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peterb
ParticipantDid I write “depression”. I dont see it. But I do think we have tremendous amounts of supply over-hang right now. Cars, Houses, shipping capacity, products from China, etc…supply destruction is way behind demand destruction. And, I think it is a “panic” that’s how these things start. But the panic is brought on by the reality of the numbers being way off predictions. Then comes the confirmation of demand destruction and the further re-adjusting of the earnings, etc…when demand keeps dwindling down. People repair cars and dont buy new ones. Keep renting a house and not buying, etc….With lay-offs ramping up and unemployement already hitting very high numbers, this trend will have legs for at least another year. When peoples livelyhoods are threatened, they go into “bunker” mode. And that’s starting to happen. Savings has started to tick-up for the first time in 15 or 20 years.
If you examine the historical mortgage interest rate charts, I think you’ll see that the rates were indeed lowest at the nadir of the last two recessions. 1993 and the end of 2002. And they were climbing in the time periods leading up to these periods. Perhaps I’m not seeing it the way you are? Not sure. Also, data from the great depression indicates that personal loan rates were very cheap in 1932 and 33. Corporate borrowing was expensive as they kept defaulting and had very sketchy collateral back-up.
A further note: If you agree that the stock market portends the functioning economy, then this latest set of drops in 2008 suggest that we are at the begining of a strong contractionary period. And they tend to run from 2 to 3 years these days. I think, if we’re lucky, we’ll get the usual this time around. But this looks like world failure to me. Every major industry in the US is in peril and housing accross the country getting hammered. This looks global and bad, when’s the last time we could say this? The hard contractions were usually sectored to specific areas, industries or countries in the recent past. Keep in mind that from 2002 to 2007 saw every asset class rise substantially in price. When was the last time that happened? Food for thought.
ParticipantDid I write “depression”. I dont see it. But I do think we have tremendous amounts of supply over-hang right now. Cars, Houses, shipping capacity, products from China, etc…supply destruction is way behind demand destruction. And, I think it is a “panic” that’s how these things start. But the panic is brought on by the reality of the numbers being way off predictions. Then comes the confirmation of demand destruction and the further re-adjusting of the earnings, etc…when demand keeps dwindling down. People repair cars and dont buy new ones. Keep renting a house and not buying, etc….With lay-offs ramping up and unemployement already hitting very high numbers, this trend will have legs for at least another year. When peoples livelyhoods are threatened, they go into “bunker” mode. And that’s starting to happen. Savings has started to tick-up for the first time in 15 or 20 years.
If you examine the historical mortgage interest rate charts, I think you’ll see that the rates were indeed lowest at the nadir of the last two recessions. 1993 and the end of 2002. And they were climbing in the time periods leading up to these periods. Perhaps I’m not seeing it the way you are? Not sure. Also, data from the great depression indicates that personal loan rates were very cheap in 1932 and 33. Corporate borrowing was expensive as they kept defaulting and had very sketchy collateral back-up.
A further note: If you agree that the stock market portends the functioning economy, then this latest set of drops in 2008 suggest that we are at the begining of a strong contractionary period. And they tend to run from 2 to 3 years these days. I think, if we’re lucky, we’ll get the usual this time around. But this looks like world failure to me. Every major industry in the US is in peril and housing accross the country getting hammered. This looks global and bad, when’s the last time we could say this? The hard contractions were usually sectored to specific areas, industries or countries in the recent past. Keep in mind that from 2002 to 2007 saw every asset class rise substantially in price. When was the last time that happened? Food for thought.
ParticipantDid I write “depression”. I dont see it. But I do think we have tremendous amounts of supply over-hang right now. Cars, Houses, shipping capacity, products from China, etc…supply destruction is way behind demand destruction. And, I think it is a “panic” that’s how these things start. But the panic is brought on by the reality of the numbers being way off predictions. Then comes the confirmation of demand destruction and the further re-adjusting of the earnings, etc…when demand keeps dwindling down. People repair cars and dont buy new ones. Keep renting a house and not buying, etc….With lay-offs ramping up and unemployement already hitting very high numbers, this trend will have legs for at least another year. When peoples livelyhoods are threatened, they go into “bunker” mode. And that’s starting to happen. Savings has started to tick-up for the first time in 15 or 20 years.
