[davelj]

[quote=CA renter][quote:davelj][quote:CA renter]Thanks for your response, Dave.

It just seems like it would be easier to manage in a stagnant/falling interest rate environment, not so easy in a rising rate environment.[/quote]

Why does it “seem” that way? (Because it’s your preference?) Please explain.[/quote]

It seems that it would be easier to manage a portfolio of loans in a falling rate environment because the borrowers who were likely to default would be more able to refinance to lower-rate loans, eliminating **some** of the default risk (to the new lender) as their monthly payments would go down. The original lender would be made whole by the refinance, so potentially lower/no losses there. Additionally, asset prices would likely be higher so that they would have the equity to refinance (yes, there are other variables).

It would also be easier to manage because the higher-rate loans could be sold off for a better price if the lender thought the default risk was greater than the benefit of holding those higher-rate loans.

Also, assuming the mortgages had rates that were fixed at those higher rates, the lenders could borrow at ever-lower costs in a falling rate environment, increasing their spread.

Essentially, I would personally prefer to hold and manage bonds in a falling rate environment, rather than a rising rate environment.

Yes, the counterparty risk on those swaps is also a great concern, IMHO. One thing I do NOT like about credit swaps (interest rate or default swaps), is that it distorts the price of money in the open market. If the swaps are not traded on the open market, and/or if the price of swaps (and swaps on swaps) is not somehow made transparent, it masks the price of risk in the open market, which increases that “systemic risk” that everyone supposedly worries about.[/quote]

Ah, I thought you were specifically talking about the asset-liability/swap portion of the portfolio management process… which is no easier or harder if rates are rising are falling. But, yes, I’d say the CREDIT COST portion of the process is more difficult if rates are rising, but recall that rents, inflation and interest rates have a very high correlation. If rates are rising there’s a very good chance that rents are rising (as they are beginning to do in the multi-family sector)… which makes home ownership look more attractive because you can lock in your cost of housing. Go back at look at housing prices and rents during the 70s. What you’ll find is that prices continued to rise as rates (and rents) rose dramatically. Now, if rates increased by 200 bps in one year there might be an issue, but if it takes 2 or 3 years I don’t think it’ll be a big deal because most of the excess inventory will have been cleared out.

It is far easier to manipulate the value of credit default swaps than interest rate swaps. The latter are far more straightforward from an accounting standpoint and have been around for a couple of decades now. There’s always risk but I’m not overly concerned about them.

[davelj]

[quote=CA renter][quote:davelj][quote:CA renter]Thanks for your response, Dave.

It just seems like it would be easier to manage in a stagnant/falling interest rate environment, not so easy in a rising rate environment.[/quote]

Why does it “seem” that way? (Because it’s your preference?) Please explain.[/quote]

It seems that it would be easier to manage a portfolio of loans in a falling rate environment because the borrowers who were likely to default would be more able to refinance to lower-rate loans, eliminating **some** of the default risk (to the new lender) as their monthly payments would go down. The original lender would be made whole by the refinance, so potentially lower/no losses there. Additionally, asset prices would likely be higher so that they would have the equity to refinance (yes, there are other variables).

It would also be easier to manage because the higher-rate loans could be sold off for a better price if the lender thought the default risk was greater than the benefit of holding those higher-rate loans.

Also, assuming the mortgages had rates that were fixed at those higher rates, the lenders could borrow at ever-lower costs in a falling rate environment, increasing their spread.

Essentially, I would personally prefer to hold and manage bonds in a falling rate environment, rather than a rising rate environment.

Yes, the counterparty risk on those swaps is also a great concern, IMHO. One thing I do NOT like about credit swaps (interest rate or default swaps), is that it distorts the price of money in the open market. If the swaps are not traded on the open market, and/or if the price of swaps (and swaps on swaps) is not somehow made transparent, it masks the price of risk in the open market, which increases that “systemic risk” that everyone supposedly worries about.[/quote]

Ah, I thought you were specifically talking about the asset-liability/swap portion of the portfolio management process… which is no easier or harder if rates are rising are falling. But, yes, I’d say the CREDIT COST portion of the process is more difficult if rates are rising, but recall that rents, inflation and interest rates have a very high correlation. If rates are rising there’s a very good chance that rents are rising (as they are beginning to do in the multi-family sector)… which makes home ownership look more attractive because you can lock in your cost of housing. Go back at look at housing prices and rents during the 70s. What you’ll find is that prices continued to rise as rates (and rents) rose dramatically. Now, if rates increased by 200 bps in one year there might be an issue, but if it takes 2 or 3 years I don’t think it’ll be a big deal because most of the excess inventory will have been cleared out.

