Too bad that when they were building the bubble, Greenspan was out there telling folks to dump their 30 year mortgages and get into exotic stuff like ARMS. Now that they built it, they're gonna bust it. I think this shows Bernanke is in charge now, and is gonna fix the mistake.
Hard stuff. They light the housing fire, and then they put it out. Zero sum game.
Fed won't act to preserve high home prices
The Federal Reserve has no intention of preserving all of the recent gains in home price values, said Federal Reserve board governor Donald Kohn on Thursday.
"If real estate prices begin to erode, homeowners should not expect to see all the gains of recent years preserved by monetary policy actions,' Kohn said in a speech prepared for delivery to a European Central Bank forum in Frankfurt, Germany.
"The same consideration apply to homeowners: All else being equal, interest rates are higher now than they would be were real estate valuations less lofty; and if real estate prices begin to erode. Homeowners should not expect to see all the gains of recent years preserved by monetary policy actions," Kohn said.
March 16, 2006
Brutal honesty from the Fed today - "Homeowners shoud not expect to see all the gains of recent years preserved"
Subscribe to:
Post Comments (Atom)
49 comments:
That’s right. They will let real estate collapse before they give up the dollar. DOLLAR=WORLD POWER! Collapsing real estate and American citizens in debit= A controlled and productive work force. (slavery) It's all good for Uncle Sam, and us.
Here’s my question, how long will it take before congress reverses the new bankruptcy law?
I for one had a lot of mixed feeling about that law change.
Debtor's Prison CONDO, 2 bedroom 6x8, shared 1/2 bathroom, one light bulb and eternal view of the Bars. CHEAP...Contact your BANK for Financing and TERMS!
This is great news. Donald Kohn should receive a commendation. People who are STUPID, don't look at historical values, and use all kinds of subjective arguments to trick themselves into believing it's different this time should and deserve to lose their asses.
It pisses me off that enough mass of people have bought into the deluded arguments (they're not making more land, real estate only goes up, everone wants to live here, etc) to tip this economy into recession but the good news is those of us who are smart enough to know better should find ourselves masters of our domains. It will be cheap to buy a Hummer or a really nice loaded Dodge Ram 4x4 supercab with a huge camping trailer, complete with HD plasma TV and gold plated crapper from some moron who bought it all with paper gains that didn't really exist.
Rational markets have a way of washing idiots out of them. Look at the stock market - every johnny-come-lately was a daytrader. How many of those people continue to enjoy the good life they were living in 1999? Not very many I suspect. Those people pumped and dumped stocks until the 'rational' part of the market took back over and left them holding the bags. In 2002 those people were saying "Do you want hot, medium, or mild sauce with your taco".
I bet the bk bill will be reversed in 2008/2009.
I agree with the idea behind the bill but it should have made it easier to get off credit card mailing lists. I have 7 credit cards already (not all with balances thank goodness) and I get 10-15 packages of balance transfer and cash advance checks a week and at least 3 credit card offers a day.
The problem is those who are getting themselves into such debt (30k+) are generally moronic who don't need credit card companies egging them on.
What a waste of trees.....
The guys on Wall Street and the money center banks (not much diff) all know they can count on the Federal Reserve and Congress to take care of their interests when things get tough. People like Robert Rubin and Alan Greenspan will retire comfortably even though they engineered the biggest economic screw job in history. Meanwhile the standard of living for average people will decline.
There will be no deflationary depression like we saw in the '30s because the government is going to inflate away its debts.
Yup if one really sits back and reads between the lines, this is all part of the necon agenda, the less money you have, the more control the goverment has on you. This is going to be an interesting year to say the least. Forget 2007 , there might not be one.
SCREW Housing!...I'm putting My Money in MAGIC BEANS...THAT'S where the Next Big profits ARE !
Good Lord, why all of the animosity? Please take a moment to review the comments on this page. Now ask why it is we are stuck with an inneffectual 2-party system? Could it be that the natural human tendency to assign blame on others and indescriminately classify the rest of the world as "morons" has something to do with it? You all are not part of the solution.
