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Brian – I agree that liquidity is part of the problem with the lack of manufacturing and production…. but only a part. The other problem is lack of demand. When the housing bubble burst folks no longer felt as wealthy… so spending slowed. Add higher in employment than before the collapse and you have another factor killing off demand for those manufactured goods. The job market is just barely starting to recover.

As far as toxic assets eventually recovering… not so much with the mortgage backed securities. Foreclosures force a recognition of the loss. If enough houses foreclose that MBS will never be above water. The AIG credit default swaps paid off dollar for dollar to Goldman… those will never be anything but a loss.

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[quote=briansd1]

Looking back and punishing past crimes is not the primary focus and will not create jobs and growth.[/quote]
This is where you and I disagree.
Prosecuting bad acts and bad actors sends a message that these actions are not acceptable and will not be tolerated. Sweeping them under the rug provides no disincentive for future criminal acts.

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[quote=Allan from Fallbrook]
Your argument also avoids answering the focal question that Domo has also evaded up to this point: WHAT ABOUT THE ASSETS? If you were to take the balance sheet of the ECB and correctly value the assets, the ECB becomes effectively insolvent (I’m sure the Fed is in a similar predicament).

[/quote]

Forgetting the politics and back to the topic of inflation (or lack thereof)…

I read something a few weeks ago that made sense to me. With the fed doing the massive QE – which in theory should have an inflationary effect, why haven’t we seen massive inflation. The explanation I read was that the fed wasn’t *adding* to the currency, it was replacing the currency represented by the collapsed assets.

We know that banks have to have treasuries or other “dollar equivalents” at some percentage to meet capitalization requirements.

A lot of these dollar equivalents (or close to dollar equivalents) turned out to be toxic derivatives. (mortgage backed securities, bonds issued by AAA rated Lehman for example). So when the value of these assets collapsed, the banks sold them to the fed, and recapitalized. All that re infusion was not adding money to the system, is was restoring (and not 100% restoring) some of the money that was in the system before the financial collapse.

We still have a problem with the assets being worth crap… but it’s not in the private sector as much.

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Interesting.
He’s figured out how to show a post while being ignored.

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[quote=walterwhite]Why is the conventional wisdom to only refi when rate is down 1 percent?[/quote]

Conventional wisdom (up until the bubble) was that there were transaction costs associated with the refi, so you needed a big enough drop to recoup your transactions costs. (doc fees, appraisals).

The other factor is that when you refi- you restart the term of the loan… And there are arguments against doing that for small rate changes.

But these days you can actually get cash paid to you if you have the sweet spot of good credit, big enough mortgage that the brokers commission is big… I’ve watched a few coworkers refi over the past few years – and the size of the mortgage determines the cost of the refi (including negative cost.) My mortgage is small enough there’s no free refi for me. A coworker is at the top end of conventional/conforming… he was paid a few hundred bucks at closing.

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[quote=flu]

Added to ignore users.
[/quote]
Yep.

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[quote=afx114]Portlandia Dumpster Divers[/quote]
Love it.

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In college I had friends who lived near the vons (then safeway) and bigbear grocery stores on Adams Ave in (ab)Normal Heights.

They’d regularly dumpster dive the dumpsters near the loading docks. They’d make up big stews, soups, etc with the produce that was being tossed. They’d invite all their friends to dinner.

I didn’t do the actual diving, but I ate a lot of the food.

I’ve definitely trash picked. Furniture, etc… I’ve got a chair that I found in an alley in college… it’s a great chair. I’ve also got a pink mixmaster mixer – still works. Used it to make cookies last week.

Hey – reduce, reuse, recycle.

[UCGal]

From the lenders perspective – they would be lending to an unqualified borrower. If you don’t meet their criteria, then why would they loan to you. Especially since they already loaned to an apparently unqualified buyer who is now not making payments and in threat of foreclosure.

Why would they judge a borrower different in this scenario than if they were purchase borrower not assuming the loan.