It is far easier to manipulate the value of credit default swaps than interest rate swaps. The latter are far more straightforward from an accounting standpoint and have been around for a couple of decades now. There’s always risk but I’m not overly concerned about them.

[davelj]

[quote=CA renter][quote:davelj][quote:CA renter]Thanks for your response, Dave.

It just seems like it would be easier to manage in a stagnant/falling interest rate environment, not so easy in a rising rate environment.[/quote]

Why does it “seem” that way? (Because it’s your preference?) Please explain.[/quote]

It seems that it would be easier to manage a portfolio of loans in a falling rate environment because the borrowers who were likely to default would be more able to refinance to lower-rate loans, eliminating **some** of the default risk (to the new lender) as their monthly payments would go down. The original lender would be made whole by the refinance, so potentially lower/no losses there. Additionally, asset prices would likely be higher so that they would have the equity to refinance (yes, there are other variables).

It would also be easier to manage because the higher-rate loans could be sold off for a better price if the lender thought the default risk was greater than the benefit of holding those higher-rate loans.

Also, assuming the mortgages had rates that were fixed at those higher rates, the lenders could borrow at ever-lower costs in a falling rate environment, increasing their spread.

Essentially, I would personally prefer to hold and manage bonds in a falling rate environment, rather than a rising rate environment.

Yes, the counterparty risk on those swaps is also a great concern, IMHO. One thing I do NOT like about credit swaps (interest rate or default swaps), is that it distorts the price of money in the open market. If the swaps are not traded on the open market, and/or if the price of swaps (and swaps on swaps) is not somehow made transparent, it masks the price of risk in the open market, which increases that “systemic risk” that everyone supposedly worries about.[/quote]

Ah, I thought you were specifically talking about the asset-liability/swap portion of the portfolio management process… which is no easier or harder if rates are rising are falling. But, yes, I’d say the CREDIT COST portion of the process is more difficult if rates are rising, but recall that rents, inflation and interest rates have a very high correlation. If rates are rising there’s a very good chance that rents are rising (as they are beginning to do in the multi-family sector)… which makes home ownership look more attractive because you can lock in your cost of housing. Go back at look at housing prices and rents during the 70s. What you’ll find is that prices continued to rise as rates (and rents) rose dramatically. Now, if rates increased by 200 bps in one year there might be an issue, but if it takes 2 or 3 years I don’t think it’ll be a big deal because most of the excess inventory will have been cleared out.

It is far easier to manipulate the value of credit default swaps than interest rate swaps. The latter are far more straightforward from an accounting standpoint and have been around for a couple of decades now. There’s always risk but I’m not overly concerned about them.

[davelj]

[quote=CA renter][quote:davelj][quote:CA renter]Thanks for your response, Dave.

It just seems like it would be easier to manage in a stagnant/falling interest rate environment, not so easy in a rising rate environment.[/quote]

Why does it “seem” that way? (Because it’s your preference?) Please explain.[/quote]

It seems that it would be easier to manage a portfolio of loans in a falling rate environment because the borrowers who were likely to default would be more able to refinance to lower-rate loans, eliminating **some** of the default risk (to the new lender) as their monthly payments would go down. The original lender would be made whole by the refinance, so potentially lower/no losses there. Additionally, asset prices would likely be higher so that they would have the equity to refinance (yes, there are other variables).

It would also be easier to manage because the higher-rate loans could be sold off for a better price if the lender thought the default risk was greater than the benefit of holding those higher-rate loans.

Also, assuming the mortgages had rates that were fixed at those higher rates, the lenders could borrow at ever-lower costs in a falling rate environment, increasing their spread.

Essentially, I would personally prefer to hold and manage bonds in a falling rate environment, rather than a rising rate environment.