If you examine the historical mortgage interest rate charts, I think you’ll see that the rates were indeed lowest at the nadir of the last two recessions. 1993 and the end of 2002. And they were climbing in the time periods leading up to these periods. Perhaps I’m not seeing it the way you are? Not sure. Also, data from the great depression indicates that personal loan rates were very cheap in 1932 and 33. Corporate borrowing was expensive as they kept defaulting and had very sketchy collateral back-up.
A further note: If you agree that the stock market portends the functioning economy, then this latest set of drops in 2008 suggest that we are at the begining of a strong contractionary period. And they tend to run from 2 to 3 years these days. I think, if we’re lucky, we’ll get the usual this time around. But this looks like world failure to me. Every major industry in the US is in peril and housing accross the country getting hammered. This looks global and bad, when’s the last time we could say this? The hard contractions were usually sectored to specific areas, industries or countries in the recent past. Keep in mind that from 2002 to 2007 saw every asset class rise substantially in price. When was the last time that happened? Food for thought.
December 12, 2008 at 6:12 PM in reply to: How high goes the rally on Obama infrastructure spending? #315007ParticipantHWG – I’m with you on this one. I think deflation has got real legs. People on this site that are saying it’s a “panic” or that things will pick-up, etc…. are not thinking through what has to happen to clean up this mess. It takes years. This is the first year of a recession and they usually have a couple years before they really capitulate. Usually about 2 or so years after the first big drop in the markets. So we got a ways to go IMO.
December 12, 2008 at 6:12 PM in reply to: How high goes the rally on Obama infrastructure spending? #315363ParticipantHWG – I’m with you on this one. I think deflation has got real legs. People on this site that are saying it’s a “panic” or that things will pick-up, etc…. are not thinking through what has to happen to clean up this mess. It takes years. This is the first year of a recession and they usually have a couple years before they really capitulate. Usually about 2 or so years after the first big drop in the markets. So we got a ways to go IMO.
December 12, 2008 at 6:12 PM in reply to: How high goes the rally on Obama infrastructure spending? #315396ParticipantHWG – I’m with you on this one. I think deflation has got real legs. People on this site that are saying it’s a “panic” or that things will pick-up, etc…. are not thinking through what has to happen to clean up this mess. It takes years. This is the first year of a recession and they usually have a couple years before they really capitulate. Usually about 2 or so years after the first big drop in the markets. So we got a ways to go IMO.
December 12, 2008 at 6:12 PM in reply to: How high goes the rally on Obama infrastructure spending? #315419ParticipantHWG – I’m with you on this one. I think deflation has got real legs. People on this site that are saying it’s a “panic” or that things will pick-up, etc…. are not thinking through what has to happen to clean up this mess. It takes years. This is the first year of a recession and they usually have a couple years before they really capitulate. Usually about 2 or so years after the first big drop in the markets. So we got a ways to go IMO.
December 12, 2008 at 6:12 PM in reply to: How high goes the rally on Obama infrastructure spending? #315490ParticipantHWG – I’m with you on this one. I think deflation has got real legs. People on this site that are saying it’s a “panic” or that things will pick-up, etc…. are not thinking through what has to happen to clean up this mess. It takes years. This is the first year of a recession and they usually have a couple years before they really capitulate. Usually about 2 or so years after the first big drop in the markets. So we got a ways to go IMO.
ParticipantWe’re in a massive deflationary cycle right now. $30T lost in the markets, $3T lost in housing equity, $50T or more in CDS,etc…. I count credit as part of the money supply. So we’ve lost a huge amount of it in the last year. Look around. Commodities down about 75% accross the board. Homes around the country are about 25% down. Prices are coming down on just about everything. People are losing jobs. All this means less US$ running around.The US$ gaining strength. It’s in higher demand. Banks make loans. It’s a big part of their business structure. The demand for mortgages should be declining. Rates tend to go up in a growth cycle and down in a bust.There’s far less demand for debt as economies contract. The spread is very large right now. But as the banks see that getting return will be more difficult, they will have to lower rates. And inflation wont be the big concern any longer. Risk needs to be mitigated since defaults are now the big concern. But this can be done with higher down payments and more careful documentation work.
