Bits Bucket for May 26, 2013
Post off-topic ideas, links, and Craigslist finds here.
The Housing Bubble
Examining the home price boom and its effect on owners, lenders, regulators, realtors and the economy as a whole.
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Name:Ben Jones
Location:Northern Arizona, United States
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Quantitative Easing Explained - YouTube
http://www.youtube.com/watch?v=PTUY16CkS-k - 234k - Cached - Similar pages
Nov 11, 2010 …
Quantitative Easing Revisited
Bear 2) But there must be some benefit to all this money printing by the Fed.
Bear 1) It makes the stock market go up.
Bear 2) Do unemployed people own a lot of stocks?
Bear 1) No.
Quantitative Easing III
“The discovery of the BRICs has saved the global economy.”
LOLOLOLOLOLOLOL!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
The Ben Bernank.
Rick Santelli Rips Tim Geithner and Quantitative Easing
Common Sense Capitalism
Uploaded on Oct 6, 2010
Good comments from yesterday:
——–
Jeff Greene of Florida Sunshine Investments: “But if you want to sell that house to somebody two or three years later and he doesn’t have a 3 percent loan, how much is he going to pay for that house?’” ??
Comment by Ben Jones
2013-05-25 08:20:47
Boy oh boy, have these bankers and politicians pulled one over. Even at 3 percent, you are paying much more interest than a 13% loan at pre-bubble prices. And you could pay it off in 15 years back then too.”
——–
And two more things:
1. The banks don’t even have to wait years to collect that “more” in interest from J6P. They just raise the price and fees of the loan when they sell it on the secondary market, because the loan buyer will supposedly realize that More in interest. Banks just got more profit from the sale simply by promising more. And it was the taxpayer they foisted it off on.
2. Rental rates have adjusted PITI, so people don’t really have the option of saying “no” the housing markets altogether. In other words, the cost of shelter is simply much higher than it was in that mythical past.
At this point, does it even matter whether we elect so-called fiscal conservatives, or end the Fed or get rid of Fannie and Freddie. ISTM that the Bilderbergs or the Illuminati or the Davos or whoever have accumulated enough money and power to buy up all the assets and make the masses into sharecroppers no matter what form of government, or lack of government, is instituted.
“Boy oh boy, have these bankers and politicians pulled one over. Even at 3 percent, you are paying much more interest than a 13% loan at pre-bubble prices. And you could pay it off in 15 years back then too.”
Spot on!
- Interest is only until your principle is paid down.
- High principle spawned by low rates is FOREVER UNTIL FORECLOSURE, at which point you lose all of your accumulated equity to the bank.
Has a better scam ever previously been devised by the banksters?
Most peoples only chance at real wealth is signing on to debt in hopes of hitting the big one with rising prices.
They need to be constantly recruiting new debtors.
Frankly I’d rather play the lottery every weekend than gamble on using debt to make myself rich at this juncture in history. (I do neither…)
isnt a pyramid scheme where you recruit new players to pay off existing players? Without new players the scheme collapses cause the money dries up.
Frankly I’d rather play the lottery every weekend than gamble on using debt to make myself rich at this juncture in history. (I do neither…)
I’m happy to play the lottery on the very rare instances when the expected-value of a ticket is higher than the price of a ticket; at that point, if flips from gambling (where the house always has an edge), to the infinitely-risky investment.
“I’m happy to play the lottery on the very rare instances when the expected-value of a ticket is higher than the price of a ticket;…”
Then I’d suggest you hang on to your funds until the risk loving crowd is too broke to afford a ticket.
Then I’d suggest you hang on to your funds until the risk loving crowd is too broke to afford a ticket.
I don’t think it works that way. You need a bunch of people buying in to get the jackpot high enough.
Most peoples only chance at real wealth is signing on to debt in hopes of hitting the big one with rising prices
If you mean a short cut to real wealth without working.
Build ‘em and they will come. - P.T. Barnum
(He didn’t really say this but he probably would have is he was still around.)
“And it was the taxpayer they foisted it off on.”
Taxpayers collectively chip in to cover the unfunded liability on the federal mortgage guarantee.
a delusional cesspool of realtorbabble distilled into a grand conspiracy
“so people don’t really have the option of saying “no” the housing markets altogether…”
There is the heart of it; defeat, surrender, rationalization of voluntary debt slavery. I am part of a seemingly small band of rebels who cast off the debt donkey yoke and find ways to live without borrowing into the Big Lie. It has its challenges, but nothing like coughing up the mortgage payments for 30 years.
Yup.
‘the cost of shelter is simply much higher than it was in that mythical past’
We could very well be talking about the exact same house!
“Boy oh boy, have these bankers and politicians pulled one over. Even at 3 percent, you are paying much more interest than a 13% loan at pre-bubble prices. And you could pay it off in 15 years back then too.”
Option 1:
15 year mortgage
$100K house at 13%
$1265 payment
Total interest paid $127K
Option 2:
30 year mortgage
$300K house at 3%
$1264 Payment
Interest paid $155K
It ends up being the same thing.
‘It ends up being the same thing’
No it doesn’t. These houses were $25k-40k new. Here’s the really dumb thing; when interest rates were high and we actually had inflation, house prices didn’t climb like they have the past several years.
According to the Fed, rising home prices are not (undesirable) inflation — they are (desirable) housing market wealth gains.
Has anyone asked them how high housing prices are good for an economy based upon consumer spending, and discretionary income?
I believe the pat answer is that higher home prices give rise to a housing market wealth effect that leads consumers to spend more on furniture, lawnmowers, barbecue grills and anything else associated with homeownership. Moreover, people paying high purchase prices for homes put themselves on the hook for high property taxes which support local governments and schools. The resulting economic impacts ripple through the regional economy, benefiting just about everybody.
How am I doing?
How am I doing?
Sounds good to me, as long as there are some constraints on the lenders, who have a long history of usury, blowing credit bubbles, etc.
You are missing something quite important: Once you lock yourself into high principle on the $300K home bought with a 3% mortgage, you are on the hook to pay off the full principle balance right up until the moment of mortgage default.
Wouldn’t you rather have $100K in principle to pay off at a 13% interest rate, given the option of paying down the principle quickly over time, thereby reducing total payments and owning the home free-and-clear of vampire squid tentacles relatively sooner?
given the option of paying down the principle quickly over time,
+1. The lower the principal, the higher the benefit from each prepayment.
Wouldn’t you rather have $100K in principle to pay off at a 13% interest rate? “
Actually, yes, I would.
So tell me p-bear, for the 14th time, how many years would you like me to wait for these 13% interest rates? How many Salmon P. Chase banknotes shall I drop in rent while waiting for this craaaater from $300 to $100K? 15? 17? ∞?
And what if, while I’m waiting, Blackstone gives interest rates the finger and buys the house for cash when it craters to, say, $250K? Will you help me to choose a box?
“So tell me p-bear, for the 14th time, how many years would you like me to wait for these 13% interest rates?”
That’s entirely up to you. And may the odds be ever in your favor.
How about a comparison of options at current rates?