Yes, the counterparty risk on those swaps is also a great concern, IMHO. One thing I do NOT like about credit swaps (interest rate or default swaps), is that it distorts the price of money in the open market. If the swaps are not traded on the open market, and/or if the price of swaps (and swaps on swaps) is not somehow made transparent, it masks the price of risk in the open market, which increases that “systemic risk” that everyone supposedly worries about.[/quote]

Ah, I thought you were specifically talking about the asset-liability/swap portion of the portfolio management process… which is no easier or harder if rates are rising are falling. But, yes, I’d say the CREDIT COST portion of the process is more difficult if rates are rising, but recall that rents, inflation and interest rates have a very high correlation. If rates are rising there’s a very good chance that rents are rising (as they are beginning to do in the multi-family sector)… which makes home ownership look more attractive because you can lock in your cost of housing. Go back at look at housing prices and rents during the 70s. What you’ll find is that prices continued to rise as rates (and rents) rose dramatically. Now, if rates increased by 200 bps in one year there might be an issue, but if it takes 2 or 3 years I don’t think it’ll be a big deal because most of the excess inventory will have been cleared out.

It is far easier to manipulate the value of credit default swaps than interest rate swaps. The latter are far more straightforward from an accounting standpoint and have been around for a couple of decades now. There’s always risk but I’m not overly concerned about them.

[davelj]

[quote=CA renter][quote=davelj]It assumes that EVENTUALLY the future losses will be much smaller than they are currently (probably a reasonable assumption, yes?). Whether that’s next year or in five years only affects the date we get our nominal dollars back, not “if” we get them back. Put another way, how the losses play out will not affect the nominal dollar loss (which will be zero), but rather the real dollar loss (which will be a positive number, no doubt, but a small fraction of the numbers we read about in the media).

I’ve addressed your spread issue before in a prior thread. I must assume that the folks running F&F have a reasonable grip on asset/liability management (their prior sins related to underwriting, as opposed to A/L management) and they are funding the long-term fixed rate portfolio with a combination of relatively long-term fixed-rate funding along with interest rate swaps (one Wall Street innovation that has been relatively helpful in aggregate). The rates on the floating portfolio will adjust as rates increase. So, I’m not implying that rising interest rates are a non-issue, but I’m not overly concerned about rising rates where the portfolio is concerned.[/quote]

Thanks for your response, Dave.

It just seems like it would be easier to manage in a stagnant/falling interest rate environment, not so easy in a rising rate environment.[/quote]

Why does it “seem” that way? (Because it’s your preference?) Please explain.

[quote=CA renter]
And, while I’m sure some safeguards have been instituted since 2008, can we assume those swaps will perform if rates become erratic and/or rise far higher and faster than people expect?[/quote]

There’s always counter-party risk. And anyone can conjure a positive or negative scenario out of just about anything.

[quote=CA renter]
One could argue that defaults will not return to historical averages if the economy ends up in a prolonged downturn, which is what I’m anticipating. IMHO, the FHA loans that have been made over the past few years will end up seeing 50%+ default rates. The GSEs will be better off, but I still think people are being optimistic in their default assumptions. I am, admittedly, an uber-bear.[/quote]

One could argue many things.

FHA serious delinquencies (90+ days delinquent) peaked at around 13% sometime back in 2009. They’re currently at 5.8%. I’ll take the under on your 50% prediction.

F&F serious delinquencies are currently at 4.5%, which is pretty bad (particularly considering how much has been charged off), but not End of Times bad.

Again, these aren’t pretty, but considering the crisis we’ve been through and the unemployment situation… I’m actually cautiously optimistic that these numbers are going to continue to very slowly improve over the next several quarters. I’m very slightly bullish on the economy for the next two years (which is a change from how I felt a year ago) and mildly bearish on housing (no change there). And, yes, we’ve got too much debt on many levels (govt. and household). But… we’ve hardly built anything at all for the last couple of years, hardly anything’s in the pipeline, so… general equilibrium will be upon us in the real estate sector within a few years. And once we start building again – even at a well-below-bubble level – employment will pick up in earnest. So, I think it’s going to be a tough few years and even when things begin to “look” better we have the secular debt issue to deal with, but… I simply don’t see the disaster you envision. I think most of it is behind us, although a mini-crisis or two wouldn’t surprise me going forward. (And the S&P at 900 wouldn’t surprise me either.)

