. We have been trying to bail out our financial system with never before seen facilities and programs to the tune of hundreds of billions of dollars. But the end result was already determined because the system was insolvent. We have now made our Governments balance sheet insolvent. The rest of the world for a time will attempt to keep us afloat because it is in their best interest. However, the final outcome will be the same as it was for our financial system…..a crash.

Our quality of life here in the coming decades will be very different then the one we enjoy now.

I hope and pray that what I see ahead is proven false. Nothing would make me happier then to look back 5 years from now and chuckle at this post for being tinfoil. However, I don’t see a way out of what we are in. Our economy was the once unsinkable Titanic and we just struck the iceberg. Those with understanding and means are headed for the boats while the vast majority of the public is in the ballroom dancing and being told the jolt they just felt was nothing to be concerned about.

My2Cents

[Running Bear]

fat_lazy_union,

This will go on as long as foreign Governments lend us cheap money. Our Gov’t now doesn’t control its own destiny. It can say and do all it wants to bail out every aspect of this credit bubble. But once foreign Governments want higher rates for the money they lend to us, we will go into a death spiral. It’s that simple. I can give you tons of examples of what this will lead to, but the simple fact is in our lifetimes we will see a point where our Gov’t will no longer be able to service its debt. You can imagine what will happen when the US defaults on its debt.

The rest of the world isn’t stupid. They will play along for a time because they will hope that we can figure a way out of this mess. Because when we default, they are going to feel a lot of pain as well. However, eventually they will see the writing on the wall and that our Government is basically insolvent and will be unable to recover.

What we just saw over the last year on Wall Street was a perfect example. We have been trying to bail out our financial system with never before seen facilities and programs to the tune of hundreds of billions of dollars. But the end result was already determined because the system was insolvent. We have now made our Governments balance sheet insolvent. The rest of the world for a time will attempt to keep us afloat because it is in their best interest. However, the final outcome will be the same as it was for our financial system…..a crash.

Our quality of life here in the coming decades will be very different then the one we enjoy now.

I hope and pray that what I see ahead is proven false. Nothing would make me happier then to look back 5 years from now and chuckle at this post for being tinfoil. However, I don’t see a way out of what we are in. Our economy was the once unsinkable Titanic and we just struck the iceberg. Those with understanding and means are headed for the boats while the vast majority of the public is in the ballroom dancing and being told the jolt they just felt was nothing to be concerned about.

My2Cents

[patb]

fundamentally

Bubbles Greenspan let financing of home prices run to 6X
personal income.

that leaves only 2 choices.

1) deflate home prices

2) inflate incomes.

of course, adjustable debt rises too, commodities rise,

either way, it’s going to be ugly

[patb]

fundamentally

Bubbles Greenspan let financing of home prices run to 6X
personal income.

that leaves only 2 choices.

1) deflate home prices

2) inflate incomes.

of course, adjustable debt rises too, commodities rise,

either way, it’s going to be ugly

[patb]

fundamentally

Bubbles Greenspan let financing of home prices run to 6X
personal income.

that leaves only 2 choices.

1) deflate home prices

2) inflate incomes.

of course, adjustable debt rises too, commodities rise,

either way, it’s going to be ugly

[patb]

fundamentally

Bubbles Greenspan let financing of home prices run to 6X
personal income.

that leaves only 2 choices.

1) deflate home prices

2) inflate incomes.

of course, adjustable debt rises too, commodities rise,

either way, it’s going to be ugly

[patb]

fundamentally

Bubbles Greenspan let financing of home prices run to 6X
personal income.

that leaves only 2 choices.

1) deflate home prices

2) inflate incomes.

of course, adjustable debt rises too, commodities rise,

either way, it’s going to be ugly

[orthofrancis]

This should NO EFFECT on housing prices, unless it spikes interest rates up. Prices were in a bubble, and need to return to sustainable prices – i.e. 2.5-3X average income for the area.

What the bailaout means, is another financial mess, possible a harbinger of an upcoming DEPRESSION, and not just a recession.

[orthofrancis]

This should NO EFFECT on housing prices, unless it spikes interest rates up. Prices were in a bubble, and need to return to sustainable prices – i.e. 2.5-3X average income for the area.

What the bailaout means, is another financial mess, possible a harbinger of an upcoming DEPRESSION, and not just a recession.

[orthofrancis]

This should NO EFFECT on housing prices, unless it spikes interest rates up. Prices were in a bubble, and need to return to sustainable prices – i.e. 2.5-3X average income for the area.

What the bailaout means, is another financial mess, possible a harbinger of an upcoming DEPRESSION, and not just a recession.

[orthofrancis]

This should NO EFFECT on housing prices, unless it spikes interest rates up. Prices were in a bubble, and need to return to sustainable prices – i.e. 2.5-3X average income for the area.

What the bailaout means, is another financial mess, possible a harbinger of an upcoming DEPRESSION, and not just a recession.

[Author]

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