Option 1:
15 year mortgage
$1265 payment
$183.5K house at 3%
Option 2:
30 year mortgage
$1265 Payment
$278.5K house at 3.6%
Conclusion: Option 2 will allow you to live in a much nicer home today, in exchange for a much greater home equity wealth loss when interest rates rise.
I betcha they don’t cover that illustration in Realtor™ school, eh Eddie?
Slithers hubris is stunning.
Actually I misspoke. Since the 30-year risk-loving buyers can pay the most at all price points, it is their housing market losses which will bury almost everyone else when rates go up.
If you were to purchase a home for $200,000 today at 3% interest and nothing down after 15 years your opi and loan would total $311,593 and at 30 years $485,452 assuming no capital repayments.
At the 2% inflation rate Bernanke is trying for - at 15 years the npv of that house would be $147,714 and at 30 years $109,097.
Without housing price increases your cash flow and capital loss at 15 years is $163,879 and at 30 years $376,355.
About $11,000 a year. Worse still is that these interest and inflation rates are the best we have had in our lifetimes.
Of course this doesn’t consider the intrinsic value of ownership, nor the fact you need a place to live.
Before someone throws in the opportunity cost of capital - have you seen what rates are being paid today ! After tax ?
May a house be upon you.
buy a house today and you will be wealthier tomorrow. U cannot lose buying a house.
And stocks, too.
glory land here we come
True. Not only housing always goes up, but so does the stock market.
do u remember all the lawsuits when the market crashed in 2000?
everyone was blaming analysts for their losses.
I thinks some people actually recovered some money.
How can you have a free market when the bailouts occur when the losses come on?
Bailouts only encourage more riskier behavior.
My memory was the lawsuits were against brokers who had elderly people in allocations unsuitable for the peoples’ ages.
This is amazing! Here’s a crowd composed of thousands of people and yet one can easily zoom in and identify anyone in the picture if they so choose.
Couple this technology with some face recognition software and there’ll be no more hiding out.
(Remember, Big Brother is watching you.)
http://www.gigapixel.com/image/gigapan-canucks-g7.html
But can they match the faces to the people who post anonymously on Internet?
Probably. If the location of where the posts are originated from can be identified then it’s just a matter of determining just who it is that is at that location.
IP address => ISP => Billing address => ?
One could argue they already have the ISP/billing address via commercial data mining. I maintain my own private email server and just use Yahoo/Gmail accounts to post in public forums just to keep a little separation between my public/private internet use.
One should assume that everything is monitored, if not by our own government then by cyber crooks as well.
Yup. True. Those people who do not want to initiate force should have nothing to fear.
“nothing to fear.”
Sure, except the loss of privacy and freedom. To an abusive power, even subtle disagreement is percieved as a violent attack. One must ultimately be prepared to resort to violence if one is determined not to be abused.
Blue Skye, since you value your freedom would you consider risking it with an act of non-violent civil disobedience? We have the numbers but lack organization. I haven’t seen the Tea Party pushing this because they have been brain washed to believing that strike=unions=socialism but that’s not the lesson history teaches us. The Civil Rights Act & the EPA all came from national non-violent movements. A house divided can not stand.
There are ways to be non-violently civil disobedient without publicizing them and immediately being made an example of by the thugernment. Being non-aggressively civil disobedient is moral and proper, particularly since the USA has become a mobocracy and we are experiencing tyranny of the majority.
If your rights to life, liberty, and property you earned through voluntary association are violated, you have a right to stop such violations. No rule by majority has any validity if that rule violates your individual rights, and properly should be ignored.
How you do this is up to you.
The EPA is a sore subject w/ me right now. I was told during my current episode of Ca smog check failure and fix it that they are lowering the numbers to pass the smog check, to get old cars off the road. I like no car payments.
OTOH, $300-$1,000 every two years, is still cheap. 18 years 320K miles on my ‘95 Volvo. 14 yrs = no car pymt.
Bluestar, I think it is good for a person to take risks to do what is right. To simply be honest in your dealings with others is sometimes practically a revolution.
18 years 320K miles on my ‘95 Volvo.
Does CA have any age at which a car no longer has to be smogged?
In WA state, we have fairly strict smogging, but there is a max you have to pay per year to “fix” it, and older cars no longer have to be smogged after 25yrs of age; I think the latter is a gift to the classic-car lovers.
IP address => ISP => Billing address => ?
Yep, that part is pretty easy.
Of course, that assumes that the web-server hosting the forum keeps logs mapping IP-addr to individual posts; I would assume that they do unless there is reason to believe otherwise.
You can always go through an anonymous proxy server if you’re willing to take the speed hit.
+1; TOR servers solve this readily.
Couple this technology with some face recognition software and there’ll be no more hiding out.
There never has been, nor should have been, any presumption of anonymity in public. That has been well established by the courts.
Exactly. It laughable people who complain about cameras in public.
That’s a lot of “useless eaters” there. Oh well, a little “culling the herd” will take care of most of that.
Aug 12, 2012
Bill Gates famously explained his depopulation agenda through the use of vaccines with this quote, delivered to a live TED audience in 2010:
The world today has 6.8 billion people… that’s headed up to about 9 billion. Now if we do a really great job on new vaccines, health care, reproductive health services, we could lower that by perhaps 10 or 15 percent.
(http://www.naturalnews.com/029911_vaccines_Bill_Gates.html)
“Eliminate the weak”
That this is the desire of the global controllers is no secret. It’s not debated. This is what today’s politicians, bureaucrats and even some misinformed activists of the “environmental” movement wish to achieve — the reduction of world population to under one billion people. To them, humanity is seen as a threat to the planet and even to itself.
The great intelligence test
Importantly, the genocidal properties of vaccines, GMOs, chemical food additives, medications and other synthetic chemicals function as a sort of intelligence test for the population. Those who routinely take vaccines are, of course, stupid. Removing the stupid people — the “useless eaters” — from the gene pool is one of the goals of the global controllers. Thus, vaccine propaganda serves as the perfect filter for removing “stupid genes” from the human gene pool. This is no doubt why globalists so aggressively push vaccines on low-income families — they equate “low income” with “not qualified to reproduce.”
Remember: the goal of the controllers is to kill off roughly 90% of the existing population, either through a fast-kill weapon release, or the “slow kill” method of causing global infertility. While Bill Gates only publicly mentioned 10% – 15% in his 2010 quote (above), Ted Turner publicly announced, on video, that he believes the population should be reduced by roughly 70% to the “two billion” level. You can see that astonishing video, filmed by Luke Rudkowski, at:
https://www.youtube.com/watch?v=b-X3sJKtVJE
Behind the scenes at secret meetings, the real reduction levels being discussed are in the 90% range. If this is the real goal, it would mean a typical person only has a 1 in 10 chance of winning the survivor game.
http://www.darkgovernment.com/news/great-culling-of-the-human-population-has-quietly-begun/ - 91k -
Farrakhan: ‘To Cull … 2 to 3 Billion People Is Policy’
Joe Schoffstall, CNS News, April 3, 2013
Louis Farrakhan, the Nation of Islam leader, told students at Tuskegee University in March that “to cull, meaning to get rid of, two to three billion people is policy.”