Personally, I think it’s interesting that John Paulson’s (he of the Big Short) exposure to bank stocks is now second only to his position in gold. That’s a leveraged bet on recovery. I’m not saying he’s right; merely pointing out that he’s capable of changing his mind when the facts change.

[davelj]

[quote=CA renter][quote=davelj]It assumes that EVENTUALLY the future losses will be much smaller than they are currently (probably a reasonable assumption, yes?). Whether that’s next year or in five years only affects the date we get our nominal dollars back, not “if” we get them back. Put another way, how the losses play out will not affect the nominal dollar loss (which will be zero), but rather the real dollar loss (which will be a positive number, no doubt, but a small fraction of the numbers we read about in the media).

I’ve addressed your spread issue before in a prior thread. I must assume that the folks running F&F have a reasonable grip on asset/liability management (their prior sins related to underwriting, as opposed to A/L management) and they are funding the long-term fixed rate portfolio with a combination of relatively long-term fixed-rate funding along with interest rate swaps (one Wall Street innovation that has been relatively helpful in aggregate). The rates on the floating portfolio will adjust as rates increase. So, I’m not implying that rising interest rates are a non-issue, but I’m not overly concerned about rising rates where the portfolio is concerned.[/quote]

Thanks for your response, Dave.

It just seems like it would be easier to manage in a stagnant/falling interest rate environment, not so easy in a rising rate environment.[/quote]

Why does it “seem” that way? (Because it’s your preference?) Please explain.

[quote=CA renter]
And, while I’m sure some safeguards have been instituted since 2008, can we assume those swaps will perform if rates become erratic and/or rise far higher and faster than people expect?[/quote]

There’s always counter-party risk. And anyone can conjure a positive or negative scenario out of just about anything.

[quote=CA renter]
One could argue that defaults will not return to historical averages if the economy ends up in a prolonged downturn, which is what I’m anticipating. IMHO, the FHA loans that have been made over the past few years will end up seeing 50%+ default rates. The GSEs will be better off, but I still think people are being optimistic in their default assumptions. I am, admittedly, an uber-bear.[/quote]

One could argue many things.

FHA serious delinquencies (90+ days delinquent) peaked at around 13% sometime back in 2009. They’re currently at 5.8%. I’ll take the under on your 50% prediction.

F&F serious delinquencies are currently at 4.5%, which is pretty bad (particularly considering how much has been charged off), but not End of Times bad.

Again, these aren’t pretty, but considering the crisis we’ve been through and the unemployment situation… I’m actually cautiously optimistic that these numbers are going to continue to very slowly improve over the next several quarters. I’m very slightly bullish on the economy for the next two years (which is a change from how I felt a year ago) and mildly bearish on housing (no change there). And, yes, we’ve got too much debt on many levels (govt. and household). But… we’ve hardly built anything at all for the last couple of years, hardly anything’s in the pipeline, so… general equilibrium will be upon us in the real estate sector within a few years. And once we start building again – even at a well-below-bubble level – employment will pick up in earnest. So, I think it’s going to be a tough few years and even when things begin to “look” better we have the secular debt issue to deal with, but… I simply don’t see the disaster you envision. I think most of it is behind us, although a mini-crisis or two wouldn’t surprise me going forward. (And the S&P at 900 wouldn’t surprise me either.)

Personally, I think it’s interesting that John Paulson’s (he of the Big Short) exposure to bank stocks is now second only to his position in gold. That’s a leveraged bet on recovery. I’m not saying he’s right; merely pointing out that he’s capable of changing his mind when the facts change.

[davelj]

[quote=CA renter][quote=davelj]It assumes that EVENTUALLY the future losses will be much smaller than they are currently (probably a reasonable assumption, yes?). Whether that’s next year or in five years only affects the date we get our nominal dollars back, not “if” we get them back. Put another way, how the losses play out will not affect the nominal dollar loss (which will be zero), but rather the real dollar loss (which will be a positive number, no doubt, but a small fraction of the numbers we read about in the media).

