[bsrsharma]

Someone explain to me please: NetBank was never known for its strength or longevity. Why would anyone keep more than FDIC limits there? You would think anyone who handles 6-figure cash has more brains than that, right?

[bsrsharma]

HereWeGo,

Borat has written a good explanation. FED WANTS controlled decent. That is the only way to balance the trade. But they have to be careful not to cause a panic and stall. It is like landing an airplane – you want to glide and not fall down. BB DID not create any of the crises the nation is in today; he can only attempt to fix the problems. They are all very mindful of exchange rates with the rest of the world, commodity prices etc., Knowing all that, they have to carefully lower the $ at about 6% p.a. max till trade is balanced and we no longer need huge capital imports for consumption. It may need 10 years or 20 years – but it has to be done.

[bsrsharma]

Fed doesn't really care about the value of the dollar with respect to foreign currencies

Not True. Exchange rates are important indices that point to the value of US $. FED's primary mission is to preserve that value. { Without value preservation, paper money is just paper and not money anymore }

[bsrsharma]

Applicable to Jeopardy & Wheel-of-Fortune also?

[bsrsharma]

How low can she go??

39? 19? … When exporting is more profitable than importing is the proper answer. We have ways to go before that. When investors start asking "it costs how much to hire a Chinese/Korean/Mexican/etc.," and then say "wow, that is too much. Let us move the production from those places to  Alabama/Oklahoma/etc., and reduce the cost "

[bsrsharma]

what a shame…good job Mr. Bernake!

No shame; That is THE intention. BB wants you to shop in US and attract Canadians to shop in US too.

[bsrsharma]

CB: See http://www.rsfassociation.org/pages/cove.html

{The original meaning of the word is an agreement with God. But here it is used as a lofty term for a contract.

Genesis 15
God’s Covenant With Abram
1 After this, the word of the LORD came to Abram in a vision:
“Do not be afraid, Abram.
I am your shield, [a]
your very great reward. [b] ”
2 But Abram said, “O Sovereign LORD, what can you give me since I remain childless and the one who will inherit [c] my estate is Eliezer of Damascus?” 3 And Abram said, “You have given me no children; so a servant in my household will be my heir.”

4 Then the word of the LORD came to him: “This man will not be your heir, but a son coming from your own body will be your heir.” 5 He took him outside and said, “Look up at the heavens and count the stars—if indeed you can count them.” Then he said to him, “So shall your offspring be.”

6 Abram believed the LORD, and he credited it to him as righteousness.

7 He also said to him, “I am the LORD, who brought you out of Ur of the Chaldeans to give you this land to take possession of it.”

8 But Abram said, “O Sovereign LORD, how can I know that I will gain possession of it?”

9 So the LORD said to him, “Bring me a heifer, a goat and a ram, each three years old, along with a dove and a young pigeon.”

10 Abram brought all these to him, cut them in two and arranged the halves opposite each other; the birds, however, he did not cut in half. 11 Then birds of prey came down on the carcasses, but Abram drove them away.

12 As the sun was setting, Abram fell into a deep sleep, and a thick and dreadful darkness came over him. 13 Then the LORD said to him, “Know for certain that your descendants will be strangers in a country not their own, and they will be enslaved and mistreated four hundred years. 14 But I will punish the nation they serve as slaves, and afterward they will come out with great possessions. 15 You, however, will go to your fathers in peace and be buried at a good old age. 16 In the fourth generation your descendants will come back here, for the sin of the Amorites has not yet reached its full measure.”

17 When the sun had set and darkness had fallen, a smoking firepot with a blazing torch appeared and passed between the pieces. 18 On that day the LORD made a covenant with Abram and said, “To your descendants I give this land, from the river [d] of Egypt to the great river, the Euphrates- 19 the land of the Kenites, Kenizzites, Kadmonites, 20 Hittites, Perizzites, Rephaites, 21 Amorites, Canaanites, Girgashites and Jebusites.”