“Now, to cull, meaning to get rid of, two to three billion people is policy. They feel that the resources of our planet are dwindling and the people on the planet are considered useless eaters. So to get rid of them means that they have access to the raw materials of the planet without opposition because they’re killing the potential opposition,” Farrakhan said.
He went on to describe the ‘methods’ the U.S government is using for ‘depopulation.’
“Now here are the methods they are using to effect global depopulation, starting with the Department of Defense and the Joint Chiefs of Staff: Depleted uranium bombs. Every time America drops a bomb, either from a drone, or from shock and awe, it has– in each bomb– depleted uranium. In the bullets, depleted uranium. What’s the effect of it? See, when you drop a bomb with depleted uranium in it, it poisons the atmosphere, the earth, the water and the people with the residue of uranium. If you look at some of the horrific pictures of the babies that are born now, in Iraq- twisted. So grotesque. All of this comes from the way we are using bombs, weapons, genetically modified food.”
He continues, “If they’re experimenting with genetically modified organisms on this land, and then using it to kill and cull populations, then we have to understand what we are doing…”
According to Oliver Darcy at Campus Reform, Farrakhan was a speaking guest for the Muslim Student Association.
http://www.amren.com/news/2013/04/farrakhan-to-cull-2-to-3-billion-people-is-policy/ - 163k - Cached - Similar pages
Apr 4, 2013 …
By all means, avoid vaccination. There are waaay too many people on this planet already, and eliminating the stoopids from the genepool is the first step to ecological stability.
Wholly FNF.
How about them mortgage rates?
Real Estate - Wire
Tom Reddin: Why are mortgage rates still so low?
May 23
By TOM REDDIN
The Charlotte Observer
We are now heading toward the end of the spring homebuying season, and mortgage rates remain near record-low levels.
I predicted a few months ago that rates would gradually rise this year as the economy slowly demonstrated modest signs of improvement. This did start to happen. According to the weekly Freddie Mac Primary Mortgage Market Survey, 30-year fixed rate mortgages started the year at 3.34 percent and peaked at 3.63 percent on March 14.
Since then, however, mortgage rates have trailed back down and last week were at 3.51 percent, including an average of 0.7 points paid at closing. For context, that’s only 20 basis points above the record low of 3.31 percent recorded back in November of 2012, so we remain at very low levels. A basis point is one one-hundredth of a percentage point, so we are within spitting distance of the historical bottom for mortgage rates.
These super-low rates have helped to boost the housing market. According to the National Association of Realtors, the median home price shot up 11.3 percent in the first quarter of 2013 to $176,600, compared with $158,600 in the first quarter of 2012. While the housing market is clearly recovering and home prices are rising, affordability of homes is still very attractive given the record-low mortgage rates.
With the stock market setting new daily record highs, one might wonder why mortgage rates are still so low. Usually when the stock market takes off, investors “rotate” out of bonds into stocks. This causes downward pressure on bond prices, which in turn increases interest rates. This affects both government bonds as well as mortgage-backed bonds, which in turn affects mortgage rates.
But we are seeing a different dynamic today. Investors are tired of getting a very low return on their idle cash, and they are increasing their stakes in the equity and bond markets alike. Essentially, cash is coming off the table and being deployed into both stocks and bonds.
Simultaneously, the Federal Reserve has reiterated its commitment to purchase approximately $85 billion of bonds each month to help keep bond prices high and interest rates low. The Fed has indicated that it will put a plan in place to stop this program at the appropriate time. But until inflation starts to show up, the Fed will most likely stay the course with this program to try to further stimulate the economy. And as the saying goes, “You don’t want to fight the Fed.”
…
it seems like it is costing more and more money to keep rates low.
The future is being heavily discounted.
But house prices could go up even more if rates went to zero. Or better yet they pay you interest to take the house.
do you think seniors have gotten use to alpo yet?
“do you think seniors have gotten use to alpo yet?”
If seniors have to eat Alpo in order to keep mortgage rates affordable, then so be it.
For some seniors, it may come down to a choice between rentership forever or eating dog food.
SENIORS COULD BE ABLE TO GET MORTGAGE BREAK
By U-T San Diego
Updated 12:01 a.m. May 26, 2013
1:08 p.m. May 24, 2013
Here’s a heads-up for the growing ranks of seniors whose post-retirement monthly incomes aren’t sufficient to qualify for a mortgage under today’s tough underwriting standards: Thanks to a rule change by the largest players in the home loan business, you may be able to use imputed income from your 401(k), IRA and other retirement assets to qualify for the loan you want.
That, in turn, could open the door to a money-saving refinancing to a lower-rate loan or a downsizing purchase of a new house or condo.
Top credit officials at Freddie Mac — the giant federally controlled mortgage investment company — said last week that a “little known” policy revision now allows seniors and others to use certain retirement account balances to supplement their incomes for underwriting purposes — without actually tapping those balances or drawing down cash.
Freddie’s revised rule is aimed at the tidal waves of baby boomers heading into retirement status — 8,000 a day for the next 18 years, according to one industry estimate. Many of these seniors have seen their monthly incomes — heavily dependent on Social Security and limited pension plan payouts — plummet following retirement. Yet on paper, they look relatively comfortable financially. They’ve got growing IRA and 401(k) retirement account balances, swelled by recent stock market gains. They often have solid equity in their homes, good credit scores and at least modest savings.
But if these same people apply for a refinancing or a new mortgage to buy a home, suddenly they’re told they don’t look so great. They often can’t qualify under the “debt-to-income” standards required for today’s post-recession underwriting. Those rules sometimes set the bar for total household debt-to-income too low for retirees who are still making payments on auto loans, credit cards, home equity lines of credit and other debts.
…
Mortgage Rates For FHA Rising To Two-Month High
Posted: May 26, 2013
Mortgage rates for 2013 are rising quickly these past several months, reaching a two-month high.
As previously reported by The Inquisitr, mortgage rates were at an all-time low in the fall of 2012 due to fears over the fiscal cliff. But mortgage rates in April of 2013 stayed low well after that financial crisis was handled, er…kicked down the road.
In recent years mortgage rates for a 30-year fixed loan were at 3.31 percent, the lowest on records dating to 1971. The average on the 15-year fixed mortgage were as low as 2.63 percent, also a record low.
In March of 2013, 30-year fixed mortgage rates jumped to 3.88 percent, but FHA based mortgage rates were still around 3.45 percent. Mortgage rates for 15-year fixed loans also broke the three percent barrier, rising to 3.08 percent. But then a pullback occurred in April.
May of 2013 is seeing mortgage rates rise again. 30-year fixed-rate mortgage rates jumped to 3.74 percent this past week, while 15-year fixed mortgage rates increased to 2.97 percent.
But FHA mortgage rates are still quite a deal. The average rate for a 30-year fixed mortgage climbed to 3.59 percent, jumping up from 3.51 percent. The average 15-year rate increased to 2.77 percent from 2.69 percent.