Rob A.
When exactly did Greenspan advise people to dump 30yr fixed mortages for ARMs and other exotics? I am pretty sure he didn't. After that why not explain what's so exotic about an adjustable rate mortgage? ARMs seem pretty useful for many situations.
This site recognizes pretty well that markets can go to irrationally high levels, but it tends to forget that the market usually overshoots on both the upswing and the downswing. All the talk about a new depression is nothing less than a mirror image of the irrational exuberance driving the market up - call it irrational gloom mongering.
Greenspan did push arms about 1-2 years ago...he said something to the effect that most folks would be better off in ARMS (the traditional arm). He did not say anything about I/O's & Option Arms.
Anonymous said...
When exactly did Greenspan advise people to dump 30yr fixed mortages for ARMs and other exotics? I am pretty sure he didn't. After that why not explain what's so exotic about an adjustable rate mortgage? ARMs seem pretty useful for many situations.....
He said it in February 2004. read it hear or google it yourself.
http://www.forbes.com/columnists/forbes/2005/0620/160.html
In February 2004 Alan Greenspan advised the Credit Union National Association: "[R]ecent research within the Federal Reserve suggests that many homeowners might have saved tens of thousands of dollars had they held adjustable-rate mortgages rather than fixed-rate mortgages during the past decade, though this would not have been the case, of course, had interest rates trended sharply upward." Very helpful, Mr. Chairman. In fact, interest rates began trending up--he himself started pushing them up--just four months later.
Off topic, but important update.
The Senate finally got around to bumping up the deficit ceiling. Bush still needs to sign it, but US gov't was so close to defaulting on debt.
Senate Votes to Raise Debt Limit
All the talk about a new depression is nothing less than a mirror image of the irrational exuberance driving the market up - call it irrational gloom mongering.
With that kind of logic you could convince yourself of anything.
My bills are all due and the babies need shoes,
But I'm Busted
Cotton's gone down to a quarter a pound
And I'm Busted
I got a cow that's gone dry
And a hen that won't lay
A big stack of bills
Getting bigger each day
The county's gonna haul my belongings away,
But I'm Busted
So I called on my brother to ask for a loan
'Cause I was Busted
I hate to beg like a dog for a bone,
But I'm Busted
My brother said, "there's not a thing I can do,
My wife and my kids
Are all down with the flu
And I was just thinkin' about callin' on you,
'Cause I'M Busted."
Lord, I ain't no thief, but a man can go wrong,
When he's Busted
The food that we canned last summer is gone,
But I'm Busted
Now the fields are all bare
And the cotton won't grow
Me and my family's gotta pack up and go
But I'll make a living, just where, I don't know
'Cause I'm Busted
Everyday I wake up to see what the government has accomplished, More threats to Iran, We raised the debt cieling,the president shakes hands with some autistic kid,cheney shoots somebody.
I awake everyday hopeing the government solved one problem, just one, If Raiseing the debt cieling was an accomplishment then I give up, I'm not going to wake up tommorrow!
I would hope they would work on the literacy problem this country has as well.
A Tale of Two Farmers
Farmer Chang only grows oranges. Farmer Jones only grows apples. Each grows only the fruit that he produces most efficiently, trading the surplus for the fruit grown by the other. Both farmers benefit from comparative advantage and free trade. The sole reason that Farmer Chang “exports” oranges is to “import” apples, and vise-versa.
Suppose that one year a frost wipes out farmer Jones’ apple crop. Not having any fruit to trade, but hungry nevertheless, he proposes to trade apple IOUs for farmer Chang’s oranges. Since Farmer Chang cannot eat all of the oranges he grew anyway, and since farmer Jones’ IOUs will pay 10% interest (in extra apples of course) he agrees.
Farmer Chang only accepts farmer Jones’ offer because of the apples that Farmer Jones’ IOUs promise to pay. By themselves, the IOUs have no intrinsic value. Farmer Chang cannot eat them. It is only the promise to pay apples that gives them value.
