Tilted Forum Project Discussion Community  

Go Back   Tilted Forum Project Discussion Community > The Academy > Tilted Politics


 
 
LinkBack Thread Tools
Old 12-08-2007, 01:55 AM   #41 (permalink)
Banned
 
willravel, in my 1935 article on HOLC, 862,000 were initially granted mortgages which averaged $2,320 each. Economic conditions were much worse than today, but a look in 1930's house prices clearly shows that people paid less than $6,000,on average, for their homes:
Quote:
http://www.thepeoplehistory.com/30s-homes.html
Whenever possible we tried to pick a mix new or nearly new homes and plots of land to provide an idea of how much buying a home cost in the 1930's with 3 different homes from 3 different locations

Year
1930 House Morristown
New Jersey 2 family, 2 car garage, 11 rooms $9,500
1930 House Morristown
New Jersey 5 room family home $3,500
1931 Bungalow Lincoln
Nebraska 4 room bungalow with basement , gas , pine finish , full basement $2,100
1931 House Appleton
Wisconsin New Modern 5 bedroom Home $4,100
1931 House Oakland
California 8 room english style home 3 bedrooms , electric appliances, large basement $7,200
1932 House Middleton
New York New house 6 rooms and bath all modern improvements $4,200
1932 House Appleton
Wisconsin Modern 6 room house attached garage desirable location $4,500
1932 House Oakland
California English style home 5 big rooms every modern feature garage lawn shubbery $3,650
1932 Bungalow Lima
Ohio Modern Bungalow Basement 2 car garage furnace $2,500

1933 House Mansfield
Ohio 6 rooms , breakfast nook , enclosed porch, water softener, garage $4,000
1933 Spanish style House Oakland
California 3 large bedrooms , tile roof , big basement, furnace $6,200
1933 Farm Sheboygan
Wisconsin 10 acre chicken farm large basement barn and small house $1,900
1933 Cottage Fitchburg
Massachusetts 6 room , garage and large plot $2,800
1934 Stucco Bungalow Oakland
California 5 room stucco bungalow , breakfast room , seperate garage, delightful location $3,750

1934 Brick Home Mansfield
Ohio Brick built home 5 rooms modern in every respect $5,000
1934 Cottage Fitchburg
Massachusetts 6 room cottage all improvements on 1/2 acre $2,000
1934 House Sheboygan
Wisconsin 7 room house with bath and furnace, double garage and large lot $4,000
1935 English Type Home Oakland
California 6 rooms , 3 bedrooms, all electric kitchen, 2 car garage, close to country clubs $5,700
1935 Farm and House Mansfield
Ohio 160 acres with brick built house barns and spring fed water $4,000
1935 Brick Bungalow Lincoln
Nebraska 6 room brick bungalow large lot double garage 3 bedrooms den and loft $6,000
1936 2 story English Oakland
California 3 bedrooms social hall and double garage $7,150
1936 Land for sale Port Arthur
Texas Land for sale in 4 acre lots $200.00 per acre $800
1936 New House Mansfield
Ohio 6 roomed new house bath and sun parlour $4,400
1936 6 Rooms
New Jersey $5,000
1937 Colonial Home Oakland
California Brand new Moterey Collonial 6 rooms willow trees and large plot $6,750
1937 Cottage Port Authur
Texas 5 room home and bath in town center $2,250
1937 Lakeside Plot Appleton
Wisconsin Lakeside plot on Lake Winnibago 60ft X 200ft $500
1937 Colonial Brick Home Mansfield
Ohio 6 modern rooms and bath with open fireplace in living room $6,000
1938 House Appleton
Wisconsin 6 room home with full basement and hot water heater and garage $4,200
1938 Farm Mansfield
Ohio 71 acre farm with 6 room house , electricity and bath and large orchards $4,200
1938 House Hammond
Indiana 5 room house 1 acre plot with electricity $2,000
1938 Lakeshore Property Port Arthur
Texas 4 room home hot water lakeside views double garage $2,650
1939 English Cottage Oakland
California 5 rooms and sunroom in restricted area $5,250
1939 Modern House Mansfield
Ohio 5 room house large corner plot and double garage $2,400
1939 Bungalow Lincoln
Nebraska 6 room bungalow with gas heat 3 bedrooms , oak finish $3,250
1939 New Home Sheboygan
Wisconsin Newly built modern home fully insulated built in garage weather stripped new fully fitted kitchen $3,500
Are homeowners in California today earning 80 or 90 times the amounts earned there in 1935? If not, today's asking prices are unsustainable. Look at the stress on the new HOLC government bailout in 1935. At most, unemployment was in the low 20's percent, and the cost of almost all consumer goods had deflated. Even with tiny mortgage amounts, those "bailed out" were in arrears in huge numbers.

There is no foundation for hope of anything but huge price delcines. Lending requirements, conservative appraisals, a lack of liquidity, and foreclosures, potential buyer's price direction expectations, and pent up selling forces will kill valuations. They were liquidity driven, not by earnings fundamentals.

It is so obvious what will happen. The only "out" is to destroy what remains of the dollar's purchasing power. Lack of demand from economic decline will make it impossible to engineer the inflation that would be required to do that. They've tried, with $100 oil. I would not want to be elected US president, next november. It will be a nightmare term of four years.....
host is offline  
Old 12-08-2007, 04:34 AM   #42 (permalink)
Getting it.
 
Charlatan's Avatar
 
Super Moderator
Location: Lion City
Host, am I missing something? When you say that "today's asking prices are unsustainable", you seem to be suggesting that the cost of housing should be controlled.

Is this the case?
__________________
"My hands are on fire. Hands are on fire. Ain't got no more time for all you charlatans and liars."
- Old Man Luedecke
Charlatan is offline  
Old 12-08-2007, 07:36 AM   #43 (permalink)
Pissing in the cornflakes
 
Ustwo's Avatar
 
The average salary in 1930-1939 was $1368 annually.

host you are really unclear on the concept.

I'd also add that the homes are a HELL of a lot nicer these days, most back then were very cramped, one bathroom, and would have much larger families in them.

You know I've only looked at 3 articles posted by you in several weeks host, one didn't support your point at all, one you completely misinterpreted or misrepresented, and this one you don't seem to understand.

I pay my dental assistants more in a week (before your kinds taxes) and more in two weeks real money (after taxes) than the average annual income was when you posted those house prices.
__________________
Agents of the enemies who hold office in our own government, who attempt to eliminate our "freedoms" and our "right to know" are posting among us, I fear.....on this very forum. - host

Obama - Know a Man by the friends he keeps.
Ustwo is offline  
Old 12-08-2007, 08:18 AM   #44 (permalink)
Easy Rider
 
flstf's Avatar
 
Location: Moscow on the Ohio
Perhaps it is time for the 100 year mortgage. That should allow sellers to ask higher prices and still be affordable to many buyers.

I remember when I bought my first house in the early 70s. My father and grandfather thought I was crazy for taking out a 30 year loan. In their opinion 15 years was the max one should commit to. Of couse these were the kind of people who would save until they could pay cash for a car and never borrow money for one.

As it turned out that first house and others I bought later were some of the best investments I have made. Like the stock market real estate goes up and down but the overall trend over time is up.

