The Housing Bubble

Someone had a great question last week. If their lender goes bankrupt, can they buy their own mortgage for a fraction of its cost?

Who knows? Of course, the only way you would get a hefty discount would be if you had a risky (subprime) mortgage. There is no way that Joe or Jose Sixpack will have that kind (or any kind) of dough stashed away.

I think you would have to pay in cash - and we know how much cash these idiots have - nadda.

I think you can, but you’d be buying it in bulk along with a ton of other mortgages you’re probably better off having nothing to do with.

I doubt it. If you’re a good customer, making your payments on time with a healthy LTV ratio, someone else will be willing to buy your mortgage for more than that great “bargain price” you’re dreaming of.

“Someone had a great question last week. If their lender goes bankrupt, can they buy their own mortgage for a fraction of its cost?”

1) Most lenders sold their mortgages to conduits, to be bundled into toxic bonds. There is no way you are going to get that mortgage back.
2) However, some mortgages are now ’stuck’ with the lenders as they can’t foist them off on anyone else. If the lender goes bankrupt, these mortgages might end up with their creditors. These creditors might me more willing to bargain on the terms of the mortgage than the (underwater) lender would, since they would rather have a lower income stream without a foreclosure than have a worthless foreclosure on their hands. This would be especially the case if they otherwise would end up selling the notes to collection agencies for pennies on the dollar.

“When prices are out of line in a big market like housing, there ain’t nothing that can stop a correction, IMO. This isn’t bananas we are talking about”.

No but “they” will try and we can count on that. Over time the housing market will correct but if anything can be done to stretch it out they will give it a shot.

I think what is telling about the candidates on both sides of the spectrum for the presidential race, in their speeches and in debates, is how little in touch with reality any of them are, save Ron Paul, about the nitty gritty of what is going on, financially.

And as Ben says, this is the mother of all debt.

If big gov practically gave up on the Gulf Coast, in Katrina’s aftermath, do you think they have the money to fix this?

‘No but “they” will try and we can count on that.’

I hear this all the time, but with no reason given.

We really are the housewife (strictly for pun’s sake) that can’t be overdrawn, because we still have checks!

I would venture to say the reason is a simple one from a political standpoint. These are the roofs over people/families heads, this is nothing like trying to bail out the stock market or boost Wall Street. The bleeding hearts will be all over this as foreclosures increase, so candidates polling info will dictate that they come up with some “save the family house bill” I for one do not think it can be done, but that will not stop an effort. How could it be engineered? I am not sure however our ever growing nanny State will brew up some concoction and see the the public will swallow it.

wmbz wrote:
No but “they” [government] will try [to prop up home prices] and we can count on that

Ben Jones wrote:
I hear this all the time, but with no reason given.

The reason comes from our understanding of the players in government, the housing market, and the players’ motivations.

1) Housing Market Players: NAR, Wall Street financial companies, home builders, private home sellers, homeowners who are feeling richer from holding a vastly appreciated asset.

2) Government players: local, state, government politicians, federal government politicians: All of these people gain that most precious resource from higher house prices - higher tax revenue. Plus, the highly moneyed interests pay politicians to get things done. NAR is the third largest donor in politics since 1989. Number 7 is Goldman Sachs; Number 10 is the Carpenter and Joiners union. They don’t give out of basic charity felt for the politician; they give so their interests will be advanced. Check out http://www.opensecrets.org/orgs/index.asp for a breakdown.

All of the above players benefit from high home prices.

Who gains from lower selling prices? Renters? The 30-some percent of the population that does not own a home?

These are not big moneyed interests, or cohesive interests.

Thus, I believe that government will do all it can to prop up home prices.

Well said, Messr. Neuromance.

How about making option-ARMs illegal about a certain LTV and forcing those contracts into low interest 30 year fixed? If the FB can’t handle that payment, then tough luck?

It’s a no-brainer to think that the gov will TRY to hold up the housing market. The arguments presented on why they will TRY are well founded. But I think what Ben is saying (and please correct me if i’m wrong Ben) is that it’s a big whatever. If ever there was an exercise in futility, this would be it. If anyone here thinks for a second that our gov can stave this off, even prolong it, it’s time to wake up to just how impotent your gov is. Lot’s of saber-rattling and football humping, but the end result is the same - economic disaster. I just crack-up every time one of you gets your panties in a twist over some seemingly new piece of news about a bail-out or some other machination that is the white horse that will save the day for housing. It’s not going to happen, so move on!

