Shadow Inventory – The Flood that May Never Come

[sdduuuude]

Seems like there must be some analytical answer to the question – “Why don’t banks ramp up the staff ?”

I mean, if the situation is still “whoever panics first wins” (or loses the least), why don’t they staff up and manage it. Everyone is hurting for work. They could staff up pretty cheap.

Maybe the banks see appreciation in these properties over the next few years, or maybe peterb is right – it isn’t growth, so why fund it ?

[carlsbadworker]

peterb, I don’t think it is really because of “deflation” itself.

I was kind of naive, thinking that deflation will be easy to solve as well: you just let the price drop and at certain point it will attract buyers and market will recover.

However, I failed to consider the political side of the “deflation”. The way I look at, deflation is really bad for the rich people (banks included) because they are the ones who are holding the assets when the music stops. (On the other hand, inflation is bad for ordinary folks as they dont’ have much bargaining power over their assets, mainly the labor costs) So naturally, the rich will fight back as a political force in time of deflation to drag onto their status as long as they could.

We should have let all the banks go bankrupcy and let the home prices drop to really affordable levels. But the banks wouldn’t let us and they are getting their ways. So like Japan, we will too have a very prolonged recovery process since the society can not efficiently clear the non-performing assets to restart again.

[carlsbadworker]

peterb, I don’t think it is really because of “deflation” itself.

I was kind of naive, thinking that deflation will be easy to solve as well: you just let the price drop and at certain point it will attract buyers and market will recover.

However, I failed to consider the political side of the “deflation”. The way I look at, deflation is really bad for the rich people (banks included) because they are the ones who are holding the assets when the music stops. (On the other hand, inflation is bad for ordinary folks as they dont’ have much bargaining power over their assets, mainly the labor costs) So naturally, the rich will fight back as a political force in time of deflation to drag onto their status as long as they could.

We should have let all the banks go bankrupcy and let the home prices drop to really affordable levels. But the banks wouldn’t let us and they are getting their ways. So like Japan, we will too have a very prolonged recovery process since the society can not efficiently clear the non-performing assets to restart again.

[carlsbadworker]

peterb, I don’t think it is really because of “deflation” itself.

I was kind of naive, thinking that deflation will be easy to solve as well: you just let the price drop and at certain point it will attract buyers and market will recover.

However, I failed to consider the political side of the “deflation”. The way I look at, deflation is really bad for the rich people (banks included) because they are the ones who are holding the assets when the music stops. (On the other hand, inflation is bad for ordinary folks as they dont’ have much bargaining power over their assets, mainly the labor costs) So naturally, the rich will fight back as a political force in time of deflation to drag onto their status as long as they could.

We should have let all the banks go bankrupcy and let the home prices drop to really affordable levels. But the banks wouldn’t let us and they are getting their ways. So like Japan, we will too have a very prolonged recovery process since the society can not efficiently clear the non-performing assets to restart again.

[carlsbadworker]

peterb, I don’t think it is really because of “deflation” itself.

I was kind of naive, thinking that deflation will be easy to solve as well: you just let the price drop and at certain point it will attract buyers and market will recover.

However, I failed to consider the political side of the “deflation”. The way I look at, deflation is really bad for the rich people (banks included) because they are the ones who are holding the assets when the music stops. (On the other hand, inflation is bad for ordinary folks as they dont’ have much bargaining power over their assets, mainly the labor costs) So naturally, the rich will fight back as a political force in time of deflation to drag onto their status as long as they could.

We should have let all the banks go bankrupcy and let the home prices drop to really affordable levels. But the banks wouldn’t let us and they are getting their ways. So like Japan, we will too have a very prolonged recovery process since the society can not efficiently clear the non-performing assets to restart again.

[carlsbadworker]

peterb, I don’t think it is really because of “deflation” itself.

I was kind of naive, thinking that deflation will be easy to solve as well: you just let the price drop and at certain point it will attract buyers and market will recover.

However, I failed to consider the political side of the “deflation”. The way I look at, deflation is really bad for the rich people (banks included) because they are the ones who are holding the assets when the music stops. (On the other hand, inflation is bad for ordinary folks as they dont’ have much bargaining power over their assets, mainly the labor costs) So naturally, the rich will fight back as a political force in time of deflation to drag onto their status as long as they could.

We should have let all the banks go bankrupcy and let the home prices drop to really affordable levels. But the banks wouldn’t let us and they are getting their ways. So like Japan, we will too have a very prolonged recovery process since the society can not efficiently clear the non-performing assets to restart again.

[XBoxBoy]

[quote=carlsbadworker]The way I look at, deflation is really bad for the rich people (snip). (On the other hand, inflation is bad for ordinary folks
[/quote]

I think this is a really bad way to view things. Deflation is really bad for those who own assets and for people who owe lots of money.