I’ve addressed your spread issue before in a prior thread. I must assume that the folks running F&F have a reasonable grip on asset/liability management (their prior sins related to underwriting, as opposed to A/L management) and they are funding the long-term fixed rate portfolio with a combination of relatively long-term fixed-rate funding along with interest rate swaps (one Wall Street innovation that has been relatively helpful in aggregate). The rates on the floating portfolio will adjust as rates increase. So, I’m not implying that rising interest rates are a non-issue, but I’m not overly concerned about rising rates where the portfolio is concerned.[/quote]

Thanks for your response, Dave.

It just seems like it would be easier to manage in a stagnant/falling interest rate environment, not so easy in a rising rate environment.[/quote]

Why does it “seem” that way? (Because it’s your preference?) Please explain.

[quote=CA renter]
And, while I’m sure some safeguards have been instituted since 2008, can we assume those swaps will perform if rates become erratic and/or rise far higher and faster than people expect?[/quote]

There’s always counter-party risk. And anyone can conjure a positive or negative scenario out of just about anything.

[quote=CA renter]
One could argue that defaults will not return to historical averages if the economy ends up in a prolonged downturn, which is what I’m anticipating. IMHO, the FHA loans that have been made over the past few years will end up seeing 50%+ default rates. The GSEs will be better off, but I still think people are being optimistic in their default assumptions. I am, admittedly, an uber-bear.[/quote]

One could argue many things.

FHA serious delinquencies (90+ days delinquent) peaked at around 13% sometime back in 2009. They’re currently at 5.8%. I’ll take the under on your 50% prediction.

F&F serious delinquencies are currently at 4.5%, which is pretty bad (particularly considering how much has been charged off), but not End of Times bad.

Again, these aren’t pretty, but considering the crisis we’ve been through and the unemployment situation… I’m actually cautiously optimistic that these numbers are going to continue to very slowly improve over the next several quarters. I’m very slightly bullish on the economy for the next two years (which is a change from how I felt a year ago) and mildly bearish on housing (no change there). And, yes, we’ve got too much debt on many levels (govt. and household). But… we’ve hardly built anything at all for the last couple of years, hardly anything’s in the pipeline, so… general equilibrium will be upon us in the real estate sector within a few years. And once we start building again – even at a well-below-bubble level – employment will pick up in earnest. So, I think it’s going to be a tough few years and even when things begin to “look” better we have the secular debt issue to deal with, but… I simply don’t see the disaster you envision. I think most of it is behind us, although a mini-crisis or two wouldn’t surprise me going forward. (And the S&P at 900 wouldn’t surprise me either.)

Personally, I think it’s interesting that John Paulson’s (he of the Big Short) exposure to bank stocks is now second only to his position in gold. That’s a leveraged bet on recovery. I’m not saying he’s right; merely pointing out that he’s capable of changing his mind when the facts change.

[davelj]

[quote=CA renter][quote=davelj]It assumes that EVENTUALLY the future losses will be much smaller than they are currently (probably a reasonable assumption, yes?). Whether that’s next year or in five years only affects the date we get our nominal dollars back, not “if” we get them back. Put another way, how the losses play out will not affect the nominal dollar loss (which will be zero), but rather the real dollar loss (which will be a positive number, no doubt, but a small fraction of the numbers we read about in the media).

I’ve addressed your spread issue before in a prior thread. I must assume that the folks running F&F have a reasonable grip on asset/liability management (their prior sins related to underwriting, as opposed to A/L management) and they are funding the long-term fixed rate portfolio with a combination of relatively long-term fixed-rate funding along with interest rate swaps (one Wall Street innovation that has been relatively helpful in aggregate). The rates on the floating portfolio will adjust as rates increase. So, I’m not implying that rising interest rates are a non-issue, but I’m not overly concerned about rising rates where the portfolio is concerned.[/quote]

Thanks for your response, Dave.

It just seems like it would be easier to manage in a stagnant/falling interest rate environment, not so easy in a rising rate environment.[/quote]

Why does it “seem” that way? (Because it’s your preference?) Please explain.

[quote=CA renter]
And, while I’m sure some safeguards have been instituted since 2008, can we assume those swaps will perform if rates become erratic and/or rise far higher and faster than people expect?[/quote]

There’s always counter-party risk. And anyone can conjure a positive or negative scenario out of just about anything.

[quote=CA renter]
One could argue that defaults will not return to historical averages if the economy ends up in a prolonged downturn, which is what I’m anticipating. IMHO, the FHA loans that have been made over the past few years will end up seeing 50%+ default rates. The GSEs will be better off, but I still think people are being optimistic in their default assumptions. I am, admittedly, an uber-bear.[/quote]

One could argue many things.