I was joking about the 100 year loans but I wonder. At one time 30 year loans were considered irresponsible by many.
flstf is offline  
Old 12-08-2007, 08:57 AM   #45 (permalink)
Banned
 
Quote:
Originally Posted by Ustwo
The average salary in 1930-1939 was $1368 annually.

host you are really unclear on the concept.

I'd also add that the homes are a HELL of a lot nicer these days, most back then were very cramped, one bathroom, and would have much larger families in them.

You know I've only looked at 3 articles posted by you in several weeks host, one didn't support your point at all, one you completely misinterpreted or misrepresented, and this one you don't seem to understand.

I pay my dental assistants more in a week (before your kinds taxes) and more in two weeks real money (after taxes) than the average annual income was when you posted those house prices.
Will you please stop your bullshit personal attacks? I don't know WTF you are talking about. I do not think that you do. You posted no link to support your 1930's income figure.

I stand by what I posted:

In 2006, the median annual household income according to the US Census Bureau was determined to be $48,201.00.
http://pubdb3.census.gov/macro/03200.../new04_001.htm

The 2006 average household income is 35.23 times your $1368 1930's income.
Quote:
http://www.fanniemae.com/newsreleases/2005/3649.jhtml
....Most loans Fannie Mae purchases are well below the conforming limit. Our average loan size for single-family properties in the first three quarters of 2005 is about $172,000.....
Fannie Mae funds no mortgage loan higher than $417,000, (iI am taking pains to be fair to your "argument") so their average loan is lower than the average of all mortgage loans.

In my last post, I supported the figure of average mortgage size in the 1930's HOLC program as $2320. <h3>$172,000 is 74.13 times $2320....</h3>

In these
Quote:
http://www.city-data.com/top2.html

Estimated median household income in 2005: $116,500 (it was $106,478 in 2000)
Englewood Cliffs $116,500

Estimated median house/condo value in 2005: $944,300 (it was $507,100 in 2000)
Englewood Cliffs $944,300
http://www.city-data.com/city/Englew...ew-Jersey.html


Estimated median household income in 2005: $210,500 (it was $200,001 in 2000)
Atherton $210,500

Estimated median house/condo value in 2005: $1,626,400 (it was $1,000,001 in 2000)
Atherton $1,626,400
http://www.city-data.com/city/Atherton-California.html
Above, it is easy to see that income in the highest average income city and in the lowest, of the 100 cities listed in the US, did not keep pace with rising home prices.

In Atherton, CA, and in Englewood Cliffs, NJ, average home prices were about 8 times average household income, in 2005.

The highest priced, post 1932 house on the list in my last post was located in Oakland, California, priced at $7150. Using your average national income figure of $1368, that Oakland house was priced at 5.22 times average national annual household income.

<h3>Please review your accusations in your last post. I've supported my contention that the core problem is that housing prices have risen dramatically above income, as have average mortgage size, compared to historical "norms".</h3>



In my post #18 here: http://www.tfproject.org/tfp/showthread.php?p=2354202
I responded to your criticism (attack) (contained in your post #15).


I did not respond to the criticism you levied in this post:
http://www.tfproject.org/tfp/showpos...3&postcount=57

..because I am weary from your groundless and needless critcism. In the post I authored on that thread that you criticized, I made it clear that the study that I cited data and conclusions from (you called it cherry picking) was biased towards making conclusions on wealth distribution, based on numbers of savings accounts opened and maintained by 25-35 year olds:
Quote:
Originally Posted by host
http://www.tfproject.org/tfp/showthr...13#post2355013

This is a recent study, and it is consistent with data covering all US age groups. I predict that the response will be that "they are young", and the fact will be ignored or downplayed,that the gains in income and wealth accumulation are confined to the top 20 percent, as every other set of data also indicates....

<i>Page 2

The proportion of this population that possesses a savings account or other fi-
nancial assets has declined significantly, as has median net worth.
Between 1985 and 2004, net worth grew almost 20 percent for those in the top quintile of
the wealth distribution and fell for the other 80 percent. This decline was most pro-
nounced for those in the bottom 20 percent of the distribution.</i>

<h3>There is a heavy emphasis on declining numbers of savings accounts.</h3> Where would the money come from for the masses to deposit in the bank. The money is not reaching them and the costs of basics...housing, food, transportation have risen dramatically since 2001.
You may not have known that the study was part of a campaign to encourage savings accounts:
http://www.aicpa.org/financialliteracy/FeedThePig/

...or that it was irrelevant to make a comparison between savings accounts per capita in 2006 vs. 1985, because:

Quote:
http://query.nytimes.com/gst/fullpag...5BC0A963948260
LOWER MORTGAGE RATES BRING OUT SHOPPERS IN DROVES

By FAY S. JOYCE
<h3>Published: August 11, 1985</h3>

WITH interest rates down to their lowest level in at least five years, brokers and builders report that metropolitan-area residents are out in force shopping for housing.

Last week, fixed-rate mortgages in the metropolitan area were averaging 12 to 12 1/4 percent, with perhaps 2 to 4 percent of the mortgage amount due at the closing. Some competitive lenders' rates run even lower -and mortgage companies report they are doing a strong business.

On a 30-year $100,000 mortgage, for example, the monthly payment at 12 percent is $1,028.62. <h3>As recently as January, interest rates were 13 1/4 percent</h3>, requiring monthly payments of $1,125.78 - a saving of $97.16 a month.....

....In general, prices have gone up. The average price of a house sold through M.L.S. in Nassau County in June was $148,700, compared with $122,500 a year earlier. In Queens, the average was $122,500, compared with $82,000 in June 1984. In western Suffolk, it was $128,100 against $104,800 a year earlier. ACCORDING to Gilbert Mercurio, executive vice president of the Westchester County M.L.S., residential sales prices reached $225,570 for a single family house in the second quarter of this year, up from $181,499 the year before. Condominiums, which account for 22 percent of the county's residential sales, cost an average of $103,650 last June and $84,971 the year before.

''It's difficult to find a house under $100,000 in good areas,'' said Verna Townsley, a broker associate with Papp Realty on Staten Island. ''It's very difficult for first-time buyers. I feel sorry for them. People can just about buy a baloney sandwich at the closing.''

But for many buyers, the lower rates have meant the ability to qualify for a mortgage large enough to buy the house they may have wanted before but could not afford. The first-time buyer - who normally is least able to make a down payment large enough to make monthly debt service affordable - has been most favored by this change.

Kenneth R. Kaan and his wife Debra, both in their 20's and working, bought their first house in East Brunswick, N. J. as interest rates were dropping. Their two-story, two-bedroom colonial cost less than $90,000. Their mortgage is $700 a month.

''I watched the market trend and shopped around for a reasonable mortgage,'' Mr. Kaan said, and found one with a 30-year term and a fixed rate of 12 1/2 percent. ''I'm very happy with how I made out. That's what we're programmed to think now,'' he said with a laugh. ''A cheap home is under $100,000 and a good mortgage rate is 12 1/2 percent.'...
...in 1985, savings account interest rates were probably triple what they were in 2006, with inflation trending similarly in both periods. I posted that I was citing the income and wealth distribution figures in the study because they were current, and you attacked, me, as you did here, baselessly.

