Paying Attention?

[briansd1]

I’m with Arraya. His post is very reasonable.

The only thing that I would add is that deflation does not flush out debts. Short of bankruptcy, the way to eliminate debt is to pay it back. Inflation makes debt repayment much easier.

CA renter, Greece which is experiencing internal deflation has cut public employee wages about 15%. Pensions have also been cut. But asset prices denominated in a strong Euro have held more steady.

The truth is that deflation makes debts harder to pay, not easier. As far as repudiation of debt goes, it’s not possible to do so without giving up the collateral (houses).

Inflation is obviously the easier way to go. War-torn countries of Europe all inflated away to get from under their war-time debts.

In fact, even noble and royal families of Europe had their wealth wiped out because of inflation. Inflation spreads the pain more evenly because inflation requires that you continue to work, be productive, and earn cash. (Deflation protects those who already have wealth).

Also remember that an asset price collapse would affect pension funds which rely on their investment portfolios to pay out benefits. As you’ve said before, pension benefits were promised based on return on investment much more so than contribution. Defined benefits will have be reduced or canceled if there are no funds to pay them.

[Jazzman]

[quote=briansd1][quote=Nor-LA-SD-GUY2]
No I think they really want to stall growth, otherwise they would have forced the banks to write down principles or some other drastic action like inflation (you cannot replace 20% of the economy with solar energy job’s) that’s so funny it’s not even trying.
(Like I said, that’s just my speculation)[/quote]

I’m with Arraya. It’s always been growth at all cost.

Forcing principal reductions would hit the banks’ balance sheets and we would need to bail them out again.

I’m curious why you think that it’s necessary to get homeowners above water for an employment recovery to happen.

Theoretically, homeowners bought houses they could afford to make monthly payments on. Underwater or not, they could just carry on. Theoretically, the banks did their job with underwriting.

But we now all know the problem is that the banking system broke-down and allowed massive numbers of homeowners to buy houses they could not afford. The whole system was predicated on refinancing and forever increasing prices.

If we were to force the banks to reduce principal, who should bear the cost of such a massive program to benefit underwater homeowners?[/quote]

You could calculate the costs, and how much money the responsible bodies have, let them pay it down, and write it off, without devastating their balance sheets and causing a run on banks. Actually, I believe this is probably happening, just mot as fast as some would like.

[Jazzman]

[quote=briansd1][quote=Nor-LA-SD-GUY2]
No I think they really want to stall growth, otherwise they would have forced the banks to write down principles or some other drastic action like inflation (you cannot replace 20% of the economy with solar energy job’s) that’s so funny it’s not even trying.
(Like I said, that’s just my speculation)[/quote]

I’m with Arraya. It’s always been growth at all cost.

Forcing principal reductions would hit the banks’ balance sheets and we would need to bail them out again.

I’m curious why you think that it’s necessary to get homeowners above water for an employment recovery to happen.

Theoretically, homeowners bought houses they could afford to make monthly payments on. Underwater or not, they could just carry on. Theoretically, the banks did their job with underwriting.

But we now all know the problem is that the banking system broke-down and allowed massive numbers of homeowners to buy houses they could not afford. The whole system was predicated on refinancing and forever increasing prices.

If we were to force the banks to reduce principal, who should bear the cost of such a massive program to benefit underwater homeowners?[/quote]

You could calculate the costs, and how much money the responsible bodies have, let them pay it down, and write it off, without devastating their balance sheets and causing a run on banks. Actually, I believe this is probably happening, just mot as fast as some would like.

[Jazzman]

[quote=briansd1][quote=Nor-LA-SD-GUY2]
No I think they really want to stall growth, otherwise they would have forced the banks to write down principles or some other drastic action like inflation (you cannot replace 20% of the economy with solar energy job’s) that’s so funny it’s not even trying.
(Like I said, that’s just my speculation)[/quote]

I’m with Arraya. It’s always been growth at all cost.

Forcing principal reductions would hit the banks’ balance sheets and we would need to bail them out again.

I’m curious why you think that it’s necessary to get homeowners above water for an employment recovery to happen.

Theoretically, homeowners bought houses they could afford to make monthly payments on. Underwater or not, they could just carry on. Theoretically, the banks did their job with underwriting.

But we now all know the problem is that the banking system broke-down and allowed massive numbers of homeowners to buy houses they could not afford. The whole system was predicated on refinancing and forever increasing prices.

If we were to force the banks to reduce principal, who should bear the cost of such a massive program to benefit underwater homeowners?[/quote]

You could calculate the costs, and how much money the responsible bodies have, let them pay it down, and write it off, without devastating their balance sheets and causing a run on banks. Actually, I believe this is probably happening, just mot as fast as some would like.

[Jazzman]

[quote=briansd1][quote=Nor-LA-SD-GUY2]
No I think they really want to stall growth, otherwise they would have forced the banks to write down principles or some other drastic action like inflation (you cannot replace 20% of the economy with solar energy job’s) that’s so funny it’s not even trying.
(Like I said, that’s just my speculation)[/quote]

I’m with Arraya. It’s always been growth at all cost.

Forcing principal reductions would hit the banks’ balance sheets and we would need to bail them out again.

I’m curious why you think that it’s necessary to get homeowners above water for an employment recovery to happen.

Theoretically, homeowners bought houses they could afford to make monthly payments on. Underwater or not, they could just carry on. Theoretically, the banks did their job with underwriting.

But we now all know the problem is that the banking system broke-down and allowed massive numbers of homeowners to buy houses they could not afford. The whole system was predicated on refinancing and forever increasing prices.