FHA serious delinquencies (90+ days delinquent) peaked at around 13% sometime back in 2009. They’re currently at 5.8%. I’ll take the under on your 50% prediction.

F&F serious delinquencies are currently at 4.5%, which is pretty bad (particularly considering how much has been charged off), but not End of Times bad.

Again, these aren’t pretty, but considering the crisis we’ve been through and the unemployment situation… I’m actually cautiously optimistic that these numbers are going to continue to very slowly improve over the next several quarters. I’m very slightly bullish on the economy for the next two years (which is a change from how I felt a year ago) and mildly bearish on housing (no change there). And, yes, we’ve got too much debt on many levels (govt. and household). But… we’ve hardly built anything at all for the last couple of years, hardly anything’s in the pipeline, so… general equilibrium will be upon us in the real estate sector within a few years. And once we start building again – even at a well-below-bubble level – employment will pick up in earnest. So, I think it’s going to be a tough few years and even when things begin to “look” better we have the secular debt issue to deal with, but… I simply don’t see the disaster you envision. I think most of it is behind us, although a mini-crisis or two wouldn’t surprise me going forward. (And the S&P at 900 wouldn’t surprise me either.)

Personally, I think it’s interesting that John Paulson’s (he of the Big Short) exposure to bank stocks is now second only to his position in gold. That’s a leveraged bet on recovery. I’m not saying he’s right; merely pointing out that he’s capable of changing his mind when the facts change.

[davelj]

[quote=CA renter][quote=davelj]It assumes that EVENTUALLY the future losses will be much smaller than they are currently (probably a reasonable assumption, yes?). Whether that’s next year or in five years only affects the date we get our nominal dollars back, not “if” we get them back. Put another way, how the losses play out will not affect the nominal dollar loss (which will be zero), but rather the real dollar loss (which will be a positive number, no doubt, but a small fraction of the numbers we read about in the media).

I’ve addressed your spread issue before in a prior thread. I must assume that the folks running F&F have a reasonable grip on asset/liability management (their prior sins related to underwriting, as opposed to A/L management) and they are funding the long-term fixed rate portfolio with a combination of relatively long-term fixed-rate funding along with interest rate swaps (one Wall Street innovation that has been relatively helpful in aggregate). The rates on the floating portfolio will adjust as rates increase. So, I’m not implying that rising interest rates are a non-issue, but I’m not overly concerned about rising rates where the portfolio is concerned.[/quote]

Thanks for your response, Dave.

It just seems like it would be easier to manage in a stagnant/falling interest rate environment, not so easy in a rising rate environment.[/quote]

Why does it “seem” that way? (Because it’s your preference?) Please explain.

[quote=CA renter]
And, while I’m sure some safeguards have been instituted since 2008, can we assume those swaps will perform if rates become erratic and/or rise far higher and faster than people expect?[/quote]

There’s always counter-party risk. And anyone can conjure a positive or negative scenario out of just about anything.

[quote=CA renter]
One could argue that defaults will not return to historical averages if the economy ends up in a prolonged downturn, which is what I’m anticipating. IMHO, the FHA loans that have been made over the past few years will end up seeing 50%+ default rates. The GSEs will be better off, but I still think people are being optimistic in their default assumptions. I am, admittedly, an uber-bear.[/quote]

One could argue many things.

FHA serious delinquencies (90+ days delinquent) peaked at around 13% sometime back in 2009. They’re currently at 5.8%. I’ll take the under on your 50% prediction.

F&F serious delinquencies are currently at 4.5%, which is pretty bad (particularly considering how much has been charged off), but not End of Times bad.

Again, these aren’t pretty, but considering the crisis we’ve been through and the unemployment situation… I’m actually cautiously optimistic that these numbers are going to continue to very slowly improve over the next several quarters. I’m very slightly bullish on the economy for the next two years (which is a change from how I felt a year ago) and mildly bearish on housing (no change there). And, yes, we’ve got too much debt on many levels (govt. and household). But… we’ve hardly built anything at all for the last couple of years, hardly anything’s in the pipeline, so… general equilibrium will be upon us in the real estate sector within a few years. And once we start building again – even at a well-below-bubble level – employment will pick up in earnest. So, I think it’s going to be a tough few years and even when things begin to “look” better we have the secular debt issue to deal with, but… I simply don’t see the disaster you envision. I think most of it is behind us, although a mini-crisis or two wouldn’t surprise me going forward. (And the S&P at 900 wouldn’t surprise me either.)