Last edited by host; 12-08-2007 at 09:03 AM..
host is offline  
Old 12-08-2007, 10:02 AM   #46 (permalink)
 
roachboy's Avatar
 
Super Moderator
Location: essex ma
host---these last couple posts of yours are very interesting...thanks for putting them together.

what i dont follow is the linkage you make between this credit crisis and the entirety of the post-bretton woods currency system. it seems to me to jump a number of levels analytically. could you spell out the steps involved?
__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite
roachboy is offline  
Old 12-08-2007, 11:47 AM   #47 (permalink)
Banned
 
Quote:
Originally Posted by roachboy
host---these last couple posts of yours are very interesting...thanks for putting them together.

what i dont follow is the linkage you make between this credit crisis and the entirety of the post-bretton woods currency system. it seems to me to jump a number of levels analytically. could you spell out the steps involved?
Thank you, roachboy.

I think that the best way to start to answer you is to offer this:
Quote:
http://www.constitution.org/mon/greenspan_gold.htm

......In the absence of the gold standard, there is no way to protect savings from confiscation through inflation. There is no safe store of value. If there were, the government would have to make its holding illegal, as was done in the case of gold. If everyone decided, for example, to convert all his bank deposits to silver or copper or any other good, and thereafter declined to accept checks as payment for goods, bank deposits would lose their purchasing power and government-created bank credit would be worthless as a claim on goods. The financial policy of the welfare state requires that there be no way for the owners of wealth to protect themselves.

This is the shabby secret of the welfare statists' tirades against gold. Deficit spending is simply a scheme for the confiscation of wealth. Gold stands in the way of this insidious process. It stands as a protector of property rights. If one grasps this, one has no difficulty in understanding the statists' antagonism toward the gold standard.
The author of the above statements is quoted more than 30 years later, lower on this page:
Quote:

......No. We are not accepting downturns, nor do I think we look at it as desirable.....
"They"dodged a downturn after the 2000 Nasdaq stock index crash, which took blue chips stocks with it, over the two subsequent years, via a massive creation and pumping of liquidity into "hard assets"...housing, culminating in the sub-prime lending blow off top of 2005-2006.

For 20 years before that, culminating in the blow off top of paper assets in the 2000 nasdaq, the scheme was to destroy demand for hard assets:


This was written nearly 3-1/2 years ago, but it is a brief relevant piece of the puzzle, IMO:
Quote:
http://www.financialsense.com/Market...2004/0614.html
....Austrians warn of a crack-up boom, wherein the real economy suffers from encroachment by the financial sector, and monetary debasement urges on investment in hard assets, commodities, and energy supplies. The flight from paper currency and securities has encouraged investment in things essential for industrial production, building construction, energy output, and food preparation.

The trend is evident in the bull market shown in the Commodities Research Bureau chart. Corporate profit margins and household budgets are each under great strain. Cost inflation threatens businesses and families. Some label the movement underway as the Great Train Wreck. A major driving force overshadows the situation. It is historic advances made by China and their growth story....
In 1980, gold briefly peaked at $800+ per oz. There was a day in 1980 when an ounce of gold bought the DOW, the Dow Jones Industrials index (DJIA) of 30 stocks was at 800 points briefly in 1980. Silver jumped to $50/ounce. I can remember, in late 1979, long lines at metals exchanges (primarily coin shops and some jewelery fabrication outlets) of people queued up to sell their sterling tea service, heirloom flat ware, and hoarded pre-1965 silver US dollar coins, halves, qtrs., and dimes at prices that have not been reached since.

While gold has exceeded $800 this year for the first time in 27 years, silver has barely broken $16.00.

In the 80's and 90's, central banks were bent on putting gold back in it's box. They conducted surprise, huge auctions of their gold stores to drive the price of gold down, intending to keep the invetor emphasis on paper money and other paper assets. In addition, and probably with more impact, they lent their gold to speculators at one percent annual interest. The speculators sold the borrowed gold, further pressuring down prices.
Quote:
http://www.moneyweek.com/file/8038/h...gold-down.html
How central banks have held gold down

09.02.2006

....."The starting point for the real story on gold is the quantity of gold held by central banks and the financial derivatives related to part of this gold," says Cheuvreux. "According to the IMF the official figure for gold held by central banks in their vaults is 31,000 tonnes, but the reality is much lower..."

"The origin of today's problems in the gold market date back to the 1980s when central banks began to lend or deposit part of their gold holdings with leading bullion banks (such as JPMorgan Chase, Goldman Sachs, Citibank, etc) in return for a fee, the gold lease rate, typically about 1-2% p.a then (currently about 0.2%). This was seen as a sensible use for an asset that otherwise earned no income for central banks..."

"From the mid-1990s onwards, however, the nature of much of the central bank gold lending and sales changed," says Cheuvreux. And here, we bring new readers up to speed with the story so far.

According to GATA – and now Credit Agricole – the central banks of the major Western governments have lent out a lot more gold than they've admitted to. Why not?

It was just sitting there...inert...at No.79 on the Periodic Table...racking up insurance and storage costs...a barbarous relic of a time before Mankind perfected the art of printing money with no other backing than the promise to pay with more paper.

It seemed like a no-brainer. The central banks got to squeeze a yield from their gold. The borrowers got to sell the gold on, and use the proceeds to fund more exciting investments like 10-year US Treasuries yielding 4% per year or so. Yes, these "carry trade" returns were tiny. But the cost of borrowing gold was tinier still.

Of course, most of the gold has since wound up in necklaces and wedding rings. So it's unlikely to make it back into the global bullion market. And it's never going to see the inside of a central bank vault again.

But what's to worry about? So long as gold remains a mere relic...a yellow reminder of what used to be money...no harm done. Unless something absurd happens, that is. Something absurd like, say, gold doubling to $573 an ounce inside 5 years. If that happened, then the "carry trade" of borrowing gold to invest in paper could become a very expensive way to bankrupt the entire global financial system.

Hence GATA's contention that Western central banks have sought to keep the price of gold down. Cheuvreux now cites the Bank of England's infamous fire-sale of mid-1999. Gordon Brown and the US administration had just failed to make the International Monetary Fund dump some of its gold onto the open market. So instead, Prudence sold half of our holding – yours and mine, gentle reader – at the bottom of gold's 20-year bear market.

"From the UK's standpoint," says Cheuvreux, "the handling of the sale was a fiasco. We believe the current loss to UK taxpayers of about $2bn makes a mockery of Tony Blair's comment to the House of Commons:
'It was carried through perfectly sensibly and we actually got the best deal for the country.'"

New and "unexpected" sources of gold supply also showed up at the turn of this century. In October 1999, for instance, the Bank of Kuwait offered to lend the UK its entire 79-tonne holding of gold. "Additional US military spending for Kuwait was announced shortly after," notes Cheuvreux...which is some kind of accusation, right?

Chile then sold 34 tonnes in 2000, and Uruguay moved 57 tonnes to London for lending. Most of the cash realised from these transactions – as with most other gold carry trade deals - found its way into government bonds. So here too, the central banks distorted the market, pushing up bond prices...pushing down yields...and helping pump up the bubble in debt.

"Our suspicion is that Bernanke will try to keep the US credit expansion going as long as possible (probably with the inevitable consequences). A further leg in the current credit expansion and inflationary boom in assets (with hyperinflationary risk) seems most likely outcome at this stage. At the same time, the heavily debtladen US economy is also at risk of a deflationary slowdown.".....
To his credit, Ron Paul hounded Alan Greenspan whenever Greenpsan tesitified before the congressional committee that Paul served on:
Quote:
http://www.usagold.com/gildedopinion...span-gold.html
7/22/1998.....