Now suppose that the following year farmer Jones’ crop is again destroyed, this time by a flood. He and Farmer Chang once again make the same deal, with Farmer Jones getting more of Farmer Chang’s oranges, and Farmer Chang accepting more of Farmer Jones’ IOUs.
Further suppose that similar natural disasters continue to besiege Farmer Jones for several more years, with Farmer Chang continuing to accept Farmer Jones’ interest-bearing apple IOUs in exchange for his oranges. Eventually it dawns on Farmer Jones that he is eating pretty well, without actually farming. He therefore decides to turn his apple orchard into a golf course, and simply play golf all day while enjoying Farmer Chang’s oranges. In other words, Farmer Jones now operates a “service economy.”
Farmer Chang on the other hand is so busy growing all those oranges that he never gets a chance to play Farmer Jones’ course. In fact, he has been accepting farmer Jones’s IOUs for so long that he no longer remembers his original reason for doing so. He forgot about his original desire to actually eat the real apples Farmer Jones had promised to deliver. Instead, he now counts his wealth based solely on his accumulation of apple IOUs. In fact, Farmer Jones had such a good reputation within the farming community that Farmer Chang was actually able to trade some of Farmer Jones’ IOUs for goods and services provided by other farmers and local merchants. Apparently no one bothered to notice that Farmer Jones’ apple orchard had become a golf course, and that his IOUs were therefore worthless, as he no longer possessed the ability to redeem them with actual apples.
Some might argue that the entire community now depends on Farmer Jones and his worthless IOUs and that everyone will accept them indifferently rather than acknowledging the reality of their folly. Of course, were these revelations to occur, any unfortunate holders of Farmer Jones’ IOUs would officially be forced to realize their losses. However, their true financial situations would improve, as any further accumulation of worthless IOUs would end. As for Farmer Chang, he would literally once again enjoy all of the fruits of his labor.
The real loser of course would be Farmer Jones, for without a viable apple orchard or the ability to buy oranges on credit, he would starve. It would take years to transform his golf course back into an orchard, regain his lost knowledge of farming, and replace his obsolete or dilapidated farming equipment (provided he hadn't already traded it in for golf carts and titanium clubs). In the end, his only alternative might be to sell his golf course to farmer Chang and take a job picking fruit in his orange grove.
Peter Schiff
The Senate voted Thursday to allow the national debt to swell to nearly $9 trillion, preventing a first-ever default on U.S. Treasury notes.
Who in the name of god would invest in a US Treasury note that isn't worth the paper its written on?
Forget the dollar that is just a pretty picture with shit green ink, nothing more.
Isn't it strange that Operation Swarmer started today? Trying to slide this one by us, eh, Mr. Bush????
More like operation bend over and take it up the arse if you ask me!
Giant immigration bill seeks to double H1-B visas
Press Trust of India
Washington, March 14, 2006
US Congress is likely to take up a giant immigration bill this month, which recommends nearly doubling the number of H-1B skilled-worker temporary visas to 115,000.
The measures include not just increasing the number of visas but also add an option of raising the cap 20 per cent more each year.
If passed, the provisions buried in the Senate's giant immigration bill, would open the country's doors to highly skilled immigrants for science, math, technology and engineering jobs.
The provisions were sought by Silicon Valley tech companies and enjoy significant bipartisan support amid concern that the United States might lose its lead in technology.
They would broaden avenues to legal immigration for foreign tech workers and would put those with advanced degrees on an automatic path to permanent residence should they want it, the San Francisco Chronicle reported.
H-1B visas were highly controversial in the Bay Area when their numbers reached a peak of 195,000 in 2003.
The new skilled immigration measures are part of a controversial 300-page bill by Senate Judiciary Committee Chairman Arlen Specter, R-Pa, now being rewritten by the committee with the goal of reaching the Senate floor by the end of the month.
Other provisions include a new F-4 visa category for students pursuing advanced degrees in science, technology, engineering or mathematics.