With mortgage rates still at relative historical lows, do you plan on constructing a new house or refinancing?
…
I would like to thank you professor for your efforts in posting relevant articles daily. I really appreciate what you do.
Warm wishes for a Memorial Day weekend.
I appreciate the acknowledgment.
And a great Memorial Day weekend to you and others who post and read here as well! I’m looking forward to attending a patriotic HS choir performance tomorrow by my son and his peers, and putting economic puzzles out of mind for a bit.
You know what would be really, cool Prof? If you could post a youtube link to the performance for those of us who don’t have HS choirs handy tomorrow? Thanks.
I can’t determine whether MSM commentary on the large influence of small increases in mortgage rates off a low base is misleading due to ignorance, laziness or deliberate deception. But as of late, I have been playing around with some simple examples to point out the glaring omissions.
Take the recent increase in mortgage rates discussed in the above article for example; it sounds like the 30-year increasing from 3.31% to 3.59% or the 15-year going from 2.63% to 2.97% percent is no big deal. After all, those rates are all very near the lowest on record, right?
For illustration, I calculated the principle which could be funded by a household earning $100K/year at 30% of income ($2500 monthly payment) on a 30-year or 15-year mortgage, before and after the recent “small” increase in rates:
Term Rate Principle
30 yrs 3.31% $570,117
30 yrs 3.59% $550,559
15 yrs 2.63% $371,512
15 yrs 2.97% $362,771
So for the same monthly payment, the principle that could be funded dropped by $19,560 (3.4%) for a 30-year mortgage and by $8,740 (2.4%) for a 15-year mortgage.
Note that these changes in rates are in response to the very slightest of hints that the Fed may eventually withdraw from QE3. Imagine the carnage that would ensue if they ever really got serious about taking away the punch bowl!
Apparently not all FOMC members view massive intervention to prop up the mortgage market as an appropriate role for the Fed.
If the Fed is going to be in the business of picking winners and losers in the economy, why not allocate billions of loanable funds into the restaurant industry instead of housing? We have way too many millionaire-sized houses around San Diego for the number of millionaire households; and meanwhile, many of the upscale restaurants which existed five years ago have gone out of business, leading to ever longer wait times at Applebees.
Three Fed Presidents Call to Phase Out Mortgage Bond Buys
By Steve Matthews & Dan Murtaugh - May 16, 2013 10:02 AM PT
Three Federal Reserve regional bank presidents called for phasing out the Fed’s monthly purchases of $40 billion in mortgage-backed securities as the housing recovery shows signs of gaining momentum.
Dallas Federal Reserve Bank President Richard Fisher said today buying mortgage bonds risks disrupting the market, while Philadelphia Fed President Charles Plosser said, “it’s not good for the bank to be holding lots of mortgage paper.”
Jeffrey Lacker of Richmond said to reporters yesterday the Fed should “get out of the credit allocation business.”
The Federal Open Market Committee said May 1 it will keep up its monthly purchases of mortgage bonds and $45 billion in Treasuries, and is ready to increase or reduce the pace in response to changes in the outlook for inflation and the labor market. Plosser, Lacker and Fisher don’t hold a policy vote this year.
The central bank’s so-called quantitative easing has pushed mortgage rates close to record lows, fueling demand in some housing markets as buyers compete for a tight supply of properties. While values remain well below their peak, 133 of the 150 metropolitan areas tracked by the National Association of Realtors had price increases in the first quarter from a year earlier. Areas such as San Francisco, Atlanta, Phoenix and Reno, Nevada, saw jumps of at least 30 percent.
“When refinancing activity eventually shifts down, the Fed could soon be buying up to 100 percent of MBS issuance if the current purchase program continues,” Fisher said today in a speech in Houston. “Buying such a high share of gross issuance in any security is not only excessive, but also potentially disruptive to the proper functioning of the MBS market.”
…
With mortgage rates trending upwards, why not save yourself thousands and thousands of dollars in interest rates by using an adjustable rate mortgage (ARM)?
5:00 AM
Adjustable rate mortgages may help some buyers save money
By: Solomon Syed
From time to time on Your Home, we like to take a look at how mortgage rates are faring for prospective buyers. Those numbers are still below average but are rising slightly. YNN’s Solomon Syed filed the following report.
“Rates are still below four percent. They have come up slightly in the last couple weeks. Rates are up from 3.5 percent to now hovering between 3.75 and 3.875 the last couple weeks. I would imagine we’re going to hover around 3.5 and 4.25 for the course of the rest of this year,” said Jim Cardinal, Syracuse Securities Mortgage Professional.
Those statistics are based on a 30-year fixed mortgage. One product making a comeback recently is adjustable rate mortgages.
“An adjustable rate just means that it is not fixed for the life of the loan. At some point it is tied to some index that will affect how the rate will go. Typically, a lot of the adjustable rates now are either fixed for a certain period of time: three, five or seven years. And after that time period, they are fixed. Then, they become adjustable and the rate changes yearly depending on the margin of what index it is tied to,” said Cardinal.
Traditionally, the initial rate on an adjustable rate mortgage is much less, but they haven’t been as popular or even offered as an option recently.
“A lot of people had attributed the fact that we had that mortgage crisis that tied them to adjustable rate mortgages. So, adjustable rates took a hit then and left the marketplace because no one was taking them,” said Cardinal.
This type of mortgage isn’t for everyone; but, there are some buyers that should be looking into them in order to save some money.
…
The Watermark development mentioned in the article posted below is along my daily commute route (”From $1 million”) — no place for young families to shop for starter homes!
What if mortgage rates shoot up?
By Lily Leung
6 a.m. May 24, 2013
Peter McNamara and his 5-year-old daughter Keira look at a model home at a Pardee Homes’ Watermark community near Carmel Valley on a recent Sunday. Record-low mortgage rates are helping drive up homebuyer demand. Peter McNamara and his 5-year-old daughter Keira look at a model home at a Pardee Homes’ Watermark community near Carmel Valley on a recent Sunday. Record-low mortgage rates are helping drive up homebuyer demand. — Hayne Palmour IV
Market watchers are speculating when the Fed will start to scale back its mega-bond buying program called quantitative easing, or QE. The economic stimulus has helped keep U.S. mortgage rates at or near record lows, sparking buyer demand and refinancing activity. Would a wind-down of the program pose a threat to the housing recovery?
• Murtaza Baxamusa, directs planning and development for the Family Housing Corporation, of the San Diego Building Trades in Mission Valley: Yes. Federal stimulus successfully drove down interest rates below 4 percent for the first time ever, making homes affordable for new buyers and those who refinanced. Loans are cheaper now than in the early 1950s. Withdrawal of this stimulus would gradually inflate interest rates to their 20-year average of 6.5 percent for a 30-year fixed mortgage. San Diego still ranks among the worst in the nation in housing affordability. Prices are accelerating, and inventories dwindling. An increase in interest rates could precipitate another housing crisis in five years if income growth does not keep pace with monthly mortgage payments.