Dr. PAUL. A very quick question. You seem to welcome, and you have been quoted as welcoming, a downturn in the economy to compensate for the surge and modest growth in the economy. Is it not true that in a free market, with sound money, you never welcome a downturn in the economy? You never welcome the idea of decreased growth, and you don't concern yourself about this? And yet, here we talk about when is the Fed going to intervene and turn down the economy?

It seems that there is a welcoming effect to the fact that the Southeast Asia has tampered-you know, price pressures. Couldn't we make a case that the free market would operate a lot better than the market we use today?

Mr. GREENSPAN. I think you have to define what you mean by a ''free market.'' If you have a fiat currency, which is what everyone has in the world--

Dr. PAUL. That is not free market.

Mr. GREENSPAN. That is not free market. Central banks, of necessity, determine what the money supply is. If you are on a gold standard or other mechanism in which the central banks do not have discretion, then the system works automatically.

The reason there is very little support for the gold standard is the consequences of those types of market adjustments are not considered to be appropriate in the 20th and 21st century. I am one of the rare people who have still some nostalgic view about the old gold standard, as you know, but I must tell you, I am in a very small minority among my colleagues on that issue.

<h3>Dr. PAUL. So I guess we have to accept the downturns?

Mr. GREENSPAN. No. We are not accepting downturns, nor do I think we look at it as desirable.</h3> What we do look at is an economy which is running at a pace which is unsustainable over the long run and will eventually run off the tracks and create significant disruption. So we do not look forward to a weakening in growth. All we are concerned about is a pattern of growth which is sustainable.

In other words, when we talk about our goal as maximum sustainable economic growth, the ''maximum'' and the ''sustainable'' are both crucial elements to that. We can get a maximum growth in the short run, which is not going to help anybody over a longer-term period. That we would consider to be an unacceptable or undesirable pattern of growth.

Dr. PAUL. Thank you.

2/24/1999

Dr. PAUL. Thank you, Mr. Chairman.

Mr. Greenspan, a lot of economists look to the price of gold as an indicator and as a monetary tool. It has been reported that you might even look at the price of gold on occasion.

Last summer on a couple of occasions here when you were talking before the committees on securities and on derivatives you mentioned something that was interesting. You said that central banks stand ready to sell gold in increasing quantities should the price rise, which I thought was rather interesting.

Then I followed up with a letter to you to ask you whether or not our central bank might not be involved in something like that, in the gold market. And you did answer me and stated that since the 1930's the Federal Reserve has had no authority to be involved with the gold markets.

I am quite confident that the Treasury has authority to be in gold markets, but you stated that the Federal Reserve did not. But this contradicts some reports that have been made by some Federal Reserve officials that said that the New York Fed was very much involved in the London gold pool from 1961 to 1971. But your answer implied that the Fed has never been involved since the 1930's, which I think is interesting.

The reason why this could be of importance is that we do know that our Treasury was supporting a fixed price of gold at $35 an ounce in the 1960's, so therefore the price of gold of $35 an ounce was totally useless in predicting what might happen and what did happen in the 1970's. So if central banks stand ready to lease and sell gold in increasing amounts should the price rise, we are more or less, you know, in a time when the gold price is probably so-called fixed; and we do know that the evidence is there that central banks do loan gold, they sell gold. So could it be that the price of gold today is less valuable to the economists, who think that gold could help us, in thinking that maybe we are in a period of time comparable to what we had in the 1960's?

Mr. GREENSPAN. I think the price of gold has, over the decades, been a generally usable indicator of what the level of inflation has been. Obviously, during the period of an active gold standard, which was really prior to World War I, the price level pretty much locked itself in to the gold price. In fact, by definition it did.

The issue of buying and selling gold as the price changes is indeed exactly what we used to do. We used to, at a certain thing called the gold points, which was the price of gold plus the transportation cost differentials, we, that is, the United States Treasury, stood ready to buy and sell gold at a spread, as indeed all other participants in the gold standard did. So in that regard that was exactly what was happening.

But, needless to say, since we have gone off the gold standard, and especially since 1973, there has been basically a general float of the dollar vis-a-vis gold, which means that the gold price is like another commodity's price.

Nonetheless, like a lot of commodity prices, and perhaps better than most, it has been useful, in my judgment, in trying to get some sense of what inflationary pressures have evolved in this country.

Dr. PAUL. Even if the central banks, who are the major holders of gold, are willing to sell gold in order to manipulate the price or hold the price at a certain level? We are not on a gold standard, so what would the motivation be?

Mr. GREENSPAN. They are not doing it for purposes of fixing the gold price. They are looking for it to reduce their stock of gold when they have sold on the grounds that: one, it costs to store the gold; and, two, it didn't obtain any interest. So they perceived it to be a poor asset to hold. But the purpose was not to manipulate the price of gold.
Quote:
2/17/2000

Dr. PAUL. "My concern is what is going to happen when this bubble bursts? I think it will, unless you can reassure me. But the one specific question I have is will M3 shrink? Is that a goal of yours, to shrink M3, or is it only to withdraw some of that credit that you injected through the noncrisis of Y2K?"

Mr. GREENSPAN. "Our problem is, we used M1 at one point as the proxy for money, and it turned out to be very difficult as an indicator of any financial state. We then went to M2 and had a similar problem. … <h3>The difficulty is in defining what part of our liquidity structure is truly money. … </h3>Our measures of money have been inadequate and as a consequence of that we … have downgraded the use of the monetary aggregates for monetary policy purposes.”

<h3>Dr. PAUL. "It is hard to manage something you can’t define."

Mr. GREENSPAN. "It is not possible to manage something you cannot define."
</h3>
2/11/2004

Dr. PAUL. "Maybe there is too much power in the hands of those who control monetary policy, the power to create the financial bubbles, the power to maybe bring the bubble about, the power to change the value of the stock market within minutes? That to me is just an ominous power and challenges the whole concept of freedom and liberty sound money."

Dr. GREENSPAN. "Congressman, as I have said to you before, the problem you are alluding to is the conversion of a commodity standard to fiat money. We have statutorily gone onto a fiat money standard, and as a consequence of that it is inevitable that the authority, which is the producer of the money supply, will have inordinate power."

7/21/2004

Dr. PAUL. "Yesterday's testimony was received in the press as you painting a pretty rosy picture of the economy. … So my question to you is, how unique do you think this period of time is that we live in and the job that you have? … <h3>Since there is no evidence that fiat money works in the long run, is there any possibility that you would entertain that, quote, we may have to address the subject of overall monetary policy not only domestically but internationally in order to restore real growth."</h3>

Mr. GREENSPAN. "Well, Congressman, you are raising the more fundamental question as to being on a commodity standard or another standard. And this issue has been debated, as you know as well as I, extensively for a significant period of time. Once you decide that a commodity standard such as the gold standard is, for whatever reasons, not acceptable in a society and you go to a fiat currency, then the question is automatically, unless you have Government endeavoring to determine the supply of the currency, it is very difficult to create what effectively the gold standard did. I think you will find, as I have indicated to you before, that most effective central banks in this fiat money period <h3>tend to be successful largely because we tend to replicate that which would probably have occurred under a commodity standard in general."</h3>
So, with that background of contradiction and mismanagment in place in this post, consider that "they" will do anything to "preserve growth". They will contrive and implement ways to make house valuations seem higher than the trend and fundamentals dictate that they will go. I believe that the only way to do this is to massively inflate the dollar. First there will be attempts like this bailout to inflate housing and other "hard goods" prices, the exact opposite of the recent scam to drive gold prices down.