How about making option-ARMs illegal about a certain LTV and forcing those contracts into low interest 30 year fixed? If the FB can’t handle that payment, then tough luck?

This is, IMHO, the best possible compromise. Force the lenders (who were, no doubt, sleazy) to refi anyone with a stinky loan into a 30-year fixed at whatever the going rate is (6.1%?)

No doubt, fewer than half of the FBs will even be able to afford that payment, but I think you’ll be able to convince most reasonable people that those folks are beyond help.

House prices will still reset to normal, but those people who got suckered into an “affordability” product will have a chance to get out, at a deal with which the bank can still make a few bucks, and can be seen as “fair”

Does this have a chance of happening? Absolutely not! (For one thing, this may require banks to make mortgages for $600K for houses that are only worth, say, 400K at best, etc.)

“No doubt, fewer than half of the FBs will even be able to afford that payment,”

You’re being generous, my friend. I’d say less than 10% could actually afford the payment.

500B? No, much much larger. That’s why I think it’s undoable. And I doubt the public would stand for it if it was smaller.

RE: (This one to the tune of about 500B.)

$500 billion was the cost of the Keating & Co. S&L clean-up following the ‘90/’91 bust.

This fiasco is easily 10X worse.

I think the a $$4/$5 trillion number has been batted around by a few posters here including myself.

Hopefully, the numbers are so huge, even the politico’s will blink in disbelief and say-sorry…no bail-out on my watch.

They will rightfully use in the housing fallout what they’ve wrongly used with other unresolved domestic problems;

Subertfuge, Blame, Debate, Rhetoric and Misdirection.

It’s been alarmingly effective at not addressing healthcare, social security, illegal immigration, offshoring, the dismantling of govt. institutions, etc.

Robert X Cringley has an interesting take on illegals and credit(and Google). He claims that illegals misusing other peoples social security numbers have boosted credit scores. He also claims business and local government are fully aware of the misused social security numbers, but don’t care:
http://www.pbs.org/cringely/pulpit/2007/pulpit_20071109_003391.html

It will be hard for the elephant to pin the blame on the donkey, although that trunk is very useful for spinning things around…

Correcto Aladin. Thats what happens when Dumbo the Elephant falls asleep at the gate while the rest of dumber little elephants trash the grain store.

“Robert X Cringley has an interesting take on illegals…”

Yes, 17-million illegals sounds about right. I figure that California has about 6-million of them, for a total California population of roughly 45-million. Last week an LA Times story about tax cheats indicated that California has 14-million income taxpayers. Little wonder that a working family there has a difficult time balancing their finances.

“Last week an LA Times story about tax cheats indicated that California has 14-million income taxpayers”

i know I bash LA non-stop on this blog but this will raise your hairs. Estimates from sources such as LA Times are that 30-40% of ALL ECONOMIC TRNSACTIONS IN LA CITY ARE BLACK MARKET UNDERGROUND!! That means billions in lost tax revenue yearly due to all those streetside vendors, all those immigrant Mom and Pops understating business income ,illegal transactions- iE drugs, cash pmts,auto parts salvage and dealers in junk cars selling all cash, ect. This is very common in the extensive illegal -alien underground community of LA.
Not to mention contractors, both illegal and US citizens, falsifying books, paying cash to illegal laborers, running up non-allowable deductions, ect.
The CA Stat board of Equalization/franchise tax boards
cannot deal with all this illegal tax evasion because they can only tract down propertied US citizens who have extensive paper trails and real, not fake/stolen identities. What % of the population in LA falls in this category? Less than 50% is my guess.
When you have this amt of illegal tax evasion and off-the book transactions in LA it is not surprising that LA also is a hot zone for RE Fraudulent transactions as well. E.G.,why were homes in that LA illegal- alien sanctuary, gang- controlled cesspool called Maywood selling for over $500,000 as late as july 07′.

I love LA!

You can lay HD off to the housing bubble.

I don’t agree with this facile reasoning, just know how they’ll spin it.

WMT same store sales guidance of 0-2% for the fourth quarter is not very bullish when inflation is running north of 2%.

Food inflation is much higher than 2%. How much of Walmart’s sales are food?

Expect Big Box stores to be closing up shop, as soon as each is perceived to be a money loser.

Shouldn’t be long now.

WalMart sales came as no surprise. The cost of goods from China rose 8% last year. Units remain the same, sales go up because of increased cost. WalMart passed through cost increases. If business was so good for WalMart, then they would have upped construction of new stores instead of stopping construction.

upped construction of new stores instead of stopping construction ???