Also – why would the bank make an exception on the loan assumption – which would set a precedence… Pretty risky.

I don’t normally side with banks. But in this case, I do.

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[quote=cvmom]Ninaprincess, I think you are smart. I just went through a job scare (they laid me off, but hired me back within a couple of weeks) and the fact that we live in a small-but-paid-off house allowed me to sleep at night during that difficult period. I am nearing 50, and definitely feel that I am no longer as marketable as I once was.

Don’t buy into this culture’s mantra of over-leveraging to buy a bunch of stuff you don’t really need!![/quote]
This!

Sure you lose the tax advantage. But you also aren’t paying interest… which is really improving your long term bottom line.

Middle aged workers (like me) are definitely more disposable in this current job climate. The mantra seems to be to lay off senior folks and hire fresh grads with no experience or outsource/offshore/inshore for lower cost. And the older you are – the harder it seems to get the next gig. The fact that my mortgage retirement is in site gives me comfort for the same reasons cvmom mentioned.

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[quote=SD Realtor]I would venture to say these flippers did well. Good crew and smal holding time usually equal success absent of major calamities.[/quote]
My gut agrees with you. They managed their timeline well and probably made a decent profit on this, especially if they didn’t have to pay full sellers agent commision.

It looks like the flippers are realtors.
http://www.fitproperties.com/aboutus.aspx

It helps the neighborhood. I have friends who live near there (on the next pocket canyon over… with similar view). These houses are a mix of fully fixed up show houses, and original owner, 1960’s classics. (In other words – very outdated and need updating.)

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[quote=ucodegen]
I suspect the purpose of the price is to start a ‘bidding war’. I think it is a little too early to do that, though that is a higher priced neighborhood. RE still has to find its legs. Definitely a lot of work in that fixup though. It is also nice that they kept that tree in the backyard. Too many flippers remove large trees.[/quote]

They accepted the $575k price. That’s the sold price. Less than the asking price… The list price had been $599 per redfin.
http://www.redfin.com/CA/San-Diego/3136-Carnegie-Pl-92122/home/6234910

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[quote=DomoArigato][quote=SD Realtor]Not enough of us oldtimers on this site who experienced what life was like is the lat 70s and early 80s.

It pretty much sucked.[/quote]

Yes, life is so much better today with core inflation below 3% and U6 at 16%. Yesterday’s problems are not necessarily today’s problems.[/quote]
I could be wrong – but I remember fairly high unemployment in the late 70’s and early 80’s. I wasn’t in the job market in the 70’s (I was in high school), but I remember friends having parents lose their jobs. The early 80’s (82ish) were terrible for kids getting out of college. Over 10% unemployment.

http://online.wsj.com/public/resources/documents/JOBSHISTORY09.html

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[quote=SD Realtor]I prefer to think of it the other way. Without the GSE we would no longer have a totally manipulated overinflated housing market and prices would be substantially cheaper and larger downpayments would be needed. We would have a painful one time housing market correction and what would emerge from the ashes would be a healthier housing market that would be valued correctly. We would also have a private secondary market that would demand stringent underwriting standards because there would not be an ultimate safety net that is taxpayer funded directly or indirectly.

It would hurt at first but be great in the long run.[/quote]

I agree completely. The correction would have been painful- but faster… allowing recovery to start sooner, and more robustly.

As it stands, we still have declining home prices… it’s a slow steady drip drip drip of pain.
http://www.calculatedriskblog.com/2011/12/case-shiller-house-prices-fall-to-new.html

I’m a yank the bandaid off quickly kind of gal.

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[quote=dumbrenter][quote=DomoArigato]

By ‘retire’ the debt, I meant that the Fed would just print whatever money they need to buy the debt. The Fed wouldn’t incur any losses because they would be buying the debt with money that they had printed.[/quote]

The printing of money is done by Treasury, not the Fed. I could be wrong though, I keep getting them mixed up.[/quote]
You’re correct. Treasury prints the money.

Easy to get them confused – I think most political sites use them interchangeably (erroneously).

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