As the ecomomy increaqsingly fails, and the downturn grips the entire world and chokes growth and demand for petroleum and raw materials, as it already has for US housing units, what the FED fears most, will happen. Deflationary depression. The only question is how many will be destroyed first by the continued inflationary attempt....it's already killing the solvency of many who bought into this housing bubble which was a "hail mary" save in response to the 2000 stock and other paper assets downturn.

I don't see where they can find another speculative bubble to throw instantly printed out of thin air liquidity at. Too many individual and business credit ratings are imploding to provide a sufficient pool of "new marks" to lend money to for buying into the "next new thing"....so it's wreck the dollar to save housing and lower the burden of the accumulated federal debt.

Unlike Argentina in 2000, the US enjoys the advantage of most of it's debt being denominated (and owed) in US dollars. As the Fed prints more to pump inflation to preserve "growth", debt is paid back against unchanged dollar figured principle...lent at a dolalr worth much more than when paid back via excessively printed, fiat script!
host is offline  
Old 12-08-2007, 12:20 PM   #48 (permalink)
... a sort of licensed troubleshooter.
 
Willravel's Avatar
 
Quote:
Originally Posted by host
Are homeowners in California today earning 80 or 90 times the amounts earned there in 1935? If not, today's asking prices are unsustainable.
This is, of course, true. Especially in my area specifically. My home is unimpressive. It has two small bedrooms and a medium bedroom, 1.5 bathrooms, a medium living-room, kitchen, 2 car garage. All in all it's very mundane; not particularly fancy. If my home were transported to St. Louis or Milwaukee, it would possibly be worth $150k. Here in San Jose? $1.2m as of about 9-10 months ago. While it's true that people in the SF Bay area do make more than their counterparts elsewhere, we don't make it 8 fold. I don't think there are any people in my position in the midwest making $11,000-$12,000 a year. I knew that these prices weren't sustainable, just like I know the dollar is going to crash and I know that there will be a war for oil in South America... but like those things I had the foolish hope that it was a long way off. I kinda feel embarrassed to say that. I should have known better.
Willravel is offline  
Old 12-08-2007, 12:53 PM   #49 (permalink)
 
roachboy's Avatar
 
Super Moderator
Location: essex ma
host:

it seems to me that there are two ways to look at this...

either the problems under discussion here (and more broadly) follow from the ideology of endless growth, which is a core assumption in the gospel according to neo-liberalism--in which case the general characteristics of money since world war 2 are irrelevant...except insofar as the conversation about these general characteristics entails a concession of what i take as self-evident---that "free markets" are fictions, because they presuppose that exchange is a fact of nature and that its structure is optimally one that corresponds closest to what amounts to "natural law"--which does not exist.

so the exchange between rp and greenspan is one between two free marketeers, one of whom prefers for political reasons to position himself as a purist, and the other who is, by virtue of his position, compromised.

but the shared assumption between them appears to be that such markets are in fact possible, and that a monetary system hinged to the gold standard is, ideally, a system that would enable such fictions to unfold in the world that other people know about.

i dont buy it.

or you see a formal analogy between the characteristics of money since world war 2 and the neo-liberal ideology of endless growth....but nothing more than a formal analogy---the problem lay with the incoherence of market ideology as a whole, with neoliberalism as a whole, and should be addressed in a manner that enables us to look forward rather than back to the 1930s for solutions.


it seems to me that these lead you in very different directions.

looping back to the first point for a minute: rp's position clear, but is also so vague (that is, so lacking in correspondence to the empirical world) that it simply displaces the problem---so that, in rp-world, a "solution" to problems on the order of the subprime crisis---which is a speculation crisis----would entail a return to the gold standard (as if that is not just another form of fiat) or to some curious notion like good ole major douglas...the economic outlook that landed ezra pound in an ideological worldview that found its outlet on italilan national radio in the late 1930s and 40s.

rp wants money to be a thing. but money is a medium, and even if you link value to a second-order object, it is still a medium. as a medium, it hardly seems important whether there are predicates that one can attach to individual currency elements or not--the medium values would still fluctuate, would still be internally relative. so it seems that another way to think about dealing with the nested crises we move through would be to reject neo-liberal prescriptions and for nation-states to act to stabilize their own currencies rather than allowing their values to be determined to the extent they presently are by international currency market fluctuations. another possibility is something entirely other, a new system, which would be a version of a revolutionary socio-economic transformation. but there are no coherent proposals out there at this time that i know of that outline what such a new system would look like---so folk like rp run away, head back to some outmoded gold standard past as a model.




but what if the problem is more local than the entire history of monetary system logic since world war 2, and can be linked to the irrational assumptions particular to neoliberalism--regarding growth as eternal, for example, the collapse of expansion and equilibrium into each other. would this perspective not open onto a range of more available and implementation-possible options? like in the shorter run, more social-democratic type actions?

in other words, this is the world that neoliberalism has wrought.
why let that noxious, incoherent ideology and the politics based on it off the hook by fantasizing about a return to the gold standard?


i hope the questions i am trying to pose here are clear.
i have to go, so am posting them in this form....
__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite

Last edited by roachboy; 12-08-2007 at 12:56 PM..
roachboy is offline  
Old 12-08-2007, 03:29 PM   #50 (permalink)
Deja Moo
 
Elphaba's Avatar
 
Location: Olympic Peninsula, WA
Quote:
Originally Posted by Charlatan
Does anyone have any other way of fixing this that doesn't require a time machine ( ).
Charlatan, if you followed the above exchange between host and roachboy, you'll understand my choice of the time machine. There is more chance of that than a "fix" of some kind.

For myself, I'm going to try to ride it out with the distinct possibility that I will be applying for a goat herding job in Chapala, Mexico.
__________________
"You can't ignore politics, no matter how much you'd like to." Molly Ivins - 1944-2007
Elphaba is offline  
Old 12-08-2007, 04:12 PM   #51 (permalink)
 
roachboy's Avatar
 
Super Moderator
Location: essex ma
still kinda jammed up time-wise, but in order to block a wholesale slide to despair as to alternative ways of thinking about currency markets==assuming that the formal analogy between "fiat currency" and crises of speculation at more local levels holds as more than a formal analogy (i'm not convinced of this at all) there is the tobin tax initiative.

here is a global policy forum collection of links/information on the initiative:

http://www.globalpolicy.org/socecon/...rtax/index.htm

there's alot of material here to wade through, but a bit of time poking around will open up an entirely alternate way of thinking about international currency markets, their volatity, the relations between this volatility and political stability, and at least poses an alternative.

i used to do some work for attac a few years ago, and they were at one time a useful resource not only about this, but also for papers that debated, refined and extended this (and other) ideas...but the organization imploded a year or so ago and their archives have apparently disappeared from the web for now...the point is that this is not a new idea, it has been around and has been used for some time in the context of efforts to undermine neo-liberal hegemony.

