11 More Hard Facts About The Housing Recovery [View article]
Ralph:
"A 1% increase in interest rates would put it in a tail spin."
On the contrary, a rise in rates from current never-before-seen rates will boost housing. Firstly, lots of would-be buyers, who've been told that prices and rates will remain ever low will be prompted into action, as soon as they see rates rising, not falling or even remaining the same. Secondly, banks will get happier about making loans at higher rates, and financing has been one of the impediments, so far, to a more rapid recovery.
Rising rates from these historic low levels is completely different in its initial effects than rates rising from 5, 6 or 7%.
Digressing, in fact, the entire economy will be boosted if ZIRP is finally shelved. ZIRP is suppressing monetary velocity because neither buyers nor lenders are inspired into action. When rates languish, the opportunity cost for doing nothing is near zero, so people feel no urgency to make decisions.
The EU escalates its fight with Argentina, filing a formal complaint with the WTO challenging the country's import regulations. EU officials say Argentina's decision to nationalize Repsol's local YPF unit was only the most recent in a series of moves by Cristina Kirchner's government that have harmed foreign investors and manufacturers. (earlier) [View news story]
There is very little, now, which differentiates Argentina from its totalitarian communist forebears. And, the situation gets worse each day.
I suspect the old military-junta types are taking their uniforms out of mothballs and dusting them off, as we speak.
In the face of a nasty Greek exit from the eurozone, investors have little choice now but to cling to low-yielding U.S. government debt, says Pimco's Bill Gross. Despite our own debt mess, a flight from risk assets is going to continue to send money into Treasurys. "It's what we call the cleanest dirty shirt," Gross says; "at the moment the cleanest dirty shirt is the United States." [View news story]
TVP:
If there's a broad panic in Europe, money will flow firstly to where it always does, the good-ol' U.S. of A. Even Switzerland would be a distant second.
11 More Hard Facts About The Housing Recovery [View article]
MC:
Yes, let's make sure all "evil" folks with capital --good ones and less savory ones -- leave the country and take their money along, too. You've just made the classic socialist argument for sharing the misery, as long as we're all "equal."
Are you serious? I'll tell you what, the world is abundant with places lacking any capital formation and possessing even stronger socialist and/or communist tendencies than infect us, presently. Why not emmigrate to their happy climes, rather than suggesting to emulate their sorry status here?
The Current U.S. Stock Market Collapse Makes No Sense [View article]
ERM:
Nobody in Europe, especially Germany, is about to make any broad-brush policy changes prior to the June 17th Greek elections.
Personally, what I anticipate is that if Greece plays ball, then, there will be some gradually-modulated support for economic expansion. If Greece, however, commits suicide, then, the EU, Germany included, will have only a single recourse to prevent a rapid escalation in systemic deterioration. That recourse will have to be a "shock-and-awe" bank support and stimulus plan for remaining weaker EU countries, i.e., lots of ECB printing.
If the EU is not prepared, a priori, for such a course to be launched simultaneous with any Greece withdrawal or expulsion, then the EU will unravel very quickly. I don't believe that even Germany favors such an outcome, so it would surprise me if they allowed such a course to be followed while they merely stand by and observe.
The Current U.S. Stock Market Collapse Makes No Sense [View article]
MC:
Your distinction between sovereign and private debt is facile.
In a fiat-currency system, where excess debt of all types results from the over-creation of the money supply, it's the Government (Fed) that's at the root of all debt amplification. As it's standard practice, our system of monetary creation uses the Fed and banks to feed money into the economy. It's the Government that's always at the origin of excessive debt, no matter on whose balance sheet it ultimately resides. Banks and corporations are simply intermediaries in the distribution process. They have no ability to create supply.
The Current U.S. Stock Market Collapse Makes No Sense [View article]
ERM:
A run on Greek banks may be reason for Greeks to panic, but not the rest of the world, but that won't stop irrational behavior, of course. That's what panics are all about. It will, however, provide some wonderful buying opportunities for calm investors, who keep their heads screwed on.