Personally, I think it’s interesting that John Paulson’s (he of the Big Short) exposure to bank stocks is now second only to his position in gold. That’s a leveraged bet on recovery. I’m not saying he’s right; merely pointing out that he’s capable of changing his mind when the facts change.

[davelj]

[quote=bearishgurl] As a condition of sale of these first two complexes downtown (the only ones for many years), the first owners had to set aside a small percentage of any profit they made upon subsequent sale to the CDCC. Is this still the case now with the first owners of units in dtn complexes? [/quote]

I have no idea.

[quote=bearishgurl]

Did you purchase your new unit as a principal residence and do you work dtn, davelj?[/quote]

Yes and yes (although I own another unit that’s a rental).

[davelj]

[quote=bearishgurl] As a condition of sale of these first two complexes downtown (the only ones for many years), the first owners had to set aside a small percentage of any profit they made upon subsequent sale to the CDCC. Is this still the case now with the first owners of units in dtn complexes? [/quote]

I have no idea.

[quote=bearishgurl]

Did you purchase your new unit as a principal residence and do you work dtn, davelj?[/quote]

Yes and yes (although I own another unit that’s a rental).

[davelj]

[quote=bearishgurl] As a condition of sale of these first two complexes downtown (the only ones for many years), the first owners had to set aside a small percentage of any profit they made upon subsequent sale to the CDCC. Is this still the case now with the first owners of units in dtn complexes? [/quote]

I have no idea.

[quote=bearishgurl]

Did you purchase your new unit as a principal residence and do you work dtn, davelj?[/quote]

Yes and yes (although I own another unit that’s a rental).

[davelj]

[quote=bearishgurl] As a condition of sale of these first two complexes downtown (the only ones for many years), the first owners had to set aside a small percentage of any profit they made upon subsequent sale to the CDCC. Is this still the case now with the first owners of units in dtn complexes? [/quote]

I have no idea.

[quote=bearishgurl]

Did you purchase your new unit as a principal residence and do you work dtn, davelj?[/quote]

Yes and yes (although I own another unit that’s a rental).

[davelj]

[quote=bearishgurl] As a condition of sale of these first two complexes downtown (the only ones for many years), the first owners had to set aside a small percentage of any profit they made upon subsequent sale to the CDCC. Is this still the case now with the first owners of units in dtn complexes? [/quote]

I have no idea.

[quote=bearishgurl]

Did you purchase your new unit as a principal residence and do you work dtn, davelj?[/quote]

Yes and yes (although I own another unit that’s a rental).

[davelj]

[quote=CA renter][quote=davelj]That’s an imperfect but reasonably good analogy.

And the Uncle Sam that’s bailing us out is… Us. And the specific “Us” that’s bailing us out is principally comprised of taxpayers in the top 10% of income earners, who collectively pay 70% of all federal income taxes (including SS and Medicare). And federal income taxes + SS + Medicare + corporate taxes comprise over 95% of all federal revenue. Now, I’m not complaining about this, I’m merely pointing out that it’s principally the top income earners who are financing this bail out. Which in many ways makes sense as arguably they – collectively – are the principal beneficiaries.[/quote]

Of course, one could also argue that all the public employees who are being made the scapegoats for our “financial crisis” are the ones who will really end up paying for this bailout.[/quote]

The fact is that most public employees don’t earn enough as it is (to have a big enough tax bill) to pay for this bailout. What percentage of public employees earn over $75K/year? It’s probably not a huge number. Now, that doesn’t mean they’re not overpaid (including pension benefits, etc.) in aggregate. I’m sure that in some cases they are and in some cases they aren’t. But that’s an issue that’s going to ultimately be decided by taxpayers (and their representatives). And it seems pretty clear that the taxpayers want to reduce the overall public compensation burden. Now, that will come with reduced services – there’s no free lunch – but I suspect taxpayers will learn to live with that.

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