• Michael Lea, director of the Corky McMillin Center for Real Estate at San Diego State University: Under its quantitative-easing program, the Fed has been buying long-term Treasury and mortgage-backed securities. This strategy has been successful in keeping long-term rates low, stimulating housing demand and mortgage refinance as well as the stock market. It is time to end it. The housing market is no longer in need of life support and the risks of continuing the program are large. There is a risk of creating housing and stock-market bubbles. And continuing the policy makes the inevitable adjustment to market determined rates more difficult.
• Marco Sessa, chairman of the Building Industry Association of San Diego County and senior vice president of Sudberry Properties : Yes. Just how much is hard to say, particularly for supply- constrained markets like San Diego’s. Everyone expects that a wind-down of the Fed’s quantitative-easing program will result in higher interest rates. Higher interest rates obviously deter homeownership, but they also increase the cost of bringing homes to market. Both are bad for the housing recovery. However, there is a local housing shortage, which puts upward pressure on home values. This offsets the negative effect of increasing interest rates. Bottom line: If you didn’t buy in the last 12 months, there’s no time like the present – if you can find one.
• Robert Vallera, senior vice president of Voit Real Estate Services in San Diego: Yes, there is a threat, but no one knows how this will unfold. Like a cheating athlete, the market is juiced on low interest rates. When the quantitative easing tapers off, rising interest rates will create a drag on home values. San Diego’s median home price is now 6.7 times the median income, well above the historic average. It’s possible that household incomes might not grow quickly enough to offset rising mortgage rates and successfully support current valuations. Conversely, with housing in short supply here, a gradual rise in rates could play out far more smoothly than a sudden rate shock.
•Kurt Wannebo, real estate broker and CEO of San Diego Real Estate and Investments: No. Our housing recovery has been based on a multitude of factors including low inventory, programs that help struggling homeowners, public perception, overseas money and low interest rates. A slight increase in interest rates will slow down price increases but will not be extremely threatening to our recovery. However, it could slow the speed at which we are seeing things change.
…
This is shaping up to be a very weird year in the U.S. residential real estate market. For one small example: Can you find another year when new home sales were higher in January than in April? I doubt it, as April is right smack in the middle of the red-hot spring sales season, while January is normally a slow month, but I am genuinely interested in seeing the statistics for other years when January new home sales exceeded April’s.
As usual, the MSM falsely attributes rising new home sales to jobs creation, completely missing the role of rock-bottom record-low mortgage rates and efforts to extend credit to buyers with a history of loan defaults.
Economy
US New Home Sales Rise; Mortgage Rate Ticks Up
April New Home Sales Rise 2.3 Percent
Thursday, 23 May 2013 | 10:00 AM ET
Analysis of new home sales data, with Scott Nations, NationsShares, and CNBC’s Diana Olick.
Sales of new homes rose in April to the second highest level since the summer of 2008 while the median price for a new home hit a record high, further signs that housing is recovering. A separate report out on Thursday showed that average rates on fixed mortgage rose for the third straight week, hitting their highest levels since mid-March.
New-home sales rose to a seasonally adjusted annual rate of 454,000 in April, the Commerce Department said Thursday. That was up 2.3 percent from March and just slightly below January’s 458,000.
Economists were expecting sales of new U.S. single-family homes on a seasonally adjusted annual rate to increase to 425,000 in April, according to a Reuters poll.
Both January and April had the fastest sales rates since July 2008.
The median price of a home sold in April was $271,600, the highest level on government records going back to 1993. The April price was 8.3 percent higher than in March and 13.1 percent higher than a year ago.
Steady job creation and near-record-low mortgage rates are spurring more Americans to buy homes.
With the April increase, sales are now 29 percent higher than a year ago, but sales are still below the 700,000 level considered healthy by economists.
The strength in April was led by a 10.8 percent rise in sales in the West. Sales in the South were up 3 percent but sales fell 16.7 percent in the Northeast and were down 4.8 percent in the Midwest.
Sales of previously owned homes rose in April to a seasonally adjusted annual rate of 4.97 million, the highest level in 3 1/2 years.
…
“You’d have to have rocks in your head to sign up for a lifetime of mortgage payments at the massively inflated asking prices of resale housing.”
Exactly. Rent the same space for half the monthly cost.
with FHA insuring most of the loans it seems the taxpayer has a lot of rocks n their head.
For the homeowner all they have to do is walk if prices fall right? But they get to get in the game and have a shout at some free equity.
I just cannot see how the homeowner can lose in this casino.
“…with FHA insuring most of the loans it seems the taxpayer has a lot of rocks n their head.”
I’d guess most American voters are completely clueless about how the banksters stuck them with the bailout tab…
Not in recourse state. They can go after your assets as well as the house. They don’t always, but they can.
Who cares considering rents are half the cost?
Tell us about that “pent-up demand” again, NAR-scum
“Although the economic recovery has led to some hiring improvements, it remains a tough time to be a new college graduate.
Armed with degrees but little experience, this year’s job candidates are part of the sixth consecutive class to push its way into a labor market with elevated joblessness and depressed wages. Federal spending cuts are making the hunt for government jobs even more competitive, and forcing some contractors and health care providers to cut back.
Recent college graduates face unemployment of 8.8 percent, compared with 5.7 percent in 2007, when the Great Recession started. Underemployment, which adds in those who have given up searching and part-timers who want full-time jobs, has climbed to 18.3 percent for recent college graduates, compared with 9.9 percent in 2007, according to an Economic Policy Institute analysis of federal Bureau of Labor Statistics data.
… more recent graduates will have trouble finding work or will find jobs that don’t require college degrees. And those who are hired will have lower wages on average
Even worse … they are unlikely to recover from that bad start. It could take an additional 10 to 15 years for them to reach the wages and stability they would have had if they started out in a stronger economy”
http://www.denverpost.com/business/ci_23320396/new-college-graduates-find-job-market-unwelcoming
Talk about biting the hand that feeds you.
- World wide protests against GMO food draws thousands…
- Monsanto & ADM are targets…
No need to post links but I think these people are missing the bigger point of government sanctioned monopolies when it comes to patents on DNA modifications. Here’s the problem as I see it. We will have to use every technological trick in the book to produce enough food for the 7+ billion people already alive plus the billions more we expect to see born over the next few decades. That means GMO seeds and livestock are the critical element we will need to prevent hunger and poverty. But can we trust big agriculture to put ethics over profits?
That means GMO seeds and livestock are the critical element we will need to prevent hunger and poverty.
Not sure I buy that argument. I have heard that the GMO yields are overstated—which should be unsurprising, considering that they are essentially marketing material.
Sounds like you have fallen for the propaganda…
Have you ever seen a GMO fact label on any food you buy? I haven’t. Big AG didn’t put nutrition labels to boost sales ether.
I’m just being a realist and hoping there are a few politicians willing to push back on this patents angle. The plain fact is technology is going to keep pushing the boundaries of engineered biology and to prevent negative outcomes the best tool we have is government oversight. BTW, Mexico and Canada are pissed about our new meat labeling rules and are threatening to ban imported US meat.