I have seen a recent spike in Wal-Mart facilities “For Sale” in the past several months including super centers…..I have also seen lots of residual land next to wal-marts put up for sale recently…This land is owned by wal-mart…Excess dirt after they have completed their center….They also like to control the product that develops around them to increase the synergies…

LOL! Amazing, isn’t it, that the market will probably rally big time on Wal-Mart “good news”? However, how do we know that Wal-Mart isn’t lying about its numbers? For all I know, Wal-Mart could be tanking.

I always feel sort of dirty and disturbed after shopping at Wal Mart. I haven’t been to one in months and the last time I went it was only to pick up an international money order payment. Wal Mart is like one giant convenience store. There was one nearby for years and then they closed it down and moved operations to a SUPER Walmart five miles away, which is five miles from another SUPER Wal-Mart. The US could do nicely without Wal Mart. It’s like a cancer.

Some real estate ads in our town will list the distance to the nearest Wal-Mart. I kid you not.

You really need to move.

“I always feel sort of dirty and disturbed after shopping at Wal Mart”

I shop at wallmart. I know i will be castigated on this blog for shopping at a neighborhood-destroying,low-wage paying big box monstrosity which kills the local mom-and- pops. And yes i get sick of the lower class/ welfare mom’s/no-english speaking immigrants/lower classes who take a half hr to pay an item at the checker, or swarm the store with their wild screeching kids.
I go where the prices are cheapest , and if walmart has cheaper items than home-depot or target then thats where i go.
In my home city of Long beach the city council actually is debating and submitting a ballot to the public as to whether to allow bix-box superstores such as Walmart. This is a silly debate-much of Long Beach /LA is already badly deteriorated and overcrowded with cheap malls, decaying neighborhoods, swampeds with immigrants and gangs,cheap strip malls and abysmal quality of life that debating whether to put up a superstore is like debating whther to ban liquor stores in SCentral LA. It is a stupid ideological debate.
Ditto for Inglewood voting to ban Walmart in that nasty, rundown-,gang-ridden, stripclubs galore corrupt city where the police regularly visit massage parlors to get ’serviced’.

I always feel sort of dirty and disturbed after shopping at Wal Mart.

We have two Super Walmarts in Loveland. The difference in demographics bewteen the two is amazing. Like you mentioned, at the old one (about 4-5 years old) I feel dirty after visiting (this in spite of the fact that they just gave it a facelift). The old one is usually full of illegals and other folk from the bottom of socio-economic ladder. The new one on the other hand opened recently on the much more yuppie north end of town, and feels completely different. Will it last? Time will tell.

I grew up on that flashing blue light, over in boy’s shirts, where for the next 20 minutes, everything is on sale and 20% off…

And my 8 year old eyes would watch grown-ups scurry towards the light, at the K-Mart of my youth.

Good popcorn, too.

“I shop at wal mart.”

Another Wal Mart shopper here. I go for the same reasons you do: lowest prices & one-stop shopping. There is a certain time each month when social security and welfare checks are deposited, and the place becomes very crowded and unpleasant for a few days. But otherwise, its just like any other grocery store to me.

There’s no shame in saving money on necessities. oh, I know I’d probably get better value on the silk boxers available at Neiman Marcus for 69.95, but I’ll take the cheap tightie whities from Walmart.

I go where the prices are cheapest , and if walmart has cheaper items than home-depot or target then thats where i go.

I wonder what the future cost is of all of those lead tainted toys/dishes/etc. will be? I mean, how can parents in good conscientiousness continue to buy toys that they know are probably are tainted with lead??

I fear that all these cost savings will come back and bite us all in the kiester sometime in the near future…

The difference in price between walmart and target here in the desert isn’t worth the misery of the experience. I’m willing to pay a few pennys more to not have to go through the blood curdling shrieks of kids that are wound up on their McD meal racing through the store. Many times, I find a cheaper price on line, order it up and skip the whole dreadful experience of going out amongst the public at all. No driving, parking or shopping drama.

ATC,

Same here. It’s 15-20 min to the nearest WalMart or Target. I can however go to someplace like Drugstore.com and buy everything I need tax-free and get free shipping.

Now these services are reserved for folks with either credit or debt cards so savings are passed on to middle-class (lower Middle and true Middle), but many families at the poverty barrier will not be able to utilize this method.

