[underdose]

I have a somewhat alternate viewpoint. I fully expect home prices to continue to decline in real terms. The important word here is “real”, which opens the quesion, “what will prices do in nominal terms?” That’s anybody’s guess, and it depends on how aggressive Helicopter Ben gets, and how unwilling to continue holding and absorbing dollars our creditors become. Unfortunately, I feel stuck between a rock and a hard place in this scenario. I don’t want to rent because I could see inflation pushing rents up dramatically. I don’t want to own because, although a 30 yr fixed keeps a big part of my monthly outflows constant nominally and potentially shrinking in real terms, my downpayment will shrink in real terms and my equity will underperform inflation. I may turn out to be wrong in my inflation expectations, or it may take a long time to materialize (that is, it may take months or years of money printing for the new money to ripple through home prices). But I agree with the above post that Bernanke is unlikely to stop printing until home prices resume going upwards. He’ll declare victory, even if milk is $50 per gallon by then…

[underdose]

I have a somewhat alternate viewpoint. I fully expect home prices to continue to decline in real terms. The important word here is “real”, which opens the quesion, “what will prices do in nominal terms?” That’s anybody’s guess, and it depends on how aggressive Helicopter Ben gets, and how unwilling to continue holding and absorbing dollars our creditors become. Unfortunately, I feel stuck between a rock and a hard place in this scenario. I don’t want to rent because I could see inflation pushing rents up dramatically. I don’t want to own because, although a 30 yr fixed keeps a big part of my monthly outflows constant nominally and potentially shrinking in real terms, my downpayment will shrink in real terms and my equity will underperform inflation. I may turn out to be wrong in my inflation expectations, or it may take a long time to materialize (that is, it may take months or years of money printing for the new money to ripple through home prices). But I agree with the above post that Bernanke is unlikely to stop printing until home prices resume going upwards. He’ll declare victory, even if milk is $50 per gallon by then…

[underdose]

I have a somewhat alternate viewpoint. I fully expect home prices to continue to decline in real terms. The important word here is “real”, which opens the quesion, “what will prices do in nominal terms?” That’s anybody’s guess, and it depends on how aggressive Helicopter Ben gets, and how unwilling to continue holding and absorbing dollars our creditors become. Unfortunately, I feel stuck between a rock and a hard place in this scenario. I don’t want to rent because I could see inflation pushing rents up dramatically. I don’t want to own because, although a 30 yr fixed keeps a big part of my monthly outflows constant nominally and potentially shrinking in real terms, my downpayment will shrink in real terms and my equity will underperform inflation. I may turn out to be wrong in my inflation expectations, or it may take a long time to materialize (that is, it may take months or years of money printing for the new money to ripple through home prices). But I agree with the above post that Bernanke is unlikely to stop printing until home prices resume going upwards. He’ll declare victory, even if milk is $50 per gallon by then…

[underdose]

I have a somewhat alternate viewpoint. I fully expect home prices to continue to decline in real terms. The important word here is “real”, which opens the quesion, “what will prices do in nominal terms?” That’s anybody’s guess, and it depends on how aggressive Helicopter Ben gets, and how unwilling to continue holding and absorbing dollars our creditors become. Unfortunately, I feel stuck between a rock and a hard place in this scenario. I don’t want to rent because I could see inflation pushing rents up dramatically. I don’t want to own because, although a 30 yr fixed keeps a big part of my monthly outflows constant nominally and potentially shrinking in real terms, my downpayment will shrink in real terms and my equity will underperform inflation. I may turn out to be wrong in my inflation expectations, or it may take a long time to materialize (that is, it may take months or years of money printing for the new money to ripple through home prices). But I agree with the above post that Bernanke is unlikely to stop printing until home prices resume going upwards. He’ll declare victory, even if milk is $50 per gallon by then…

[underdose]

I have a somewhat alternate viewpoint. I fully expect home prices to continue to decline in real terms. The important word here is “real”, which opens the quesion, “what will prices do in nominal terms?” That’s anybody’s guess, and it depends on how aggressive Helicopter Ben gets, and how unwilling to continue holding and absorbing dollars our creditors become. Unfortunately, I feel stuck between a rock and a hard place in this scenario. I don’t want to rent because I could see inflation pushing rents up dramatically. I don’t want to own because, although a 30 yr fixed keeps a big part of my monthly outflows constant nominally and potentially shrinking in real terms, my downpayment will shrink in real terms and my equity will underperform inflation. I may turn out to be wrong in my inflation expectations, or it may take a long time to materialize (that is, it may take months or years of money printing for the new money to ripple through home prices). But I agree with the above post that Bernanke is unlikely to stop printing until home prices resume going upwards. He’ll declare victory, even if milk is $50 per gallon by then…

[underdose]

My impression is that the bailout allows (requires?) the government to buy the assets at face value, not fire sale prices. Banks can sell loans at fire sale without the help of the government, but then that turns unrealized losses into realized loses and doesn’t provide them enough cash to start resuming lending. But if the gubment buys at face value, voila, the banks’ losses magically vanish and they get a big infusion of cash. I could be misinterpreting the bailout, but I think that is the whole social injustice of it, that banks that really do deserve losses for their poor management are shifting their losses to the tax payer. If my interpretation is correct, that makes your point even that much stronger. Yes, the government will have to take big write downs, but even bigger since the write downs will be from face instead of discount. It really, really won’t work.

[underdose]

My impression is that the bailout allows (requires?) the government to buy the assets at face value, not fire sale prices. Banks can sell loans at fire sale without the help of the government, but then that turns unrealized losses into realized loses and doesn’t provide them enough cash to start resuming lending. But if the gubment buys at face value, voila, the banks’ losses magically vanish and they get a big infusion of cash. I could be misinterpreting the bailout, but I think that is the whole social injustice of it, that banks that really do deserve losses for their poor management are shifting their losses to the tax payer. If my interpretation is correct, that makes your point even that much stronger. Yes, the government will have to take big write downs, but even bigger since the write downs will be from face instead of discount. It really, really won’t work.