If we were to force the banks to reduce principal, who should bear the cost of such a massive program to benefit underwater homeowners?[/quote]

You could calculate the costs, and how much money the responsible bodies have, let them pay it down, and write it off, without devastating their balance sheets and causing a run on banks. Actually, I believe this is probably happening, just mot as fast as some would like.

[Jazzman]

[quote=briansd1][quote=Nor-LA-SD-GUY2]
No I think they really want to stall growth, otherwise they would have forced the banks to write down principles or some other drastic action like inflation (you cannot replace 20% of the economy with solar energy job’s) that’s so funny it’s not even trying.
(Like I said, that’s just my speculation)[/quote]

I’m with Arraya. It’s always been growth at all cost.

Forcing principal reductions would hit the banks’ balance sheets and we would need to bail them out again.

I’m curious why you think that it’s necessary to get homeowners above water for an employment recovery to happen.

Theoretically, homeowners bought houses they could afford to make monthly payments on. Underwater or not, they could just carry on. Theoretically, the banks did their job with underwriting.

But we now all know the problem is that the banking system broke-down and allowed massive numbers of homeowners to buy houses they could not afford. The whole system was predicated on refinancing and forever increasing prices.

If we were to force the banks to reduce principal, who should bear the cost of such a massive program to benefit underwater homeowners?[/quote]

You could calculate the costs, and how much money the responsible bodies have, let them pay it down, and write it off, without devastating their balance sheets and causing a run on banks. Actually, I believe this is probably happening, just mot as fast as some would like.

[Arraya]

[quote=briansd1]I’m with Arraya. His post is very reasonable.

The only thing that I would add is that deflation does not flush out debts. Short of bankruptcy, the way to eliminate debt is to pay it back. Inflation makes debt repayment much easier.
[/quote]

I am still in the deflation camp. IMO, All Bernanke has done is facilitate a wealth transfer and protected the banks – while delaying the inevitable. Deflation is still going to reign down like a monsoon on the populace.

We’ve experienced a long counter-trend rally from March 2009 low. It looks to be reversing about now. The next phase will be longer and more brutal than the first. Good thing they cleaned up the banks balance sheets because they are going to need it to handle the next phase.

[quote=briansd1]
The truth is that deflation makes debts harder to pay, not easier. [/quote]

This is very true.

[Arraya]

[quote=briansd1]I’m with Arraya. His post is very reasonable.

The only thing that I would add is that deflation does not flush out debts. Short of bankruptcy, the way to eliminate debt is to pay it back. Inflation makes debt repayment much easier.
[/quote]

I am still in the deflation camp. IMO, All Bernanke has done is facilitate a wealth transfer and protected the banks – while delaying the inevitable. Deflation is still going to reign down like a monsoon on the populace.

We’ve experienced a long counter-trend rally from March 2009 low. It looks to be reversing about now. The next phase will be longer and more brutal than the first. Good thing they cleaned up the banks balance sheets because they are going to need it to handle the next phase.

[quote=briansd1]
The truth is that deflation makes debts harder to pay, not easier. [/quote]

This is very true.

[Arraya]

[quote=briansd1]I’m with Arraya. His post is very reasonable.

The only thing that I would add is that deflation does not flush out debts. Short of bankruptcy, the way to eliminate debt is to pay it back. Inflation makes debt repayment much easier.
[/quote]

I am still in the deflation camp. IMO, All Bernanke has done is facilitate a wealth transfer and protected the banks – while delaying the inevitable. Deflation is still going to reign down like a monsoon on the populace.

We’ve experienced a long counter-trend rally from March 2009 low. It looks to be reversing about now. The next phase will be longer and more brutal than the first. Good thing they cleaned up the banks balance sheets because they are going to need it to handle the next phase.

[quote=briansd1]
The truth is that deflation makes debts harder to pay, not easier. [/quote]

This is very true.

[Arraya]

[quote=briansd1]I’m with Arraya. His post is very reasonable.

The only thing that I would add is that deflation does not flush out debts. Short of bankruptcy, the way to eliminate debt is to pay it back. Inflation makes debt repayment much easier.
[/quote]

I am still in the deflation camp. IMO, All Bernanke has done is facilitate a wealth transfer and protected the banks – while delaying the inevitable. Deflation is still going to reign down like a monsoon on the populace.

We’ve experienced a long counter-trend rally from March 2009 low. It looks to be reversing about now. The next phase will be longer and more brutal than the first. Good thing they cleaned up the banks balance sheets because they are going to need it to handle the next phase.

[quote=briansd1]
The truth is that deflation makes debts harder to pay, not easier. [/quote]

This is very true.

[Arraya]

[quote=briansd1]I’m with Arraya. His post is very reasonable.

The only thing that I would add is that deflation does not flush out debts. Short of bankruptcy, the way to eliminate debt is to pay it back. Inflation makes debt repayment much easier.
[/quote]

I am still in the deflation camp. IMO, All Bernanke has done is facilitate a wealth transfer and protected the banks – while delaying the inevitable. Deflation is still going to reign down like a monsoon on the populace.

We’ve experienced a long counter-trend rally from March 2009 low. It looks to be reversing about now. The next phase will be longer and more brutal than the first. Good thing they cleaned up the banks balance sheets because they are going to need it to handle the next phase.

[quote=briansd1]
The truth is that deflation makes debts harder to pay, not easier. [/quote]

This is very true.

[pemeliza]

“Japan experience deflation because their prices were so expensive relative to the rest of the world.”

Interesting point.

[pemeliza]

“Japan experience deflation because their prices were so expensive relative to the rest of the world.”

Interesting point.

[pemeliza]

“Japan experience deflation because their prices were so expensive relative to the rest of the world.”

Interesting point.

[pemeliza]

“Japan experience deflation because their prices were so expensive relative to the rest of the world.”

Interesting point.

[Author]

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