“Have you ever seen a GMO fact label on any food you buy? I haven’t.”
Wouldn’t that potentially cut into Monsanto’s bottom line?
Ain’t gonna happen…
No, but I have a bottle of Himalayan sea salt that is certified GMO-free.
I laugh every time I see that label.
Himalayan sea salt? That label has ALOT of issues.
I agree Bluestar.
Unfortunately it is a minimax issue: minimize the deaths and maximize the advantages. This is part game theory, part operations research, one of the upper division math classes I took back in college. It had a big impression on me. Put another way,”sacrifice the few for the many,” and very sobering if you are one of “the few.”
In reality, most people in the developed world are “the many.” our lifespans and youthful years have increased at the expense of some others perhaps.
Some people don’t like this view. Thee alternative is worse though.
“But can we trust big agriculture to put ethics over profits?”
Good luck with that hope for the greater good of mankind!
Now that global warming has been proven a hoax, the left needs a new cause. And GMO is it. And the anti-GMO nonsense is infinitely more dangerous to the world than the global warming scare tactics. Banning GMOs will actually lead to millions of people dying due to an increase in food prices.
But that doesn’t matter. As long as you feel good about yourself as you exit Whole Foods and put your local, organically grow food into your COEXIST adorned Subaru, it’s worth it.
Banning GMOs will actually lead to millions of people dying due to an increase in food prices.
Keep shilling for Big-Ag, Smithers. Fear-mongering for big biz while pretending to care about the world’s hungry may have reached a whole new level of depravity.
Banning GMOs will actually lead
p.s. I haven’t heard anyone trying to ban it, actually. But Big-Ag seems absolutely terrified of the notion that people have a right to know what they are eating, via labelling.
You might be right. But why not at least require labels to inform consumers who might want to avoid GMO products? This would not only make it possible for the phobic to avoid GMO products, but would also reduce the price paid by the masses who you obviously are worried might otherwise go hungry. And the ink to put on the label whether or not a product contains GMO ingredients can’t cost much.
Oh wait — if GMO products sold for less, then Monsanto would realize lower profits. Never mind…
There are already labels which say GMO free. I thought Monsanto was fighting that, not sure if they succeeded.
Professor Smithers, what’s killing off the bee populations?
About 80% of our food crops are pollinated.
It’s been a while since I’ve been in a Whole Paycheck, but there isn’t much “local” about them.
“Now that global warming has been proven a hoax..”
Lie much?
Roundup ready corn was promised to provide higher yields to farmers, but ultimately it has proven to provide diminishing yields, and crops which are expensive, but fail to thrive. But, it’s doing Monsanto’s dirty work by cross pollinating with different strains on opposing farmers’ fields, allowing Monsanto to sue them and take their farms.
You forgot about the super weeds. These new strains of what were once nuisance plants have evolved to actually metabolize the active ingredient in herbicides.
But what this really demonstrates is the vulnerability of depending too much on monoculture farming. All it would take is a mutated airborne fungus to destroy millions of acres of prime agricultural farmland and we would be facing a real food crises.
All the same we will still need GMO food but we should also spend the R&D money to develop more effective pest control. I always loved the idea of sterile insects. It would be cool if we could breed sterile bugs that love to eat nuisance weeds.
There may be a silver-ish lining for the planet in here somewhere when after a few more generations, RoundUp Ready genetically-modified grains are shown to tweak the reproductive capacity of the multitudes who consume them to the exclusion of more heritage seed stock crops. If nothing else, obesity and mal-nutrition will likely self-select for genetic vigor.
RoundUp’s active ingredient is a propylene glycol — the main component of anti-freeze, which is known to shut down kidney function if consumed by birds and mammals.
RoundUp’s active ingredient is a propylene glycol — the main component of anti-freeze, which is known to shut down kidney function if consumed by birds and mammals.
I’m confused. Most anti-freeze uses ethylene glycol, which is poisonous in the way you describe. I’ve used propylene glycol before, it’s considered sort of an exotic anti-freeze because you don’t have to pressurize it to avoid boil-over in normal conditions and it can be used straight instead of mixed with water.
As far as I know neither one is in Roundup. According to wikipedia the key ingredient is isopropylamine salt of glyphosate…whatever that is.
You’re right, of course. This is what I get for posting late in the night after drinking ethanol-derived compounds. Glycols, glyphosates, they’re all the same to me….
‘media lawyer Ted Boutrous writes in today’s Wall Street Journal, ‘The Justice Department has completely lost sight of the First Amendment.” But Obama’s supposed remedy is to have Eric Holder review Justice Department policy, the same man who has overseen the Justice Department prosecute leakers to the press at a record rate.’
‘The longtime executive editor of the Washington Post, Leonard Downie Jr. wrote, ‘the Obama administration’s steadily escalating war on leaks, the most militant I have seen since the Nixon administration, has disregarded the First Amendment and intimidated a growing number of government sources of information — most of which would not be classified — that is vital for journalists to hold leaders accountable.’
‘Downie would know, given he started at the Washington Post in 1964 and was present when the Paper was temporarily censored by the Nixon administration over the Pentagon Papers, and then as the paper took a leading role in exposing Watergate.’
‘Downie’s comments echo another man at the center of press freedom battles against Nixon, James Goodale, who was the New York Times general counsel in both the Pentagon Papers case and the first cases involving the government subpoenaing reporters. Goodale has said repeatedly over the last few weeks that Obama is as bad as Nixon, and could be worse if he goes ahead with prosecuting WikiLeaks, like has long been rumored.’
‘And when President Obama says, ‘Journalists should not be at legal risk for doing their jobs,’ we also hope that does not stop at the US border.’
‘He should be reminded of Abdulelah Haider Shaye, the respected Yemeni reporter who has worked for multiple US publications, yet sits in jail in Yemen for doing his job. After Shaye reported on the US cruise missiles in Yemen that killed dozens of women and children, he was incarcerated. When he was about to be pardoned, Obama personally intervened with the Yemeni president to keep him prison.’
https://pressfreedomfoundation.org/blog/2013/05/why-eric-holder-charge-oversight-eric-holders-surveillance-journalists-policy
The problem is swapping out leaders hasn’t prevented this from going on for decades. Can you remember the last time the public actually forced government to stop or change the way they treat us? It took tens of millions of non-violent protesters to make a few changes back in the 60’s & 70’s and I suspect it will take a similar effort this time too. The only thing that might still work would be a nation wide general strike but I don’t think MSM will come to our aid on anything that smells like a labor strike.
Congress’ approval rating is at 5%, and they still are not acting in the interests of the people. They don’t care!
Everybody hates Congress except for their members. It won’t change until that changes.
Well, there’s the “character” of the charlatan who currently holds the office of the prez in the US. An imperial creep with plenty to hide, that’s for sure.
As to “the press”, part of me just wants to say eff ‘em, considering how they’ve conducted themselves as a group over the past few decades. Acting as bootlickers, lackeys, running dogs, toadies and tools etc. Persecuting and suppressing those among their group who would write and publish the truth. And now they’re weeny-whining?