funny that folk in the states dont seem to know about it.
kinda makes you wonder about the reactionary ideological bubble we move around in here, dont it?

i'll wait to see if anything happens from here before i post any of my views on this.
__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite
roachboy is offline  
Old 12-08-2007, 05:22 PM   #52 (permalink)
Banned
 
Quote:
Originally Posted by roachboy
still kinda jammed up time-wise, but in order to block a wholesale slide to despair as to alternative ways of thinking about currency markets==assuming that the formal analogy between "fiat currency" and crises of speculation at more local levels holds as more than a formal analogy (i'm not convinced of this at all) there is the tobin tax initiative.

here is a global policy forum collection of links/information on the initiative:

http://www.globalpolicy.org/socecon/...rtax/index.htm

there's alot of material here to wade through, but a bit of time poking around will open up an entirely alternate way of thinking about international currency markets, their volatity, the relations between this volatility and political stability, and at least poses an alternative.

i used to do some work for attac a few years ago, and they were at one time a useful resource not only about this, but also for papers that debated, refined and extended this (and other) ideas...but the organization imploded a year or so ago and their archives have apparently disappeared from the web for now...the point is that this is not a new idea, it has been around and has been used for some time in the context of efforts to undermine neo-liberal hegemony.

funny that folk in the states dont seem to know about it.
kinda makes you wonder about the reactionary ideological bubble we move around in here, dont it?

i'll wait to see if anything happens from here before i post any of my views on this.
I found attac archives here:
http://archive.attac.org/indexen/index.html

...there are no links to US or Canadian branches or participants. I had never heard of attac.

It came to me earlier today that the contrived system of stocks and realty "aasets" that can only go "up"in valuation, along with the underlying economies that support them, went into "hyperdrive" mode....intense governmental, central bank driven interference, beginning about the time that it began to sink in that technology had made the old stimulus, "World War" obsolete with the exhibition of the destruction wrought by atomic and then even more popular thermo-nuclear devices.

I will have to think about the international currency transaction tax. I trade millions of dollars in securities annually, using the same small pool of funds to enter and exit positions. I hold some positions for less than a minute and others for days or even weeks or months at a time. You are talking about taxing "churn", which is what "trading" anything, is about.

Finding a way to tax profits and allow deductions for losses is always preferred, and easier said than done, compared to a transaction tax, I know.

It took a Dow Index crash from a 393 pt. high in 1929, to a low at just 41 points above zero, on July 8, 1932, to create an interest and preference for social-democratic reform, 70 years ago. I came across this "Time" capsule when I was researching the HOLC mortgage bailout:
Quote:
http://www.time.com/time/magazine/ar...8554-5,00.html
Kansas Candidate
Monday, May. 18, 1936

....If Governor Landon is nominated at Cleveland, pious people who dislike the Roosevelt religious record will have a chance to vote for a Methodist who goes to church about as irregularly as the present President.

"Fox." Son of a well-to-do independent oil producer, Alf Landon belonged to Phi Gamma Delta at University of Kansas in 1904-08. Fraternity records show that he got the ice cream course eliminated from the house menu, tried and failed to have only one orchestra instead of two hired for the spring lawn party, outlawed gambling in the chapter house, opposed motions to install a stein rack and to discontinue "Dr. Wilbur's Bible lessons." No niggard, however, Alf Landon gave the fraternity a cuspidor. No "Christer," he downed his beer with other members of Theta Nu Epsilon, oldtime campus drinking society. In his one year of academic study and three years of law, Alf Landon's prime avocation was the workings of fraternity and campus politics, which he mastered so thoroughly that fellow students, nicknamed him "The Fox."

Back home in Independence, Alf Landon spent four years in a bank, then plunged into the oil business as an independent producer like his father. In that arduous and risky line—by enterprise, hard work, fair dealing and stiff bargaining—he made a fortune which is now estimated at from $250,000 to $2,000,000, invested chiefly in some 100 Kansas and Oklahoma wells he still owns. He also, in his comings & goings in search of oil, made friends all over Kansas. Shortly after his first wife died in 1918, Alf Landon volunteered for Army Service, was called in mid-September, commissioned a Lieutenant in the Chemical Warfare Division in October, month before the Armistice. Candidate Landon wears his American Legion button, does not talk much about his War record.

Available on request at Governor Landon's Kansas City headquarters are mimeographed copies of press puffs ballyhooing him as the Great Budget Balancer. Alf Landon is careful to say, however, that the credit for Kansas' fiscal soundness "Does not belong to any one political party or State administration."

Kansas finances rest on three main props: 1) the Tax Limitation Act, restricting local taxing bodies to a maximum levy for any one purpose and to a maximum total; 2) the Budget Law, requiring local governments to publish their budgets in advance, hold public hearings; 3) the Cash Basis Law which limits every locality to pay-as-you-go spending. The last is a Landon measure. The first two were initiated by Democratic Governor Woodring. Governor Landon has stuck to the law's letter. But the enormous myth which GOPartisans have made of his budget-balancing feat may be finally debunked by reflection on the probable state of Kansas' finances if the Federal budget had been balanced since 1933, thus depriving dust, drought and Depression-stricken Kansas of the $400,000,000 of Federal money which has poured in from such sources as RFC, HOLC and FCA loans, AAA checks and Relief.

Alf Landon has shrewdly avoided offering specific answers to national problems. His rare speeches to date have been to the effect that it would be nice to attain many New Deal goals without New Deal spending and experiment. "No reasonable citizen should ask us what to do," cried he in his second broadside at the New Deal last winter. "The American people propose to solve their problems under the American system."

In his well-rehearsed radio interview last week, Candidate Landon uttered his boldest words to date, took the following stands on issues of the day:

¶The Republican Campaign: The Republican Party must proceed along sound and progressive lines. . . . Progressive government . . . can succeed only when accompanied by careful preparation, competent administration and sound fiscal policies.

¶Labor and Agriculture: Where labor or agriculture are under disadvantages these must be removed.

¶Youth: What the young people of America really need and earnestly desire is not relief but opportunity.

¶Foreign Policy: It might repay all of us to read Washington's Farewell Address again.

¶Government & Business: There should be regulation wherever regulation keeps open opportunity and protects, not hampers, the people as a whole in the exercise of their rights. ... I believe we have got to attack the evils of monopoly frankly and resolutely. . . .

¶Social Security: I am for it but . . .

¶Relief: When we have the facts, we must provide an honest and effective system, administered so that the money will go to those who need it and deserve it, free from political restriction.

With these views, spoken in an honest, cracker-barrel voice which showed that Alf Landon's efforts to improve his strident, monotonous radio delivery have brought results, hardly a citizen, from President Roosevelt down, could well differ. Nor could they disagree with another remark of Governor Landon's in the course of his interview: "Good intentions are not enough."

Alf M. Landon has been an able Governor of Kansas. Honestly provincial, he is devouring stiff economic and social treatises, trying hard to push his mental horizon beyond Kansas plains. Of his capacity to fill the White House chair, his friend William Allen White devoutly declares: "If a man has any latent subconscious powers they are aroused by the overwhelming responsibility. ... I am inclined to believe that Landon would rise to it. I don't know. No man knows. I don't think he knows."
Six months later, Roosevelt took every state, including Landon's Kansas, with the exceptions of Maine and Vermont...

