Sunday, September 23, 2007

Truth or Dare?

I keep trying to understand how it can be that Bernanke's lowering of interest rates last week by 50 bps can be the cure when it was too low of interest rates for too long that caused the problem to begin with. How can a course of action be both the cause of a problem and its cure?

Or was it all about saving the banking system (by giving them more time to unload over-leveraged positions in toxic holdings) and ensuring Wall Street's Christmas bonuses this year? That should make some of the Marin elite happy. But the general public, savers, the middle-class be damned. The Bernanke Fed abandoned inflation and the dollar just for a short-term bailout. Shameful.

What I like about the following video is that it suggests that Americans just might be starting to wake up. The video ends with the following quote but it should really start with it:
"It is to be regretted that the rich and powerful too often bend the acts of government to their own selfish purposes." (Andrew Jackson)

If you want to see the full video clip of Rep. Sanders raking Greenspan over the coals, you can see it here.


Blogger Rob Dawg said...

keep trying to understand how it can be that Bernanke's lowering of interest rates last week by 50 bps can be the cure when it was too low of interest rates for too long that caused the problem to begin with.

Two different problems. The first was an unrealistic fear of a little deflation. The second was a realistic fear of a market crisis. The answer for both is lower interest rates. In the latter case "answer" is a little strong. You can shuffle chairs on the deck and get your friends into the lifeboats first with their luggage but the ship is still in trouble.

Sep 23, 2007, 2:16:00 PM  
Blogger Matthew said...

Well, not quite the book signing that Sir Al was looking for I'm sure... I wonder how his other signings went ? Perhaps he should stick to future signings down in lower Manhattan only…

It's too bad, however, that people like that Vermont Congressman have not been given much time in the media... I'd be curious to see and hear his views today... I'm sure they have not changed a lick, only intensified in fact..

It remains to be seen what the long term implications will be of BB's and the Fed's latest 50 bps move and specifically how that will play out here in Marin and other bubble areas. Heat index at .32, which is really like a .20 in a non-distressed market as most of the sales are REOs and foreclosures I’m sure.

I don't see any knight in shining armor coming to the rescue anytime soon… no driver of home prices now that the ponzi scheme of illegal selling, lending and borrowing has run it’s course.. Of course, I’m sure Leslie A-Young will enlighten us why the turn-around is right around the corner..

20-25% additional price drop in Marin (we’ve hit 10% easily already by the way).. Have seen a few homes in Hamilton in Novato sitting and rotting on the market for months at $789-799K down from $879 or so at the peak… Yea, right, sign me up.. You will see those same houses for sale at $579 -599K in a few years... about where they were in 2000..

Oh, by the way, despite what the RE machine says, $579K is still a ton of money for a house, especially one where you can chat with your neighbors from the kitchen window.

Sep 23, 2007, 2:54:00 PM  
Blogger Marinite said...

I don't see any knight in shining armor coming to the rescue anytime soon

Well, since Wall Streeter types can be assured their end-of-year bonuses, that means another short-term spike in county-wide appreciation rates later this year as that bonus money finds its way into the higher end housing in Tib/Bel. That should fuel the denial a bit longer.

Sep 23, 2007, 3:36:00 PM  
Blogger Tyrone said...

Couldn't agree more on $500K+ being a ton of money for a home. And I'm amazed at the ignorance that's still out there where people are willing to pay (or attempt to pay) these prices. Read an article today about a family that was denied a $675K loan at the last minute, with 5% down. These fools don't know how lucky they were to NOT GET THE LOAN. But I'm sure they will keep trying.

Sep 23, 2007, 4:28:00 PM  
Blogger Lisa said...

$500K is indeed a ton of money, especially when you have to save for a 20% downpayment, pay P+I every month and show you have 6 months cash reserves in the bank.

Another terrible consequence of voodoo financing is that these big numbers mean NOTHING because borrowers have no skin in the game, have not had to make sacrifices to save up for that house. People say $500K like it's affordable housing for a middle class family. Yeah right. By the time you tack on interest on that 30 year loan, you're talking close to around $1MM.

If zero down loans are really gone, it will be a while before first timers can step up to purchase.

Sep 23, 2007, 6:06:00 PM  
Blogger Matthew said...

Yes, there many dragons need to be slayed right along with home prices. Chief amongst them, in my opinion, is the notion of a fast, quick and easy buck that is rampant throughout this country. Starter homes for $699K. Yea, it will start me all right, start me on the road to serfdom and the poor house... no thank you..

This bubble has indeed aired our dirty laundry for all to see. We've become a very superficial country, especially here out west (IMO). Boob jobs, botex injections, lipo suction, BMWs and house flips. Just the kind of stuff I want my kids focusing on.

I hope the losses in the mortgage / banking industries remain huge and the lending standards continue to tighten up like a frog's ass. The tighter the better. That's the environment I want to play in after this thing finishes unwinding.

Sep 23, 2007, 8:48:00 PM  
Blogger see me said...

Ron Paul of Texas - The End of Dollar He...

Sep 23, 2007, 8:59:00 PM  
Blogger see me said...

This link might work better

Sep 23, 2007, 9:04:00 PM  
Blogger Marinite said...

Please use tinyurl to make urls, well, tiny.


Sep 23, 2007, 9:09:00 PM  
Blogger Matthew said...

Gotta love Ron Paul... it's too bad we don't elect our leaders based on honesty, integrity and conviction..

Sep 23, 2007, 9:50:00 PM  

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