I do find it an interesting answer to inflationary eneregy prices.

“Ditto for Inglewood voting to ban Walmart in that nasty, rundown-,gang-ridden, stripclubs galore corrupt city where the police regularly visit massage parlors to get ’serviced’.”

Re - lead tainted toys - I was wondering about everything else that is made in China now - what about (for example) make-up/toiletries that are made in China?

nobody was worried that Wal Mart was simply stealing future sales. Is this a ridiculous worry?

The future? Leave tomorrow for tomorrow. What does the stock market have to do with the long-term anyway? Get in early this morning, cash in your chips this evening. What’s the concern? /snark

nah, I think that title should go to the Aldi stores …

2007 is the first year ever that the USA became a net importer of food. Can’t find the report but I read it last month, no MSN attention though.

Those silly Chinese. When will they learn to take food prices out of their core CPI numbers? Better yet, don’t report food prices at all. What good is it being a totalitarian government with complete censoring ability if you’re too stupid to use your power?

SOL (smiling out loud), Devildog.

2007 is the first year ever that the USA became a net importer of food. Can’t find the report but I read it last month, no MSN attention though.

This frightens me. America doesn’t have to import food, it’s just economics. Let’s home somebody is at least saving seeds. We might need them.

I use Cascadian Farm $$ organic frozen broccoli as my barometer. A year ago, it was a product of China. Last week, the bag was stamped “Product of Mexico.” And oh btw, as of 2002 or so, wholesome little tree-hugging “local business” Cascadian Farm is a wholly owned subsidiary of General Mills.

So much for organic. I’m buying local, pesticides or not.

Taking the advice of posters here, I have begun stocking up on food, which is a trick in an apt. in Manhattan. The delivery guy humped 6 cases of dog food and 3 20 lbs bags yesterday. I’m now long cases of tuna fish, coffee, soup, beans, and 10lb bags of sugar, flour and rice. There ain’t an inch of space left under the bed. The amateur’s approach to commodities investing.

A number of you jump to the Red Commie China stereotype, anytime the Goliath of the East is mentioned…

China has changed often over the years, and after being in an opium fog for almost 2 centuries, they are reawakening to the capitalists that they once were, for thousands of years.

And very good ones, I might add.

While you won’t starve, the dog food gets old after a while.

There was an article last month in the LAT about central valley farmers that had given up on the hassles of getting illegal workers and are now renting land and farming in Mexico. They were paying something like $9/day instead of $11/hr for labor.

“So much for organic. I’m buying local, pesticides or not.”

Me, too. Yesterday at the store, I noticed that the organic meat was from New Zealand, while the non-organic was local. I bought that.

Every cow and sheep and red deer I ever saw in NZ, was grass fed, is that one the key things as far as being organic?

p.s.

Having your car stopped by 10,000 sheep crossing the road…

Priceless

Me, too. Yesterday at the store, I noticed that the organic meat was from New Zealand, while the non-organic was local. I bought that.

At my local Trader Joe’s (in Los Altos, CA), the “Organic” yogurt is made from powdered milk concentrate shipped from New Zealand. The regular stuff comes from dairies in northern CA.

I’ve never fallen for the “Organic” claim anyway. (Tough to do when you spend more than half your time in northern CA)

Appreciable wage inflation will not occur in this cycle. It is not enough to keep U.S. wages static in relation to overseas wages - that gap will be closed.

Edgewatrjohn: It seems to me that depends largely upon how much money the Fed is willing to pump into circulation in the face of a massive decline in asset prices. Which do the governers fear more: runaway inflation or deflation? With the return of stagflation we can have both rising prices (as measured by the CPI) AND the disappearance of a trillion in nominal assets. The risks of both are balanced in the sense that they are both near unity.

Put yourself in China’s position…

Europeans and the rest of the world are still paying good prices for things they produce.

Why would they be all that excited about selling us fold-up cloth and metal chairs, so that we have them on sale all the time for $6.99, when everybody else is used to paying much more in terms of their currency?

Which means that same chair sells for probably 10 Euros, ($14+) overseas, and as big of a market as we are, why not sell to the currencies that by holding them, it represents a win, and not a loss, like holding Dollars?

China is deftly exiting our market, and we seem to kind of want them gone, at the same time.

Go figure…

What is noticeable if you ship in Europe and the states is the relative quality of imports from china. The stuff in the USA is increasingly cheap, poor quality cotton, etc. relative to Europe. It’s not a zero sum game. If you can produce 20 deck chairs and only sell 15 of them to Europe, then you still want to offload the other 5 somewhere.