Think about that for a minute. The asset holders are probably wealthy, but the ones who owe lots of money are just as likely to be poor or middle class as wealthy.

Conversely, deflation is good for those who have lots of savings or have few if any debts and people on fixed income. Again, think about it. The ones who are likely to have savings are probably wealthier, but those will little debt could be anywhere on the spectrum, and those on fixed income are usually retired or on disability (generally not what I think of as wealthy).

So, it seems to me that trying to define this issue in terms of class is fairly unsupportable when you think it through.

XBoxBoy

[XBoxBoy]

[quote=carlsbadworker]The way I look at, deflation is really bad for the rich people (snip). (On the other hand, inflation is bad for ordinary folks
[/quote]

I think this is a really bad way to view things. Deflation is really bad for those who own assets and for people who owe lots of money.

Think about that for a minute. The asset holders are probably wealthy, but the ones who owe lots of money are just as likely to be poor or middle class as wealthy.

Conversely, deflation is good for those who have lots of savings or have few if any debts and people on fixed income. Again, think about it. The ones who are likely to have savings are probably wealthier, but those will little debt could be anywhere on the spectrum, and those on fixed income are usually retired or on disability (generally not what I think of as wealthy).

So, it seems to me that trying to define this issue in terms of class is fairly unsupportable when you think it through.

XBoxBoy

[XBoxBoy]

[quote=carlsbadworker]The way I look at, deflation is really bad for the rich people (snip). (On the other hand, inflation is bad for ordinary folks
[/quote]

I think this is a really bad way to view things. Deflation is really bad for those who own assets and for people who owe lots of money.

Think about that for a minute. The asset holders are probably wealthy, but the ones who owe lots of money are just as likely to be poor or middle class as wealthy.

Conversely, deflation is good for those who have lots of savings or have few if any debts and people on fixed income. Again, think about it. The ones who are likely to have savings are probably wealthier, but those will little debt could be anywhere on the spectrum, and those on fixed income are usually retired or on disability (generally not what I think of as wealthy).

So, it seems to me that trying to define this issue in terms of class is fairly unsupportable when you think it through.

XBoxBoy

[XBoxBoy]

[quote=carlsbadworker]The way I look at, deflation is really bad for the rich people (snip). (On the other hand, inflation is bad for ordinary folks
[/quote]

I think this is a really bad way to view things. Deflation is really bad for those who own assets and for people who owe lots of money.

Think about that for a minute. The asset holders are probably wealthy, but the ones who owe lots of money are just as likely to be poor or middle class as wealthy.

Conversely, deflation is good for those who have lots of savings or have few if any debts and people on fixed income. Again, think about it. The ones who are likely to have savings are probably wealthier, but those will little debt could be anywhere on the spectrum, and those on fixed income are usually retired or on disability (generally not what I think of as wealthy).

So, it seems to me that trying to define this issue in terms of class is fairly unsupportable when you think it through.

XBoxBoy

[XBoxBoy]

[quote=carlsbadworker]The way I look at, deflation is really bad for the rich people (snip). (On the other hand, inflation is bad for ordinary folks
[/quote]

I think this is a really bad way to view things. Deflation is really bad for those who own assets and for people who owe lots of money.

Think about that for a minute. The asset holders are probably wealthy, but the ones who owe lots of money are just as likely to be poor or middle class as wealthy.

Conversely, deflation is good for those who have lots of savings or have few if any debts and people on fixed income. Again, think about it. The ones who are likely to have savings are probably wealthier, but those will little debt could be anywhere on the spectrum, and those on fixed income are usually retired or on disability (generally not what I think of as wealthy).

So, it seems to me that trying to define this issue in terms of class is fairly unsupportable when you think it through.

XBoxBoy

[davelj]

I don’t know. It’s a good idea in theory. But I’m not sure if that keeps people who would otherwise default (because they’re too far underwater to want to stay) wanting to stay in their homes.

But, I don’t know.

[davelj]

I don’t know. It’s a good idea in theory. But I’m not sure if that keeps people who would otherwise default (because they’re too far underwater to want to stay) wanting to stay in their homes.

But, I don’t know.

[davelj]

I don’t know. It’s a good idea in theory. But I’m not sure if that keeps people who would otherwise default (because they’re too far underwater to want to stay) wanting to stay in their homes.

But, I don’t know.

[davelj]

I don’t know. It’s a good idea in theory. But I’m not sure if that keeps people who would otherwise default (because they’re too far underwater to want to stay) wanting to stay in their homes.

But, I don’t know.

[Author]

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