In the face of a nasty Greek exit from the eurozone, investors have little choice now but to cling to low-yielding U.S. government debt, says Pimco's Bill Gross. Despite our own debt mess, a flight from risk assets is going to continue to send money into Treasurys. "It's what we call the cleanest dirty shirt," Gross says; "at the moment the cleanest dirty shirt is the United States." [View news story]
TVP:
If we see any "run" on German banks, it will be to put money in, not take it out.
11 More Hard Facts About The Housing Recovery [View article]
MC:
Plato notwithstanding, home prices don't decline when rates rise. Rising rates almost always accompany strong economic conditions, and housing prices escalate in such periods. I recall moving to Silicon Valley in 1981, and the housing market was flying, even with mortgages at 12%.
The seemingly new (post-crisis) idea that home prices and interest rates are necessarily inversely related isn't so, even if it appears logical on its surface. The following chart demonstrates, in fact, that home-price appreciation has consistently followed inflation until the recent crisis.
Plunging Commodity Prices Are Ominous For Stock Market [View article]
When commodity prices are rising, we are warned that they will suck the life out of everybody's purchasing power and kill the economy and market. When they fall, we are warned that their downward price trend is "ominous."
The Current U.S. Stock Market Collapse Makes No Sense [View article]
This is where what I have gradually learned over years of investing pays off. It's more important to pay attention to what one's portfolio throws off each year than it is to guess about daily principal values or market directions. For the most part it's beyond anybody's control to make secuity prices behave as preferred (only up), but it's not impossible to set up a portfolio so it has a somewhat predictable and attractive yield. Over time, the "miracle of compounding" makes all those dividend and interest payments turn into real money.
Too many people want to make money "right now" by guessing about or hoping for price moves. This impatience and the increasing dependence on gambling on short-term price moves that it engenders are counterproductive to building wealth.
The Current U.S. Stock Market Collapse Makes No Sense [View article]
"The S&P is still way overvalued ..."
Just printing the sentence doesn't necessarily make it so. U.S. corporate revenues and profits are at all-time highs, and expanding, yet the SPX is 15% lower than when those same revenues and profits were a lot lower.
11 More Hard Facts About The Housing Recovery [View article]
"A 1% increase in interest rates would put it in a tail spin."
On the contrary, a rise in rates from current never-before-seen rates will boost housing. Firstly, lots of would-be buyers, who've been told that prices and rates will remain ever low will be prompted into action, as soon as they see rates rising, not falling or even remaining the same. Secondly, banks will get happier about making loans at higher rates, and financing has been one of the impediments, so far, to a more rapid recovery.
Rising rates from these historic low levels is completely different in its initial effects than rates rising from 5, 6 or 7%.
Digressing, in fact, the entire economy will be boosted if ZIRP is finally shelved. ZIRP is suppressing monetary velocity because neither buyers nor lenders are inspired into action. When rates languish, the opportunity cost for doing nothing is near zero, so people feel no urgency to make decisions.
The Current U.S. Stock Market Collapse Makes No Sense [View article]
I used to run the international business of a U.S. medical firm, and we had our European HQ in Zug. A fine country.
I hope you're still there.
11 More Hard Facts About The Housing Recovery [View article]
Anybody who is successful must be "corrupt and connected," right?
The EU escalates its fight with Argentina, filing a formal complaint with the WTO challenging the country's import regulations. EU officials say Argentina's decision to nationalize Repsol's local YPF unit was only the most recent in a series of moves by Cristina Kirchner's government that have harmed foreign investors and manufacturers. (earlier) [View news story]
I suspect the old military-junta types are taking their uniforms out of mothballs and dusting them off, as we speak.
In the face of a nasty Greek exit from the eurozone, investors have little choice now but to cling to low-yielding U.S. government debt, says Pimco's Bill Gross. Despite our own debt mess, a flight from risk assets is going to continue to send money into Treasurys. "It's what we call the cleanest dirty shirt," Gross says; "at the moment the cleanest dirty shirt is the United States." [View news story]
If there's a broad panic in Europe, money will flow firstly to where it always does, the good-ol' U.S. of A. Even Switzerland would be a distant second.