Invading the privacy of others and focusing on the salacious, manufacturing scandal, (News Corp.) sacrificing their own on the altar of political correctness (Helen Thomas) drumming up support for conflict (Syria…oh, poor little Richard Engel, whose propaganda mission got knocked off the front pages by Newtown) feeding the public a steady diet of lies and false data.
They did it to themselves.
‘As to “the press”, part of me just wants to say eff ‘em’
The issue is, a free people must have a free press. I’m as critical of media as anyone, but this isn’t about them. It’s about the function they are supposed to provide. All this spying is really aimed at whistle blowers. It’s to intimidate anyone who would tell the public about potential wrongdoing by the government.
I’m as critical of media as anyone, but this isn’t about them. It’s about the function they are supposed to provide.
+infinity.
This is not about protecting the press that we have today, but rather the press that we _could_ have, or the press that we wish we had.
Exactly, Prime! I am all for freedom of the press, but the press, being advertiser driven, manufactured its own shackles. Under the current system, there is no freedom of the press.
Case in point, remember that realtor Mike Morgan over on the east coast of Florida who got embroiled with Lennar over a defective homes issue at the height of the bubble?
http://www.dmlp.org/threats/lennar-pacific-v-morgan#description
http://www.tcpalm.com/news/2007/sep/12/lennar-stuart-real-estate-broker-settle-suit-out-c/
The guy didn’t stand a chance, although it seems that his hands may not have been totally clean. Anyway, Lennar cleaned his clock, and his bank account.
“It’s to intimidate anyone who would tell the public about potential wrongdoing by the government.”
Aren’t there whistle-blower protection laws on the books? (Polly!?)
It isn’t about “whistle blowers.” The people who gave secret (or top secret materials) to the press are already required to not disclose the materials and to follow very particular procedures to make sure it is not disclosed accidentally. They can be prosecuted under current laws.
The big to do now, is the Justice Department considering prosecuting the journalists as co-conspirators in the disclosure of the secret information. In particular, I think they are thinking about this as a charge if the journalist was actively pursuing the source to disclose secret documents. It is a fairly straight forward legal interpretation, but as far as I know, hasn’t been used before. Think of it as a supply demand question. It has always been illegal to provide the supply. The uproar is about a legal interpretation that would also make the demand end illegal.
‘It isn’t about “whistle blowers.”
Yes it is.
‘are already required to not disclose the materials’
Leaks happen all the time in DC. No one started tapping reporters phones like Obama because leaks are protected by the constitution.
‘considering prosecuting the journalists as co-conspirators’
This is a fig leaf trying to cover what they know is wrong.
“All this spying is really aimed at whistle blowers. It’s to intimidate anyone who would tell the public about potential wrongdoing by the government.”
CBS reporter Sheryl Attkisson was monitored by DOJ during ‘Fast and Furious’ reporting
Published On: Wed, May 22nd, 2013
By Brandon Jones
CBS News reporter Sheryl Attkisson, who has writing frequently on the botched “Fast and Furious” gunrunning scheme, told a Philadelphia radio station Tuesday that her personal and work computers have been “compromised,” and that there “could be some relationship” between that and what happened with James Rosen at Fox News and the AP.
“To our knowledge, the Justice Department has never ‘compromised’ Ms. Atkisson’s computers, or otherwise sought any information from or concerning any telephone, computer or other media device she may own or use,” Dean Boyd, a Justice Department spokesman told Politico Tuesday night.
http://www.theglobaldispatch.com/cbs-reporter-sheryl-attkisson-was-monitored-by-doj-during-fast-and-furious-reporting-27075/ - 83k -
Sharyl Attkisson
Politico: Benghazi-focused CBS Reporter Sharyl Attkisson’s ‘Computers Compromised’
By Tim Graham | May 21, 2013 | 12:07
Dylan Byers of Politico reports “Sharyl Attkisson, the Emmy-award winning CBS News investigative reporter, says that her personal and work computers have been compromised and are under investigation.”
“I can confirm that an intrusion of my computers has been under some investigation on my end for some months. But I’m not prepared to make an allegation against a specific entity today as I’ve been patient and methodical about this matter,” Attkisson told Politico on Tuesday. She suggested it could be related to the probe of Fox reporter James Rosen:
http://newsbusters.org/people/sharyl-attkisson - 173k -
The White House and DOJ Scream at CBS Reporter Sheryl Atkinson
Tuesday, October 4, 2011 18:55
The White House and DOJ are losing their cool at CBS reporter
Sheryl Atkinson. “They say the Washington Post is reasonable, the LA Times is reasonable, the New York Times is reasonable, I’m the only one who thinks this is a story, and they think I’m unfair and biased by pursuing it.” The guy at the White House screamed at her; the woman at DOJ yelled at her. Sounds like she’s hitting a nerve with her coverage of Fast and Furious. The interview by Laura Ingraham on her radio show is quite funny as well as being informative.
http://beforeitsnews.com/tea-party/2011/10/the-white-house-and-doj-scream-at-cbs-reporter-sheryl-atkinson-1185462.html - 24k -
The press most of whom follow the leftist nonsense taught in most colleges and universities are the reason we have Obama as president. Never mind he’s completely unqualified - limited experience outside of government, never really accomplished anything other than getting in schools based on the color of his skin. Hurray for diversity. Up next Hillary. That’s it - the holy grail - a woman for president. Up after that a gay or lesbian.
“Up next Hillary. That’s it - the holy grail - a woman for president. Up after that a gay or lesbian.”
Rumor has it that Hillary might be a two-fer.:)
But somehow I doubt Hillary is going to make a run in 2016. There may be some physical problems there that maybe haven’t been fully publicized, but I could be wrong. Whatever the case, I think she’s past her expiration date.
JEB 2016! (sarc)
Waaaaaaaaaaaay past her expiration. That lie about Bosnia was the final straw. She with a straight face says the Secret Service sent the wife (her) and daughter of the POTUS on a airport runway with instructions to duck and run because of snipers. She’s completely delusional or so power hungry she will say or do anything.
Worse when she was caught red handed she lied about the lying. It amazed me and still does that she did not forced out of the race that day. But the media is too interested in the woman as president story to worry about detail such as the woman’s fitness for office. Same thing as with Obama.
Hillary’s got you covered for everything :-). As much Clinton hatred as I harbored back in the 90s I have to admit she’d have probably done a better job since 2008 than our other major choices.
Taken literally, an “inflection point” for a function of time would mean a curve that was so far increasing along a convex path suddenly started to follow a concave path.
Is that what Wall Street commentators really mean, or is “inflection point” a euphemism for “start of a downturn”?
Why Japan’s stock plunge unnerved Wall Street
Adam Shell, USA TODAY
11:48 a.m. EDT May 23, 2013
Story Highlights
* Japan’s 7.3% stock plunge is a reminder that stocks can go down — far and fast
* Fed chief’s comment that bond-buying could be slowed in coming months gives bulls pause
* Wall Street wonders if Japan shock will dampen investor bullish psychology
NEW YORK — It took Japan’s biggest one-day stock plunge since the tsunami in March 2011 to remind investors around the globe that even a white-hot stock market can cool in a hurry when information changes and investors get spooked enough to question their investment thesis.
