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Bugs.
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August 13, 2007 at 11:48 AM #74529August 13, 2007 at 12:00 PM #74424
betting on fall
Participantvery funny, and true.
But I am half in Bugs camp too.
There are two problems:
First- the cow shit problem- customers won’t buy until they are confident that cow dung is not an ingredient. When confidence in the ingredidents is still low, the price needs to such that you don’t care what is in them (this is how hot dogs get sold). In other words, higher interest rates provide investors enough return that they ignore the lingering stench. This risk premium will go away in time as people gain confidence in the ingredients again.Second is the home pricing problems- to date, mortgage investors have assumed stable or growing home prices. Mortgage backed bonds are a much worse risk when prices are falling, so again higher interest rates are needed to make them attractive. This “falling price premium” may be with us for a while.
August 13, 2007 at 12:00 PM #74541Participantvery funny, and true.
But I am half in Bugs camp too.
There are two problems:
First- the cow shit problem- customers won’t buy until they are confident that cow dung is not an ingredient. When confidence in the ingredidents is still low, the price needs to such that you don’t care what is in them (this is how hot dogs get sold). In other words, higher interest rates provide investors enough return that they ignore the lingering stench. This risk premium will go away in time as people gain confidence in the ingredients again.Second is the home pricing problems- to date, mortgage investors have assumed stable or growing home prices. Mortgage backed bonds are a much worse risk when prices are falling, so again higher interest rates are needed to make them attractive. This “falling price premium” may be with us for a while.
August 13, 2007 at 12:00 PM #74548Participantvery funny, and true.
But I am half in Bugs camp too.
There are two problems:
First- the cow shit problem- customers won’t buy until they are confident that cow dung is not an ingredient. When confidence in the ingredidents is still low, the price needs to such that you don’t care what is in them (this is how hot dogs get sold). In other words, higher interest rates provide investors enough return that they ignore the lingering stench. This risk premium will go away in time as people gain confidence in the ingredients again.Second is the home pricing problems- to date, mortgage investors have assumed stable or growing home prices. Mortgage backed bonds are a much worse risk when prices are falling, so again higher interest rates are needed to make them attractive. This “falling price premium” may be with us for a while.
August 13, 2007 at 12:00 PM #74426CAwireman
ParticipantFirstly,
Chris Scoreboard – please stay on the blog. I value your insights quite a bit.
Secondly, the Cow S&^t analogy was crude. But pretty funny!
It made me laugh.HiggyBaby
August 13, 2007 at 12:00 PM #74544ParticipantFirstly,
Chris Scoreboard – please stay on the blog. I value your insights quite a bit.
Secondly, the Cow S&^t analogy was crude. But pretty funny!
It made me laugh.HiggyBaby
August 13, 2007 at 12:00 PM #74551ParticipantFirstly,
Chris Scoreboard – please stay on the blog. I value your insights quite a bit.
Secondly, the Cow S&^t analogy was crude. But pretty funny!
It made me laugh.HiggyBaby
August 13, 2007 at 12:09 PM #74435Ex-SD
ParticipantBugs: Great analysis! Well written and thought out……………Right on the money.
LA Renter: LOL! Great analogy!
August 13, 2007 at 12:09 PM #74552ParticipantBugs: Great analysis! Well written and thought out……………Right on the money.
LA Renter: LOL! Great analogy!
August 13, 2007 at 12:09 PM #74560ParticipantBugs: Great analysis! Well written and thought out……………Right on the money.
LA Renter: LOL! Great analogy!
August 13, 2007 at 12:32 PM #74445stop_the_bubble_hype
ParticipantCFC Rates, not as high as quoted…
Maybe you guys are seeing the broker numbers, but we were locked into a 60 day jumbo today and the rate was 6.5% 30 year fixed (paid 1.5 points).
Before we finished locking, the rep told us it is better to come directly to the lender and not use brokers as their fees are astronomical. If anyone calls today with a credit score over 700 (as I’m assuming is the case among most of this financially savvy group), there is no way your rate should be as high as what’s being quoted here.
Hype
August 13, 2007 at 12:32 PM #74561ParticipantCFC Rates, not as high as quoted…
Maybe you guys are seeing the broker numbers, but we were locked into a 60 day jumbo today and the rate was 6.5% 30 year fixed (paid 1.5 points).
Before we finished locking, the rep told us it is better to come directly to the lender and not use brokers as their fees are astronomical. If anyone calls today with a credit score over 700 (as I’m assuming is the case among most of this financially savvy group), there is no way your rate should be as high as what’s being quoted here.
Hype
August 13, 2007 at 12:32 PM #74569ParticipantCFC Rates, not as high as quoted…
Maybe you guys are seeing the broker numbers, but we were locked into a 60 day jumbo today and the rate was 6.5% 30 year fixed (paid 1.5 points).
Before we finished locking, the rep told us it is better to come directly to the lender and not use brokers as their fees are astronomical. If anyone calls today with a credit score over 700 (as I’m assuming is the case among most of this financially savvy group), there is no way your rate should be as high as what’s being quoted here.
Hype
August 13, 2007 at 12:34 PM #74448lendingbubblecontinues
ParticipantHype
Buying something today, are we? Brilliant!
There’s no bubble, right? Riiiiight…
August 13, 2007 at 12:34 PM #74564ParticipantHype
Buying something today, are we? Brilliant!
There’s no bubble, right? Riiiiight…
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