11 More Hard Facts About The Housing Recovery [View article]
Yes, let's make sure all "evil" folks with capital --good ones and less savory ones -- leave the country and take their money along, too. You've just made the classic socialist argument for sharing the misery, as long as we're all "equal."
Are you serious? I'll tell you what, the world is abundant with places lacking any capital formation and possessing even stronger socialist and/or communist tendencies than infect us, presently. Why not emmigrate to their happy climes, rather than suggesting to emulate their sorry status here?
The Current U.S. Stock Market Collapse Makes No Sense [View article]
Nobody in Europe, especially Germany, is about to make any broad-brush policy changes prior to the June 17th Greek elections.
Personally, what I anticipate is that if Greece plays ball, then, there will be some gradually-modulated support for economic expansion. If Greece, however, commits suicide, then, the EU, Germany included, will have only a single recourse to prevent a rapid escalation in systemic deterioration. That recourse will have to be a "shock-and-awe" bank support and stimulus plan for remaining weaker EU countries, i.e., lots of ECB printing.
If the EU is not prepared, a priori, for such a course to be launched simultaneous with any Greece withdrawal or expulsion, then the EU will unravel very quickly. I don't believe that even Germany favors such an outcome, so it would surprise me if they allowed such a course to be followed while they merely stand by and observe.
The Current U.S. Stock Market Collapse Makes No Sense [View article]
Your distinction between sovereign and private debt is facile.
In a fiat-currency system, where excess debt of all types results from the over-creation of the money supply, it's the Government (Fed) that's at the root of all debt amplification. As it's standard practice, our system of monetary creation uses the Fed and banks to feed money into the economy. It's the Government that's always at the origin of excessive debt, no matter on whose balance sheet it ultimately resides. Banks and corporations are simply intermediaries in the distribution process. They have no ability to create supply.
The Current U.S. Stock Market Collapse Makes No Sense [View article]
A run on Greek banks may be reason for Greeks to panic, but not the rest of the world, but that won't stop irrational behavior, of course. That's what panics are all about. It will, however, provide some wonderful buying opportunities for calm investors, who keep their heads screwed on.
11 More Hard Facts About The Housing Recovery [View article]
I don't tell you they're not related. The historical data tells you they're not, but you're free to make up your own correlations, of course.
In the face of a nasty Greek exit from the eurozone, investors have little choice now but to cling to low-yielding U.S. government debt, says Pimco's Bill Gross. Despite our own debt mess, a flight from risk assets is going to continue to send money into Treasurys. "It's what we call the cleanest dirty shirt," Gross says; "at the moment the cleanest dirty shirt is the United States." [View news story]
If we see any "run" on German banks, it will be to put money in, not take it out.
11 More Hard Facts About The Housing Recovery [View article]
Plato notwithstanding, home prices don't decline when rates rise. Rising rates almost always accompany strong economic conditions, and housing prices escalate in such periods. I recall moving to Silicon Valley in 1981, and the housing market was flying, even with mortgages at 12%.
The seemingly new (post-crisis) idea that home prices and interest rates are necessarily inversely related isn't so, even if it appears logical on its surface. The following chart demonstrates, in fact, that home-price appreciation has consistently followed inflation until the recent crisis.
http://bit.ly/KT5djw
Plunging Commodity Prices Are Ominous For Stock Market [View article]
OK, which is it?
The Current U.S. Stock Market Collapse Makes No Sense [View article]
Too many people want to make money "right now" by guessing about or hoping for price moves. This impatience and the increasing dependence on gambling on short-term price moves that it engenders are counterproductive to building wealth.
The Current U.S. Stock Market Collapse Makes No Sense [View article]
Just printing the sentence doesn't necessarily make it so. U.S. corporate revenues and profits are at all-time highs, and expanding, yet the SPX is 15% lower than when those same revenues and profits were a lot lower.
How precisely is the SPX "way overvalued?"