These students would be granted permanent residence if they find a job in their field and pay a $1,000 fee toward scholarships and training of US workers.
Congress had increased the visas during the late 1990s dot-com boom, when Silicon Valley complained of tech-worker shortages, although native-born engineers complained that their wages were undermined by cheap labour from India and China.
With the tech crash and the revelation that some of the September 11, 2001, hijackers had entered the country on student visas, the political climate for foreign workers darkened, and Congress quietly allowed the number of H-1B visas to plummet back to 65,000 a year.
The cap was reached in August -- in effect turning off the tap of the visas for 14 months. A special exemption of 20,000 visas for workers with advanced degrees was reached in January.
"We're in a bad crunch right now," said Laura Reiff, head of the Essential Worker Immigration Coalition, a business umbrella group backing more immigration. "We are totally jammed on immigrant visas, the green card category, and totally jammed on H-1B visas. You can't bring in tech workers right now."
The provisions for highly skilled workers enjoy support in both parties in the Senate and in the Bush administration after a raft of high-profile studies have warned that the United States is not producing enough math and science students and is in danger of losing its global edge in innovation to India and China.
However, opponents of broadening immigration for skilled workers said doing so would defeat efforts to get more Americans interested in science, math, engineering and other technological fields.
KEtih, was GReenspan really telling people to dump their 30 yr fixed and swap into ARMs? I do not think so.
You know if want to get extremely technical (ie. ponder what the meaning if "is" is) he did not. But to deny the Fed's role in creating the housing bubble is just plain BS.
there is thing called free will. Creative mortagegs and cheap $ are all just choices. We are not lemmings who cannot make up our own decisions. We are big boys. Will people get burned, yes. Will it suck for them, yes. Should an ARM be outlawed? no way. Why are you all so angry about this so-called bubble? Things work themselves out. Houses will trade hands from weak hands to strong, some at distressed prices. People will realize more that real estate is just an asset class, and it can go up and down in the short to int. term. Life will move on.
the Fed had to use monetary policy to stimulate economy. We had a recession caused by Clinton policy and tech wreck and tight money, plus 9/11. What choice did the Fed really have? The policy worked too. Jobs were created, unemployment is at 4.8% nationally, GDP is growing, and yes we have a trade deficit; it is called the growing pains of globalization.
yeah man...the people will thank us and throw roses and chocholates at us! (Creative Financing Dude)
Actually, if the way that unemployment is calculated today was the same as the methadology used in the 1930's then unemployment is more like 12%, but I bet you already knew that.
Are one of those people that thinks you can spend your way to prosperity?
Please believe her.
http://realtytimes.com/rtmcrcond
/Virginia~Fauquier~ritagibbons
"Home prices are stabling..."
Anonymous said...
KEtih, was GReenspan really telling people to dump their 30 yr fixed and swap into ARMs? I do not think so.
Thursday, March 16, 2006 3:32:20 PM
Google it. it is not hard to find. He was saying ARMs are a good choice just as he was going to raise rates. So much for the cryptic stuff he was saying, this was not very cryptic!
it's funny a few of the posts here were doubting me about greenie telling people to not do 30 year fixed and get into arms - when I LINKED to the damn article where he said it. Go read the verbatim testimony. It was the weirdest thing - actually one of the inspirations for this site.
Right when rates were going up, greenie was telling people to get into ARMS. It made no sense. And since it made no sense, I realized....
yes, he was corrupt.
fight the power folks. fight the power.
I hace not seen price drops. No gloom an d doom salt lake city utah still going up and low inventory. Maui up, austin x up, seattle wa, bainbridge island up, boise id up up up , s&s homes in socal still selling homes up up up up up up.
The Federal Reserve chairman isn't supposed to forecast interest rates, but there he was last week, warning home buyers against fixed-rate mortgages and promoting adjustable-rate mortgages to achieve financial "flexibility." Instead, it's likely he's luring many households into financial disaster.
That is the whole neo-con agenda, the less money you have, the more they have you by the balls. The 20 somethings (IE) speculators are the ones who are going to be under the goverments rein.