I did not know until I read the above article and did some checking, that Alf's daughter, "Nancy Jo", was 20 year US senator from Kansas, Nancy Kassebaum Baker. She is currently married to former Tennessee Senator and former white house chief of staff, Howard Baker.

I read an article about medium of exchange on the mises.org site. Starting out with the desire for an exchange medium more convenient than a scenario where a man with an appetite for fresh fish acts upon his desire to have some on his table, by taking one of his most portable and valuable possessions, a telescope, down to the docks in search of a fisherman unloading a fresh catch from his boat who would be interested in owning said telescope.

As long as anyone wants to own something before they have all of the money to buy it, and as long as items rising in value are the most liquid items, further ing their attractiveness even more, and as long as people use money to "keep score" in a way similar to contests to see who has the biggest dick. instead of simply as a "store of value", and a "medium of exchange", there will be market bubbles and irrationality.

Housing valuations were much lower when mortgages were hard to come by and amounted to no more than 50 percent of total valuation of a property with repayment terms of five years. As terms loosened and lending ratios to total valuation dropped,and mortgage interest paid became deductible, more potential buyers could afford to bid on housing properties.

If the government central bank lowers it's key interest rate from six percent to one percent and relaxes lending terms and suspends oversight, and allows it's own GSE's like Fannie and Freddie to raise their lending limits to chase rising prices, is the government working to set housing prices higher?

How does a cental bank that has acted so irresponsibly pull back on it's subsidy and not "cream" those who bought at the top of a price "mountain" that the central bank itself, largely husbanded?

What is this "free" enterprise some of you speak of? I see enterprise driven by special interests and agendas, for the benefit of a few, at the expense of the many, but we don't talk about that in America.
host is offline  
Old 12-08-2007, 07:45 PM   #53 (permalink)
Getting it.
 
Charlatan's Avatar
 
Super Moderator
Location: Lion City
Quote:
Originally Posted by host
Housing valuations were much lower when mortgages were hard to come by and amounted to no more than 50 percent of total valuation of a property with repayment terms of five years. As terms loosened and lending ratios to total valuation dropped,and mortgage interest paid became deductible, more potential buyers could afford to bid on housing properties.
I am having trouble getting my head around the bigger picture here. But what you seem to be noting here is that the value of houses was lower when the number of people who qualified for mortgages was lower.

In other words, there was less demand for purchasing houses. Is this not a classic example of supply and demand? As more people are able to buy their own homes, the demand for houses goes up and if the supply is not there, the price will rise.

I suppose an argument can be made that the price of houses could be kept lower by making mortgages harder to get but I can also see that there is another way to look at this.

Making mortgages easier to get gives more people the ability to own their own home. When one rents they are just paying for someone else's mortgage (typically). In paying that "rent" into a mortgage, a homeowner builds equity. It is an investment into their future.

To me the issue here, as always, is finding the right balance. Currently, the system has proven out of balance.
__________________
"My hands are on fire. Hands are on fire. Ain't got no more time for all you charlatans and liars."
- Old Man Luedecke
Charlatan is offline  
Old 12-08-2007, 08:15 PM   #54 (permalink)
Deja Moo
 
Elphaba's Avatar
 
Location: Olympic Peninsula, WA
The system is out of balance, because artificially low interest rates made it possible to buy artificially increasing home valuations.

Both the interest rates and the home valuations were being manipulated to jack up the insupportable rise of "liquidity" that a "home" is supposed to represent. Do you see how that could become a house of cards, but the builder believes one more card can be added? (Took that analogy to the limit).
__________________
"You can't ignore politics, no matter how much you'd like to." Molly Ivins - 1944-2007
Elphaba is offline  
Old 12-08-2007, 08:34 PM   #55 (permalink)
 
roachboy's Avatar
 
Super Moderator
Location: essex ma
i still dont understand the linkage between the mortage crisis and the international currency system in general--as i keep saying, i see an analogy, but that's it.

and i REALLY don't see the linkage that follows from this, between the mortgage bubble and fiat currency, particularly if you take ron paul's little dance with alan greenspan out of the equation.

the transaction tax on currecy market activity would tax transnational activity. the premise is that A cause [[ok, 2 CAUSES---grammar--sheesh]] of political/economic instability in the current context are: (a) the lack of regulation and (b) the scale and velocity of this activity.

the premise would be that BOTH follow from neoliberal assumptions about relatively open markets, how they behave, what they do, etc.. the tobin tax proposal is just a device to slow down the system and to use that money to counter some of the effects of these markets by funnelling it into development programs.

it isn't a structural critique--its a proposal to adjust the system in the direction of longer-term stability.

the main reason i brought it up is that it seems plausible at the level of premise and this premise--that the explanation for speculation-driven crises in the present context is the ideology that directly enables them--opens onto potential actions that address the actual problems.

it seems to me that is what is at issue in the analysis of these problems--moving gradually outward from the immediate context to find larger-scale problems/issue that are proximate enough to enable rational action.

i dont see ANY rational action following from ron paul's claim that the problem really is that because there is fiat currency markets aren't free enough.
and the consequences of thinking through what such a position would entail practically seem ridiculous---tying currency back to the gold standard as if that is not simply pegging one form of fiat to another seems to me to be dreaming. and if these "imperfect" free markets are already free enough to generate massive instability and very significant social consequences, why on earth would you want to get sucked into a position that pushes you to argue that they ought to be even more open?

but maybe i'm just not seeing something.
well, except that ron paul is a whackjob. that i see. but i didn't need this particular entry point to figure that out.
so i'm confused.
please help.

but i am wondering if this is something that should be split out from this thread--if the linkage between the subprime issue and international currency in itself comes undone, we should move the discussion.
__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite

Last edited by roachboy; 12-08-2007 at 08:37 PM..
roachboy is offline  
Old 12-08-2007, 08:51 PM   #56 (permalink)
Banned
 
Quote:
Originally Posted by Elphaba
The system is out of balance, because artificially low interest rates made it possible to buy artificially increasing home valuations.

Both the interest rates and the home valuations were being manipulated to jack up the insupportable rise of "liquidity" that a "home" is supposed to represent. Do you see how that could become a house of cards, but the builder believes one more card can be added? (Took that analogy to the limit).
roachboy, this is a work in progress. I want to respond to you with Elphaba's post as a masthead.

My reaction to your attac/Tobin proposal is anecdotal. I don't disagree with your rationale for such a tax, and I am not opposed to it.

I think central banks act in concert, the gold sales of Uruguay and Norway, at the bottom of the gold price cycle, are a "tell". I'll continue.....

Last edited by host; 12-08-2007 at 08:54 PM..
host is offline  
Old 12-08-2007, 09:03 PM   #57 (permalink)
 
roachboy's Avatar
 
Super Moderator
Location: essex ma
it's interesting, host, which is why i took the time to respond as i did--and i'm working this stuff out in real time as well.

it's often when i am working in this way that i get the most concerned about steps i take and their logic----because they're the only thing i can use to feel my way along and stay coherent.

i'll post something more tomorrow.
__________________
a gramophone its corrugated trumpet silver handle
spinning dog. such faithfulness it hear

it make you sick.

