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JWM in SD
Participantthe problem with this scenario is wages. If a inflated assets stay inflated then how do people afford them? Its called pushing on a string. Japan tried that and it didn’t work. The only way is to Hyperinflate wages but how does the Fed get that $ into J6packs acct??? How? With global Outsourcing I don’t see tht happening. Also, H Inflation would cause Interst rates to skyrocket.
All of Helicopter drop crap is nonsense. Dollar hegemony must be protected. Otherwise, H Inflation leads to total debasement od USD and a new currency. Why is that bad? Well, because it also leada to a new political system. Proof: Weimer lead to Hitler coming into powr and the Nazi party ultimately causing a WWII which was just a natural sequal to unresolved issues in WWI.
This is not tinfoil hat stuff. This irrefutable. This is why I say that Bernanke does not give a crap about the value of someones SD condo.
Participantthat is intersting PR, but I think that position still ignores the fundamentals of the market. If I were the bank, I would want to know what the financial position of the assuming buyer is. Second, why would anyone with an ounce of common sense assume the heloc’ed loan value for some stupid FB who got themselves in trouble? I wouldn’t fund some else’s bad consumption decisions.
Participantthat is intersting PR, but I think that position still ignores the fundamentals of the market. If I were the bank, I would want to know what the financial position of the assuming buyer is. Second, why would anyone with an ounce of common sense assume the heloc’ed loan value for some stupid FB who got themselves in trouble? I wouldn’t fund some else’s bad consumption decisions.
Participant“As long as lenders are dumb enough to allow this, it will continue.”
And their customers like Merril Lynch will continue to allow them to do that??? I think not…no in fact I know they won’t because they sure as hell didn’t let New Century and Bear Stearns continue to sell them garbage rated and top shelf now did they? NO.
“At some point, if prices drop a lot, then even the homeowners who bought 10 years ago will get restless and call their congressman, and then B and/or C start to kick in.”
And then who is left to sell their house to because their wages have stagnated and now they are going to be taxed even more to death??? Tell me, who are boomers going to be sell their houses to when the prices drop and they demand that the Govt do what exactly? Hold a gun to every Gen X and Gen Y to buy an overpriced asset and become a debt slave? I’m not sure how that can be done exactly.
Your last assumption assumes that the Chinese won’t depeg the Yuan. That is a big assumption because their economy is choking on all of the dollars they are buying an putting treasuries.
Look PD, house prices are going to correct significantly no matter you and DaCounselor like to believe is in the offing to save it. I don’t know why this is so hard for certain people accept…well, other than those who are in mortgage debt up their eyeballs and waiting for that reset to finally do them in.
If it doesn’t, well then I will just keep on renting at half the cost of owning.
Participant“As long as lenders are dumb enough to allow this, it will continue.”
And their customers like Merril Lynch will continue to allow them to do that??? I think not…no in fact I know they won’t because they sure as hell didn’t let New Century and Bear Stearns continue to sell them garbage rated and top shelf now did they? NO.
“At some point, if prices drop a lot, then even the homeowners who bought 10 years ago will get restless and call their congressman, and then B and/or C start to kick in.”
And then who is left to sell their house to because their wages have stagnated and now they are going to be taxed even more to death??? Tell me, who are boomers going to be sell their houses to when the prices drop and they demand that the Govt do what exactly? Hold a gun to every Gen X and Gen Y to buy an overpriced asset and become a debt slave? I’m not sure how that can be done exactly.
Your last assumption assumes that the Chinese won’t depeg the Yuan. That is a big assumption because their economy is choking on all of the dollars they are buying an putting treasuries.
Look PD, house prices are going to correct significantly no matter you and DaCounselor like to believe is in the offing to save it. I don’t know why this is so hard for certain people accept…well, other than those who are in mortgage debt up their eyeballs and waiting for that reset to finally do them in.
If it doesn’t, well then I will just keep on renting at half the cost of owning.
Participant“My sense is that the smart money has already hit the doors and this is nothing other than a thinly veiled cash out. Just curious.”
That is what I’ve read on other economic blogs as well and it seems to fit all things considered.
Regarding Private Equity, I work for a well known start up in San Diego and I’ve heard the CFO talk about private equity with some degree of disdain. Basically, what he said was that if you as a business owner / entrepreneur get involved with Private Equity guys, then don’t expect to make much money (ROI). In all liklihood, those leaches have financially engineered the deal such that they receive most of the benefits of sucess and little or no risk if failure ensues.
Participant“My sense is that the smart money has already hit the doors and this is nothing other than a thinly veiled cash out. Just curious.”
That is what I’ve read on other economic blogs as well and it seems to fit all things considered.
Regarding Private Equity, I work for a well known start up in San Diego and I’ve heard the CFO talk about private equity with some degree of disdain. Basically, what he said was that if you as a business owner / entrepreneur get involved with Private Equity guys, then don’t expect to make much money (ROI). In all liklihood, those leaches have financially engineered the deal such that they receive most of the benefits of sucess and little or no risk if failure ensues.
ParticipantAh yes, Merril Lynch. The Grim Reaper of subprime chop shops in OC. Gee, is it any wonder they pulled the plug on New Century? Guess not given this statement from the newsletter.
ParticipantAh yes, Merril Lynch. The Grim Reaper of subprime chop shops in OC. Gee, is it any wonder they pulled the plug on New Century? Guess not given this statement from the newsletter.
Participant“So which of the above 3 is least likely to hurt current homeowners?”
Depends on which homeowners you are talking about. Is it the homeowners who have owned for 10 plus years and have not heloced their home to death? Or, is those who have and more recent bubble run up buyers (2003 to 2006)? If it’s the latter, then so what? The reality is that they are not a majority. However, prices are set at the margins. I guess what I’m saying is that you are missing another choice. Choice D. Bernanke lets the bubble assets deflate on their own. No inflation to deal with, no interest rate hikes to deal with and no wage inflation issues. In my opinion, that is the easiest thing for them to do while still protecting the dollar.
Participant“So which of the above 3 is least likely to hurt current homeowners?”
Depends on which homeowners you are talking about. Is it the homeowners who have owned for 10 plus years and have not heloced their home to death? Or, is those who have and more recent bubble run up buyers (2003 to 2006)? If it’s the latter, then so what? The reality is that they are not a majority. However, prices are set at the margins. I guess what I’m saying is that you are missing another choice. Choice D. Bernanke lets the bubble assets deflate on their own. No inflation to deal with, no interest rate hikes to deal with and no wage inflation issues. In my opinion, that is the easiest thing for them to do while still protecting the dollar.
ParticipantOne thing I’ve learned from trading stocks for a while: Volume always precedes price…ALWAYS.
ParticipantOne thing I’ve learned from trading stocks for a while: Volume always precedes price…ALWAYS.
Participant“You will not get your predicted r/e financial Armageddon unless unemployment returns to 90s levels or worse.”
Scruffy, this has already been adressed by Rich. I asked you where most of the job growth in SoCal has been in the past several years. You did address that. Ask somebody who used to work at New Century how they feel about employment in the RE business right now.
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