Saturday, November 26, 2005

Flipping Burgers Instead of Condos -- Ouch!

There's still more discussion regarding whether the Fed is (privately) targeting the housing bubble. If the Fed is truly concerned with the "average American", Boobus Americanus, and therefore the average affordability of housing, what does that portend for those real estate markets that are at the extreme of the housing bubble? I don't know (but I have a good idea). I'm just throwing it out there in the hopes that the 800 to 1000 weekly readers of this blog post a comment.
"The mighty Federal Reserve. It's more powerful than a ballooning housing market, able to stop inflation in a single bound. And, if it slips, if it uses its super powers unwisely, if it goes too far, it could push the economy into recession with just a nudge of its pinkie."

"While investors are growing impatient with the Fed's rate hikes, it's important to remember that at the start of this tightening program, rates were at a 45-year low. "It was like war time," Krosby said."

"Citigroup's chief global equity strategist, Ajay Singh Kapur, quotes a market adage, 'Economies don't die of old age, they are always murdered by the central bank.' Eight of the last 12 recessions were preceded by Fed rate hikes, he said, a figure that is mentioned and repeated often by the 'all-powerful Fed' school of Wall Street strategists these days."

"This is nonsense, said Sandy Lincoln. There are factors that are far beyond the Fed's control, Lincoln said, such as the introduction of the euro, the globalization of the economy and the current sharp increases in commodities prices."

"What the Fed is trying to do is take the air out of the housing bubble, slow down the larger economy and see employment edge slightly lower."

""The key is a slowdown, not a crash," she said. Still, when the Fed has finished, people will get hurt, she said."

"Speculators could be in particular trouble. "The more leveraged you are, the more vulnerable you are to losing," she said. "Instead of flipping condos, you could be flipping burgers -- and I don't think the Fed cares. What the Fed cares about is the average American.""


Anonymous Anonymous said...

Excelent headline!

Nov 27, 2005, 4:15:00 AM  
Anonymous Anonymous said...

Good post. Even if many of us don't comment, it doesn't mean that we don't read and think....

Anyway, my feeling is that the fed, being a hybrid between government and private business interests, will always see to the welfare of those parties at the expense of private citizens. The only time when home owners benefit is when there is an unintended consequence of the feds activity. Last time around this was the attempt at fixing the y2k and telecom/.com bubble. The home buyers just got an accidental free ride. And they will get accidently taken out- if and when a percieved threat to the government and business interests comes to the foreground.

My guess is that will be when asian creditors slow the recycling of export dollars and a currency crisis is imminent. Probably in the 24 months.

That could be the eternal marin optimist in me speaking though....

Spending too much time at the SF gold show this weekend...

Nov 28, 2005, 8:44:00 PM  
Blogger Marinite said...

I just like to know that I am not wasting my time. The only feedback I can get is either comments or email. I prefer that a comment dialog get started because it is the comments of the readers which is typically where the real value lies.

Nov 29, 2005, 9:38:00 AM  

Post a Comment

<< Home

Terms of Use: The purpose of the Marin Real Estate Bubble weblog (located at URL and henceforth referred to as “MREB” or “this site”) is to present and discuss information relating to real estate and the real estate industry in general (locally, state-wide, nationally, and internationally) as it pertains to the thesis that recent real estate related activity is properly characterized as a “speculative mania” or a “bubble”. MREB is a non-profit, community site that depends on community participation and feedback. While MREB administrators do strive to confirm all information presented here and qualify all doubtful items, the information presented at MREB is neither definitive nor should it be construed as professional advice. All information published on MREB is provided “as is” without warranty of any kind and the administrators of this site shall not be liable for any direct or indirect damages arising out of use of this site. This site is moderated by MREB administrators and the MREB administrators reserve the right to edit, remove, or refuse postings that are off-topic, defamatory, libelous, offensive, or otherwise deemed inappropriate by MREB administrators. You should consult a finance professional before making any decisions based on information found on this site.

The contributors to this site may, from time to time, hold short (or long) positions in mentioned and related companies.