ECRI is a respected think tank of economic analysis. They track cost and growth. Look them up. Very conservative organization. They are about to call deflation. About 3 months late in my estimation, but they are extremely careful about this sort of thing as they have a big reputation to protect.
what do I know. I just report what I’m seeing.ParticipantWe’re in a massive deflationary cycle right now. $30T lost in the markets, $3T lost in housing equity, $50T or more in CDS,etc…. I count credit as part of the money supply. So we’ve lost a huge amount of it in the last year. Look around. Commodities down about 75% accross the board. Homes around the country are about 25% down. Prices are coming down on just about everything. People are losing jobs. All this means less US$ running around.The US$ gaining strength. It’s in higher demand. Banks make loans. It’s a big part of their business structure. The demand for mortgages should be declining. Rates tend to go up in a growth cycle and down in a bust.There’s far less demand for debt as economies contract. The spread is very large right now. But as the banks see that getting return will be more difficult, they will have to lower rates. And inflation wont be the big concern any longer. Risk needs to be mitigated since defaults are now the big concern. But this can be done with higher down payments and more careful documentation work.
ECRI is a respected think tank of economic analysis. They track cost and growth. Look them up. Very conservative organization. They are about to call deflation. About 3 months late in my estimation, but they are extremely careful about this sort of thing as they have a big reputation to protect.
what do I know. I just report what I’m seeing.ParticipantWe’re in a massive deflationary cycle right now. $30T lost in the markets, $3T lost in housing equity, $50T or more in CDS,etc…. I count credit as part of the money supply. So we’ve lost a huge amount of it in the last year. Look around. Commodities down about 75% accross the board. Homes around the country are about 25% down. Prices are coming down on just about everything. People are losing jobs. All this means less US$ running around.The US$ gaining strength. It’s in higher demand. Banks make loans. It’s a big part of their business structure. The demand for mortgages should be declining. Rates tend to go up in a growth cycle and down in a bust.There’s far less demand for debt as economies contract. The spread is very large right now. But as the banks see that getting return will be more difficult, they will have to lower rates. And inflation wont be the big concern any longer. Risk needs to be mitigated since defaults are now the big concern. But this can be done with higher down payments and more careful documentation work.
ECRI is a respected think tank of economic analysis. They track cost and growth. Look them up. Very conservative organization. They are about to call deflation. About 3 months late in my estimation, but they are extremely careful about this sort of thing as they have a big reputation to protect.
what do I know. I just report what I’m seeing.ParticipantWe’re in a massive deflationary cycle right now. $30T lost in the markets, $3T lost in housing equity, $50T or more in CDS,etc…. I count credit as part of the money supply. So we’ve lost a huge amount of it in the last year. Look around. Commodities down about 75% accross the board. Homes around the country are about 25% down. Prices are coming down on just about everything. People are losing jobs. All this means less US$ running around.The US$ gaining strength. It’s in higher demand. Banks make loans. It’s a big part of their business structure. The demand for mortgages should be declining. Rates tend to go up in a growth cycle and down in a bust.There’s far less demand for debt as economies contract. The spread is very large right now. But as the banks see that getting return will be more difficult, they will have to lower rates. And inflation wont be the big concern any longer. Risk needs to be mitigated since defaults are now the big concern. But this can be done with higher down payments and more careful documentation work.
ECRI is a respected think tank of economic analysis. They track cost and growth. Look them up. Very conservative organization. They are about to call deflation. About 3 months late in my estimation, but they are extremely careful about this sort of thing as they have a big reputation to protect.
what do I know. I just report what I’m seeing.ParticipantWe’re in a massive deflationary cycle right now. $30T lost in the markets, $3T lost in housing equity, $50T or more in CDS,etc…. I count credit as part of the money supply. So we’ve lost a huge amount of it in the last year. Look around. Commodities down about 75% accross the board. Homes around the country are about 25% down. Prices are coming down on just about everything. People are losing jobs. All this means less US$ running around.The US$ gaining strength. It’s in higher demand. Banks make loans. It’s a big part of their business structure. The demand for mortgages should be declining. Rates tend to go up in a growth cycle and down in a bust.There’s far less demand for debt as economies contract. The spread is very large right now. But as the banks see that getting return will be more difficult, they will have to lower rates. And inflation wont be the big concern any longer. Risk needs to be mitigated since defaults are now the big concern. But this can be done with higher down payments and more careful documentation work.
ECRI is a respected think tank of economic analysis. They track cost and growth. Look them up. Very conservative organization. They are about to call deflation. About 3 months late in my estimation, but they are extremely careful about this sort of thing as they have a big reputation to protect.
what do I know. I just report what I’m seeing.December 12, 2008 at 1:09 PM in reply to: How high goes the rally on Obama infrastructure spending? #314857ParticipantTBT. If you time it right. Could be very good.
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