Those of us in the know, are the ones who will rise up with our arms and take back our beloved country.
Price keep going up just face it. Or rent for the next 5 years or so. no bubble prices are up. maybe not in florida or dc but lots of other places. socal, austin, seattle, boise id, salt lake ut, oregon, maui hi all up up up. everyone keeps saying soon the crash is coming since about oo so if you listened to that crowd your done financially if you did not buy. Your the people that wait behind the roulette wheel in las vegas waiting for 10 reds or black in a row then bet against the 11th but you missed the 10 in a row. you live in fear hoping your doom and gloom comes true. Where i live in maui hawaii there a sign that says " jesus is coming soon" it been there for at least 30 years hopefully your crash come sooner it all bs.
I have been following a site now for almost 2 years and I have found it to be both reliable and profitable. They post daily and their stock trades have been beating
the indexes easily.
Take a look at Wallstreetwinnersonline.com
RickJ
Very informative blog. I found everything I needed here. Great content! left handed golf equipment
Hi Blogger, I found your blog quite informative.
I just came across your blog and wanted to
drop you a note telling you how impressed I was with it.
I give you my best wishes for your future endeavors.
If you have a moment, please visit my arizona second mortgage site.
Have a great week!
Hi Blogger, I found your blog quite informative.
I just came across your blog and wanted to
drop you a note telling you how impressed I was with it.
I give you my best wishes for your future endeavors.
If you have a moment, please visit my articles on interest rates site.
Have a great week!
Hi Blogger, I found your blog quite informative.
I just came across your blog and wanted to
drop you a note telling you how impressed I was with it.
I give you my best wishes for your future endeavors.
If you have a moment, please visit my articles on interest rates site.
Have a great week!
Hi Friend! You have a great blog over here!
Please accept my compliments and wishes for your happiness and success!
If you have a moment, please take a look at my atlanta bad credit mortgage site.
Have a great day!
Hi Friend! You have a great blog over here!
Please accept my compliments and wishes for your happiness and success!
If you have a moment, please take a look at my atlanta bad credit mortgage site.
Have a great day!
Hi Friend! You have a great blog over here!
Please accept my compliments and wishes for your happiness and success!
If you have a moment, please take a look at my atlanta bad credit mortgage site.
Have a great day!
Hi Friend! You have a great blog over here!
Please accept my compliments and wishes for your happiness and success!
If you have a moment, please take a look at my stock market price site.
Have a great day!
Your blog I found to be very interesting!
I just came across your blog and wanted to
drop you a note telling you how impressed I was with
the information you have posted here.
I have a bad business credit loan personal
site.
Come and check it out if you get time :-)
Best regards!
Your blog I found to be very interesting!
I just came across your blog and wanted to
drop you a note telling you how impressed I was with
the information you have posted here.
I have a bad credit
site.
Come and check it out if you get time :-)
Best regards!
Your blog I found to be very interesting!
I just came across your blog and wanted to
drop you a note telling you how impressed I was with
the information you have posted here.
I have a bad credit and credit cards
site.
Come and check it out if you get time :-)
Best regards!
A fantastic blog yours. Keep it up.
If you have a moment, please visit my secured business credit card site.
I send you warm regards and wish you continued success.
Hi there Blogger, a real useful blog.Keep with the good work.
If you have a moment, please visit my secured credit card site.
I send you warm regards and wishes of continued success.
Hello Friend! I just came across your blog and wanted to
drop you a note telling you how impressed I was with
the information you have posted here.
Keep up the great work, you are providing a great resource on the Internet here!
If you have a moment, please make a visit to my bad credit merchant account site.
Good luck in your endeavors!
Hi Fellow! I was just searching blogs,and I found yours! I like it!
If you have a moment, please visit my bad credit mortgage arizona site.
Good luck!
Hi Fellow! I was just searching blogs,and I found yours! I like it!
If you have a moment, please visit my bad credit mortgage arizona site.
Good luck!
Post a Comment