[underdose]

My impression is that the bailout allows (requires?) the government to buy the assets at face value, not fire sale prices. Banks can sell loans at fire sale without the help of the government, but then that turns unrealized losses into realized loses and doesn’t provide them enough cash to start resuming lending. But if the gubment buys at face value, voila, the banks’ losses magically vanish and they get a big infusion of cash. I could be misinterpreting the bailout, but I think that is the whole social injustice of it, that banks that really do deserve losses for their poor management are shifting their losses to the tax payer. If my interpretation is correct, that makes your point even that much stronger. Yes, the government will have to take big write downs, but even bigger since the write downs will be from face instead of discount. It really, really won’t work.

[underdose]

My impression is that the bailout allows (requires?) the government to buy the assets at face value, not fire sale prices. Banks can sell loans at fire sale without the help of the government, but then that turns unrealized losses into realized loses and doesn’t provide them enough cash to start resuming lending. But if the gubment buys at face value, voila, the banks’ losses magically vanish and they get a big infusion of cash. I could be misinterpreting the bailout, but I think that is the whole social injustice of it, that banks that really do deserve losses for their poor management are shifting their losses to the tax payer. If my interpretation is correct, that makes your point even that much stronger. Yes, the government will have to take big write downs, but even bigger since the write downs will be from face instead of discount. It really, really won’t work.

[underdose]

My impression is that the bailout allows (requires?) the government to buy the assets at face value, not fire sale prices. Banks can sell loans at fire sale without the help of the government, but then that turns unrealized losses into realized loses and doesn’t provide them enough cash to start resuming lending. But if the gubment buys at face value, voila, the banks’ losses magically vanish and they get a big infusion of cash. I could be misinterpreting the bailout, but I think that is the whole social injustice of it, that banks that really do deserve losses for their poor management are shifting their losses to the tax payer. If my interpretation is correct, that makes your point even that much stronger. Yes, the government will have to take big write downs, but even bigger since the write downs will be from face instead of discount. It really, really won’t work.

[underdose]

I suspect there may not be another bail out. I don’t know if the new bailout that did pass had the same language as the first one that got shot down. If it did, with the Treasury getting basically unlimited power with no accountability to anyone, this bailout might turn out to be sufficiently an open ended blank check. The $700 billion will magically transform into trillions, maybe about 3 to 5, without another bill being passed. When? Gradually over the coming months. The bailout will do absolutely nothing to prevent the collapse, just as nationalizing Freddie and Fannie and AIG did absolutely nothing, so as the economy continues to deteriorate in the coming months, they will just keep pouring more and more money on it. But I’ll bet they will do it mostly on the sly. And they will really freak when the Xmas retail numbers are weak…

[underdose]

I suspect there may not be another bail out. I don’t know if the new bailout that did pass had the same language as the first one that got shot down. If it did, with the Treasury getting basically unlimited power with no accountability to anyone, this bailout might turn out to be sufficiently an open ended blank check. The $700 billion will magically transform into trillions, maybe about 3 to 5, without another bill being passed. When? Gradually over the coming months. The bailout will do absolutely nothing to prevent the collapse, just as nationalizing Freddie and Fannie and AIG did absolutely nothing, so as the economy continues to deteriorate in the coming months, they will just keep pouring more and more money on it. But I’ll bet they will do it mostly on the sly. And they will really freak when the Xmas retail numbers are weak…

[underdose]

I suspect there may not be another bail out. I don’t know if the new bailout that did pass had the same language as the first one that got shot down. If it did, with the Treasury getting basically unlimited power with no accountability to anyone, this bailout might turn out to be sufficiently an open ended blank check. The $700 billion will magically transform into trillions, maybe about 3 to 5, without another bill being passed. When? Gradually over the coming months. The bailout will do absolutely nothing to prevent the collapse, just as nationalizing Freddie and Fannie and AIG did absolutely nothing, so as the economy continues to deteriorate in the coming months, they will just keep pouring more and more money on it. But I’ll bet they will do it mostly on the sly. And they will really freak when the Xmas retail numbers are weak…

[underdose]

I suspect there may not be another bail out. I don’t know if the new bailout that did pass had the same language as the first one that got shot down. If it did, with the Treasury getting basically unlimited power with no accountability to anyone, this bailout might turn out to be sufficiently an open ended blank check. The $700 billion will magically transform into trillions, maybe about 3 to 5, without another bill being passed. When? Gradually over the coming months. The bailout will do absolutely nothing to prevent the collapse, just as nationalizing Freddie and Fannie and AIG did absolutely nothing, so as the economy continues to deteriorate in the coming months, they will just keep pouring more and more money on it. But I’ll bet they will do it mostly on the sly. And they will really freak when the Xmas retail numbers are weak…

[underdose]

I suspect there may not be another bail out. I don’t know if the new bailout that did pass had the same language as the first one that got shot down. If it did, with the Treasury getting basically unlimited power with no accountability to anyone, this bailout might turn out to be sufficiently an open ended blank check. The $700 billion will magically transform into trillions, maybe about 3 to 5, without another bill being passed. When? Gradually over the coming months. The bailout will do absolutely nothing to prevent the collapse, just as nationalizing Freddie and Fannie and AIG did absolutely nothing, so as the economy continues to deteriorate in the coming months, they will just keep pouring more and more money on it. But I’ll bet they will do it mostly on the sly. And they will really freak when the Xmas retail numbers are weak…

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