Ultimately there are limits to how many deck chairs anybody wants to own, and that’s also a part of what’s happening now.

Precisely, and this is where the whole “inflate the mess away” idea falls apart, IMHO. We can’t just trash the dollar and let prices skyrocket to “save” housing without huge wage inflation. No wage inflation = most of the US suddenly becoming poor, and I don’t think that’ll go over very well.

The weakening dollar “should” make off-shore outsourcing less enticing. What do you all think?

In theory, you are correct. And it is possible that a weakening dollar will decelerate outsourcing. But even taking the dollar’s descent into account, there is still a huge–HUGE–disparity between what Asian workers are willing to work for compared to their US counterpart. And that disparity will most likely persist despite continued weakness in the dollar. Until wage equilibrium is reached, the trend toward outsourcing will continue.

I don’t believe we are even close to going through hyperinflation. Just because the fed lowers the overnight lending rate it doesn’t mean you are going to soon be burning your dollar bills in the furnace to stay warm, spending your paycheck on Friday because it will lose so much value by Saturday, or melting down your quarters for the scrap metal. There isn’t a person alive that’s seen true hyperinflation occur in the United States, and I see no evidence that we will see it here in the near future.

hyper inflation is an inflation rate of greater than ~10% per MONTH. We’re nowhere close.

YET!

We’re not there, but I can see there, in the distance.

“hyper inflation is an inflation rate of greater than ~10% per MONTH. We’re nowhere close.

Hyper inflation can be as low as 1% per month! Hyper inflation is where inflation is out of control and becomes self perpetuating. To assign a 50% inflation per month disguises the out of control and self perpetuating aspects.

For practical purposes and where it would suffice to do the most damage (boiling frog syndrome), in the US hyper inflation need be only 100% every 4 years.

i had a bus customer inadverntently leave 45 hundred dollar bills on my desk this morning….he walked away with my directions in hand to the square….in a rush he came back to the shop after having lunch in town.

panicked, he searched the shop and his bus for his “notes”. after a bit of hurried searching I gave him his “notes”.

sweet relief.

Higher ed is a luxury too. In past recessions the trend was that more people went to school when they couldn’t get real jobs. I wonder if the current downturn will produce the same result, or if people will have awakened and noticed that just having degree(s) is no guarantee of employability or of decent wages.
Property taxes: you have pointed out an essential element of the housing bubble/bust. States and municipalities loved the run-up in valuations — a windfall for local governments. Did they pay down debt or update infrastructure? No, they “invested” in new programs and bigger bureaucracies. Life in these United States is a tug of war between public employees and the rest of us.

“In past recessions the trend was that more people went to school when they couldn’t get real jobs.”

Actually, I’ve seen this happen a bit and I was wondering the other day if it would continue. People get a degree in something fun or the economy is soft, so they go back to school and get another degree. Yeah, they may be taking on debt, but the government will give them loans so at least they can eat. I can even understand it from a short-term survival strategy, but we could easily end up with a lot of people with even more debt and not necessarily more marketable skills.

“Higher ed is a luxury too. In past recessions the trend was that more people went to school when they couldn’t get real jobs. I wonder if the current downturn will produce the same result, or if people will have awakened and noticed that just having degree(s) is no guarantee of employability or of decent wages.”

Very true. However, with my college degree I can sit back at my desk with a Latte and blog for 90-minutes while that cretin outside my window is working non-stop in the 42-degree weather.

The evidence that the gentleman outside your window is a “cretin,” sir? I submit the odd are very good that he is certainly a much nicer person than you, based upon that post, and possible more intelligent as well. Perhaps he simply prefers working outside to sharing an office with pretentious, judgemental, self-satisfied pricks such as yourself. Ninety minutes of 42 degree weather seems a small price to pay to avoid your company. God, I despise people who denigrate honest blue collar labor and the folks who provide it!

There are still a lot of clueless fools out there.

Is this cluelessness or desperation? I stay away from ebay because people let the emotion of the auction get the better of them.

Hey, as long as you have a F-150 crew cab and money for gas, you ain’t truly homeless

A ot of cities and counties invested in these automalls as economic development or gave tax breaks. Yep - your tax dollars at work. Can’t fix the roads or bridges, but we have automalls so you can replace your trashed auto.