-kamau brathwaite
roachboy is offline  
Old 12-09-2007, 07:23 AM   #58 (permalink)
Easy Rider
 
flstf's Avatar
 
Location: Moscow on the Ohio
host, comments on your post #39

Quote:
flstf, I think that I can answer your question. The "lenders" are in denial to the point that they believe their own BS. They only look at "this quarter" as far as their "bottom lines". This "bailout" might negatively impact anticipated revenue increases from ARM "resets" in the near term.
It is hard to believe that lenders would rather take a large loss and forclose instead of taking a smaller loss and freezing rates, but I have not read a better explannation than yours.
Quote:
The "lenders" are not even the actual "lenders"...investors and funds own the actual mortgages, and they cannot gauge the "health" of the tranches that the mortgage they hold are packaged in, especially if they were rated AAA-prime. Underwrites who once enjoyed unlimited warehouse credit lines, such as Countrywide, choked on mortgage loans they kept issuing that couild no longer be packaged by Bear, Lehman, et al, into tranches. They had to eat them, and this caused their credit lines to become illiquid, and then reduced and closed, and then came margin calls when the large providers of the credit lines demanded higher collateral (margin) in cash....to cover the increased risk caused by the "Countrywide level" in the chain, being stuck with mortgages no one wanted to repurchase, and no cash to make new loans and maintain the stream of underwriting profits.
If I understand the situation correctly then those of us who hold these mutual funds in our 401Ks and IRAs will be the biggest losers in this mortgage mess. Also those who are upside down in their mortgages and are forced to sell at a loss.The biggest winners should be the prospective house buyers who have already sold and can wait for prices to bottom out.
Quote:
This is about an attempt to "save" the world economy and fiat paper currencies, the US dollar being the most in peril and consequential. I predict that "the save" it will not succeed, and I know that everyone who can sell their house now, for whatever they can fairly get for it, will come out ahead of those who attempt to sell five or six and maybe longer, years from now. My opinion does not apply only to folks who are "upside down" on their loans, it applies to every homeowner.
I really do not understand how our currency works and why we accept this fiat money in exchange for things of value especially since its value is based on the actions of whichever polititians happen to be in office. But that being said, if the fix does not work and the attempt to save fiat paper fails wouldn't it be better to hold something of value like a house instead of a bunch of this paper?
Quote:
It is a valuation bubble that the bailout attempts to preserve, or appreciably slow the deflation of. It cannot be done except by allowing anyone who can fog a mirror to qualify for a 100 percent loan, fed by warehouse credit lines of mortgage originators. Feeding some sheeple bagholders into the combine by letting them "keep their homes", ain't gonna help any of them....or "save" "the system".
I agree that prices are going to fall further but also think that those able to ride this downturn out will eventually make out OK unless prices never recover. Just like many of us do not sell our portfolios everytime the market takes a dive.

I don't know what to make of your comparison of house prices from the 1930s and today. Like Ustwo said houses are much larger today. I grew up in the 50s and we had a 1/2 acre typical suburban house, 3 bedrooms one bathroom, with mom, dad, 4 kids and a grandma. Today my wife and I live alone in a 3200 sq. ft. house with 4 bathrooms. Back then we had one car and today most families have 2 or 3. I'm not disputing your analogy just pointing out that things are much different now.
flstf is offline  
Old 12-09-2007, 11:00 PM   #59 (permalink)
Upright
 
GonadWarrior's Avatar
 
The people who will be hurt are the taxpayers and businesses in the US, whose taxes will rise to bail out the spendthrifts. This, of course, will make us less competitive in the world markets, and weaken the dollar.

Just like all of the people who receive government assistance when their houses burn down, or they get flooded out, etc. Why should those who pay insurance bail out those who choose not to?
GonadWarrior is offline  
Old 12-10-2007, 04:46 AM   #60 (permalink)
Getting it.
 
Charlatan's Avatar
 
Super Moderator
Location: Lion City
Gonad... I am not sure that you get the point here. Perhaps you'd like to expand on your post, taking into consideration all that has been discussed above.
__________________
"My hands are on fire. Hands are on fire. Ain't got no more time for all you charlatans and liars."
- Old Man Luedecke
Charlatan is offline  
Old 12-12-2007, 10:54 PM   #61 (permalink)
Upright
 
GonadWarrior's Avatar
 
Quote:
Originally Posted by Charlatan
Gonad... I am not sure that you get the point here. Perhaps you'd like to expand on your post, taking into consideration all that has been discussed above.
Well, in a nutshell...

Host, between insults directed at UsTwo, reported that houses cost too much. He then mentioned some type of dark forces that initiate inflation, prop up housing prices, cause $100/barrel oil, etc. I assumed he was referring to the Bush administration, because in his view, EVERYTHING is the fault of the Bush administration.

My post was intended to point out that a lack of personal responsibility on the part of many US citizens does more to damage our economy than the factors Host cited, although I have yet to glean a coherent point from those citations.
GonadWarrior is offline  
Old 12-13-2007, 08:42 PM   #62 (permalink)
Deja Moo
 
Elphaba's Avatar
 
Location: Olympic Peninsula, WA
Quote:
Originally Posted by GonadWarrior
Well, in a nutshell...

Host, between insults directed at UsTwo, reported that houses cost too much. He then mentioned some type of dark forces that initiate inflation, prop up housing prices, cause $100/barrel oil, etc. I assumed he was referring to the Bush administration, because in his view, EVERYTHING is the fault of the Bush administration.

My post was intended to point out that a lack of personal responsibility on the part of many US citizens does more to damage our economy than the factors Host cited, although I have yet to glean a coherent point from those citations.
Ahh, personal responsibility! I am so for it in all aspects of life.

Expand upon your "nutshell" please, because I have yet to glean your coherent point.
__________________
"You can't ignore politics, no matter how much you'd like to." Molly Ivins - 1944-2007
Elphaba is offline  
 

Tags
bush, socialist


Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On



All times are GMT -8. The time now is 08:03 AM.

Tilted Forum Project

Powered by vBulletin® Version 3.8.7
Copyright ©2000 - 2024, vBulletin Solutions, Inc.
Search Engine Optimization by vBSEO 3.6.0 PL2
© 2002-2012 Tilted Forum Project

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 100 101 102 103 104 105 106 107 108 109 110 111 112 113 114 115 116 117 118 119 120 121 122 123 124 125 126 127 128 129 130 131 132 133 134 135 136 137 138 139 140 141 142 143 144 145 146 147 148 149 150 151 152 153 154 155 156 157 158 159 160 161 162 163 164 165 166 167 168 169 170 171 172 173 174 175 176 177 178 179 180 181 182 183 184 185 186 187 188 189 190 191 192 193 194 195 196 197 198 199 200 201 202 203 204 205 206 207 208 209 210 211 212 213 214 215 216 217 218 219 220 221 222 223 224 225 226 227 228 229 230 231 232 233 234 235 236 237 238 239 240 241 242 243 244 245 246 247 248 249 250 251 252 253 254 255 256 257 258 259 260 261 262 263 264 265 266 267 268 269 270 271 272 273 274 275 276 277 278 279 280 281 282 283 284 285 286 287 288 289 290 291 292 293 294 295 296 297 298 299 300 301 302 303 304 305 306 307 308 309 310 311 312 313 314 315 316 317 318 319 320 321 322 323 324 325 326 327 328 329 330 331 332 333 334 335 336 337 338 339 340 341 342 343 344 345 346 347 348 349 350 351 352 353 354 355 356 357 358 359 360