}

[bsrsharma]

TG:

There is much statistical evidence that affordable family formation costs have been a major driver in pushing many “native born U.S. Citizen families” (code word for “White” folks?), especially in the lower middle class and below, from Blue states to Red states. This has created a vacuum for lower wage jobs (the category now labeled “Jobs Americans Won’t Do”) which in turn is sucking illegal immigrants into this country. This is a self-reinforcing cycle that will eventually make majority of Blue States Hispanic. The problem is, they have lower incomes and hence will drag down on tax receipts and lower the quality public services. So, the high housing costs, especially in Blue States, are causing a major National transformation. (To put it harshly, If US should not become another Mexico, housing costs have to come down)

[bsrsharma]

Actually, I saw a report from “The Economist”, that puts Eastern Europe (and Russia to a smaller extent) in the same high growth category as China & India. I think the Eastern Europeans are getting the outsourced industries & some services from Western European nations (similar to our relation with China/Mexico/India etc.,). Probably in another 20 years they will be so integrated as to become just “Europeans”. (By then we will be “North Americans” or “Camerixans”?)

[bsrsharma]

Cashman: I gather you are in LA area. After the recent FED actions I share your thoughts: FED will not allow any kind of depression scenario to repeat. All such risks will be eliminated by sufficiently inflating the currency to make idiots of savers like you and me. My thinking, for anyone with multi-million $ in cash, is to invest in prime real estate in the main international gateway port cities (LA/SF/SEA/NY/Boston etc). I don’t think SD fits properly into the list. The reasons are exactly what you have said – FED will devalue the $ to unburden our debts, public & private. With the cheap $, prime property in these international cities will be juicy targets for foreigners. When $ becomes cheap, not just Chinese, but Japanese, Koreans, Europeans, South Americans, Rich Mexicans will all like to buy property here.

Would you like to tell what ties you down to Southern California? I am wondering if your investment activities (assuming in Real Estate) in non-bubble areas may be less riskier.

[bsrsharma]

feel the pain of a weaker dollar

My son spent a couple of weeks in Europe this summer and I learnt what it feels to be poor. When $200 vanishes from your wallet in a day and you don't even know. Same when I was in Japan in the nineties. Spent cash so fast that I almost figured out how to use (Japanese) ATM blindfolded. We should start seeing similar things here in a few years.

[bsrsharma]

From http://www.realtytrac.com/ContentManagement/RealtyTracLibrary.aspx?&ItemID=3233&accnt=64953

“Nevada continued to register the nation’s highest state foreclosure rate, one foreclosure filing for every 165 households — more than three times the national average. The state reported 6,197 foreclosure filings during the month, a 21 percent increase from the previous month and more than triple the number reported in August 2006.”

I think Nevada is somewhat special. Many of those homes are probably not primary residences. So, the secondary impact may be less.

I think a real crisis is:

“California’s foreclosure rate jumped to second highest among the states thanks to a 48 percent month-over-month spike in foreclosure activity. The state reported 57,875 foreclosure filings during the month, a foreclosure rate of one foreclosure filing for every 224 households — more than twice the national average.”

[bsrsharma]

Raptorduck: Can you tell why you preferred to move to San Diego for such a big purchase? I thought, if you want to buy a multi-million $ property, New England has some fine high class properties (miniature “Hearst Castles”). I think the South also has some fine estate property (if you hate cold). When I drove through RSF, it felt more upper middle class than “Hearst Castle” like. If one were to buy something for multi-millions, I think a fair degree of privacy, like you get with a a couple of hundred acres of grounds, is reasonable to expect. paying so much for a one acre lot seems excessive.

[bsrsharma]

$300k would be considered expensive to me if rates goes up to 10%.

75K down payment

225K Mortgage @ 10% = 22.5K per year , about $2000 p.m.

Should be affordable at family income of $140K per year.

{Anyway, I was commenting on the expected price when prices stabilize.} 

 

[bsrsharma]

Actually I consider August 17 as “the” moment. So, it is not yet 3 months in my calender. Now, even @ half time, the game looks interesting enough. The right time for your survey is around Thanksgiving-Christmas-New Year. By then, there will be enough data to extrapolate for next year. So far, I consider the damage is smaller than expected. My scale is rather simple. Less than 5% unemployment = Good, 5 – 6%: Moderately bad; More than 7% = Really bad. On that scale, it is still good time now.

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