Be *very* careful about conterfeit MO on ebay! There’s a scam where you sell a car for, say, $1000. Someone gives you a MO for $1200 and tells you to cash the MO and wire the $200 to his “shipper”

You cash the check, wire the money, and then the bank will tell you the Money Order was counterfeit. And you just gave the scammer $200 of your $$$$.

Oh, and all the old dealership properties have for sale signs in front of them. So far only one is occupied by a used car dealer.

But the only thing empty skulls respond to is image.

“But the only thing empty skulls respond to is image.”

That is why empty skulls are currently shocked and awed by how terrible the real estate situation has turned out.

ummmm…. hey flat? lmao…

Unfortunately, it’s all about image. Remember in 2000 the regular guy you’de want to have a beer with vs. the too smart and stiff guy with experience?

It was not an analogy. I was merely offering evidence on the fact that people by-and-large are uncomfortable with uncertainty. They would much rather believe in a comfortably familiar fiction, outlandish details and all, than live with an uncertain fate.

But…but…Corporate America has global markets to tap and those third world countries want high end do da’s. Who cares if Americans are starving on the streets ,there are untapped markets around the world .Who cares about Americans anymore ,they are all tapped out ,and why should Coporate American even give Americans a raise when they have slave labor to tap world-wide .Wall Street determines the path and policy these days ….my evidence …..the housing bubble and the Fed Chairmans decisions . (Just a little rant ) .

Not as much as I used to, now that I’m getting on in years.

Yes, currency controls are being tightened in many countries. Isn’t it fascinating how the devaluation/inflation scenario moves according to the script, but still so many people do not see it.

Hoz - I’m currently not a dollar bear but have a yen position and would like to be long HK dollar or yuan but it is very hard without buying overpriced equities or being screwed on fees. GCH is probably the best way to play it.

Loonie, pound, and euro are overvalued. Re the peso: If Mexico would denationalize Pemex (would require changing the constitution) foreign direct investment would skyrocket and peso would be forced higher. But I have a feeling even Mexico and Colombia may be catching a little Chavez fever, and don’t have much confidence in Latin America, except perhaps Panama, which seems to me to be a special case. (Am going to Costa Rica and possibly Panama next week.)

I don’t expect to see any big bear runs on the stock market or the dollar the rest of the year. But, the housing price problem is a long, long way from playing out and within 6 months there will be another round of wailing and gnashing of teeth. Whining will eventually win out - resulting in greater socialist inroads, more inflation, and higher gold prices.

I absolutely agree with you about the Euro and Pound being currently overvalued, the YEN is artificially low, the Yuan is available to purchase through China bonds yielding ~3.27%. (Merrill is a Market Maker). The Loonie may or may not be overvalued. It is a commodity currency and is going to trade with higher commodity prices. The only way to value the Loonie is to treat it as a 1 year option on gold and oil and price it using Black-Scholes.

Should the US government keep its current policies, the Euro, Pound and Loonie will not be overvalued in 6 months. With expanding US government deficits and reduced income, the dollar will continue to get weaker. I hate one way bets, but there is nothing to change the scenario. Mortgages will fail, losses will grow, fewer taxes will be paid, more layoffs and increased government spending when the US cannot afford to pay its current bills.

Thanks for the info on the Chinese bonds. We see it the same way - it’s just the through the next Fed meeting I see the Fed as more hawkish than the general market does - they’ve given clues that they will err on the side of not easing in the near future - thus I don’t want to be anti-dollar or pro-gold until I am convinced the Fed is ready to cave again.

Hi Watcher,

“Yes, currency controls are being tightened in many countries. Isn’t it fascinating how the devaluation/inflation scenario moves according to the script, but still so many people do not see it. ”

Please explain.

Thank you.

SF gal,

Inflationists generally agree that excess money printing will lead to dollar devaluation/inflation. When inflation becomes obvious currency controls are imposed to prevent people from fleeing the declining currency. This fails to prop the failing dollar, which causes other countries to devalue their currencies in what is commonly called a race to the bottom, or race to zero. Eventually the entire fiat system will fail, and we will have to establish a new currency regime.

That is the script and IMO we are following it exactly. This cycle has repeated many times in history. We have reached the point at which inflation is obvious, and currency controls are coming into play. Next up, faster dollar depreciation.

As of yesterday’s close, there were way too many November puts in the money. That had to be remedied and it was today.

I had no idea the November put idea the Monday before the Fed meeting would be such a winner. It was a WAG after reading the Berry column in the Washington Post. It worked out great. Another payday.

going long to hedge.