In a span of 24 hours, the perception of stocks as the only investment worth owning in a world of rock-bottom interest rates was turned upside down.
So far, the U.S. market is holding up nicely in the face of the Japan sell-off, with the Dow Jones industrial average down just 0.4% today, thanks to better-than-expected readings on new home sales, home prices and first-time jobless claims.
However, the market could be facing an “inflection point” after a bullish start to the year that has pushed stocks up more than 16% before Thursday’s open, says Gary Kaltbaum of Kaltbaum Capital Management.
…
My advisors, knowing I anticipate working many more years (perhaps til I drop), suggest I up my stock allocation to 80% and have zero cash, zero precious metals. Lots of stuff to ponder. I do think stocks will outperform any asset class in the long run.
Are they talking about having a current allocation of 80% invested in stocks, or a long-run dollar-cost-averaging allocation of new money to stocks?
There is a big difference! For a personal example, I am less than 50% in the stock market at the moment, but DCA-ing 100% of new money into stocks with no plans to change over the foreseeable future.
Ask your advisors how they think the stock market will fare when the Fed withdraws the QE3 punch bowl. If they have no idea what you are talking about, fire them immediately and don’t look back.
Good advice PB. They only suggested an allocation but did not mention a time frame to get to the 80%. I would of course prefer the 80% of new money into stocks. That way I could keep my municipal bond income, keep my precious metals horde, and have plenty of cash for emergencies. Thank you for mentioning this approach! Thank you for your post!
Bill — despite my occasionally appearance of giving you and other gold investors a hard time, I generally agree with your approach to investing, which includes diversification across asset classes and over time. What many advisors seem to completely miss is the basis risk that is created by suddenly shifting a large share of your portfolio into a single asset class. Examples include suddenly bumping your allocation up to 80% in stocks, or using massive leverage to buying a house worth over six times your annual income.
I should also mention the unfortunate tendency for individual investors to make large reallocations at the precise moment when the move is likely to lose them the most money possible — i.e., right about the time a given asset class is approaching a crash.
Yes, my main approach is to move my asset allocation slowly, when I determine I could alter my risk. I do not invest emotionally and don’t change my habit on the news of the morning financial columns, but you know what I mean! Objective investing is the key to my personal finance success. “Success” being that I don’t fear another 2009 bottom, nor a few years of unemployment.
I should also mention the unfortunate tendency for individual investors to make large reallocations at the precise moment when the move is likely to lose them the most money possible — i.e., right about the time a given asset class is approaching a crash.
I doubt most of them came up with that idea on their own. Somebody made a concerted effort to ratched up the FUD until they felt they had to do it. I’ve been feeling it pretty hard lately through the MSM.
Of course the nice thing about moving new money into a new asset allocation strategy while leaving the old one intact is you are not realizing gains. Leave any shifting of existing assets within tax deferred plans only.
sell everything not nailed down and buy stocks.
Cast your votes now, HBB readers! (Suggestion: Try to avoid looking at how the ‘expert’ panel members voted before casting your own votes.)
EconoMeter: Is Bernanke all wrong?
A hedge fund manager criticizes Fed chairman — and panel responds
By Roger Showley
6 a.m.May 26, 2013
Federal Reserve Chairman Ben Bernanke listens as he testifies on Capitol Hill in Washington, Wednesday, May 22, 2013, before the Joint Economic Committee hearing on “The Economic Outlook.” Bernanke told Congress Wednesday that the U.S. job market remains weak and that it is too soon for the Federal Reserve to end its extraordinary stimulus programs. (AP Photo/Manuel Balce Ceneta) — AP
Zimbabwe comes to mind. But that doesn’t mean there aren’t problems. The policy prescriptions implemented since 2007 have been successful in creating sub-par economic performance, as measured by real and nominal GDP growth rates. This result begs two questions: First, are the prescriptions the wrong ones for the economic problems facing the U.S.? The prescriptions are treating a temporary aggregate demand shortfall when maybe the problems are structural — like labor force issues. Second, will the debt the U.S. is accumulating limit its future expenditure capabilities and choices? There will be more choices like sequestration without higher rates of economic growth.
Is Federal Reserve Board Chairman Ben Bernanke running the “most inappropriate monetary policy in history,” as claimed by a noted Wall Street hedge fund manager?
…
Here is a hilarious comment, spelling errors and ignorance on glorious display. “I’m a certified American moron, and proud of it!”
The reader comments are shaping up to be far more interesting than anything the expert panelists had to say.
Can’t help but wonder whether the comment is by this John Oliver?
The Daily Show with Jon Stewart
Sunday June 10, 2012
The Correspondents Explain - The Economy - Economists
The correspondents weigh in on why economists are more than just nerdy, high-panted economic yodas with no accountability.
Food fight!!!!!!!!!!!
May 26, 2013, 2:14 p.m. EDT
Economists accuse Krugman of ‘uncivil behavior’
By Benjamin Pimentel, MarketWatch
SAN FRANCISCO (MarketWatch) — Harvard academics Carmen Reinhart and Kenneth Rogoff have accused fellow economist Paul Krugman of Princeton of ‘uncivil behavior’ in his criticisms of their work related to the debate over debt and austerity.
Reinhart and Rogoff are known for scholarly work that sought to highlight the negative effects of too much debt. Krugman, who is also a columnist for the New York Times, has been critical of their positions which are seen as endorsing controversial pro-austerity policies.
But Reinhart and Rogoff argue that some Krugman’s counterarguments have been unfair.
“We admire your past scholarly work, which influences us to this day,” a Saturday letter posted on Reinhart’s website said. “So it has been with deep disappointment that we have experienced your spectacularly uncivil behavior the past few weeks.”
The Harvard economists also wrote, “Your characterization of our work and of our policy impact is selective and shallow. It is deeply misleading about where we stand on the issues.”
…
The Daily Show with Jon Stewart
Sunday June 10, 2012
The Correspondents Explain - The Economy - Banks
Bailouts and low interest rates are just two of the niceties brought to you by banking.
Tags: Correspondents Explain, exclusives, Wyatt Cenac, Aasif Mandvi, John Oliver, Samantha Bee, Jason Jones, business, economy,
money, protests, bailouts
Comparison Of Prices Over 70 Years - The People History
http://www.thepeoplehistory.com/70yearsofpricechange.html - 14k -
Consumer complaints persist despite National Mortgage Settlement
Posted: 1:15 p.m. Saturday, May 25, 2013
By Kimberly Miller - Palm Beach Post Staff Writer
Patricia Gelineau lost her foreclosure battle in late April when a final judgment set a June 4 sale date for her Stuart home. Two weeks later, she got the long-awaited letter approving her for a loan modification with a July 1 start date.
“I was mostly confused and thinking, ‘How can they foreclose when I’ve been working on a loan modification and doing everything they were telling me to do?’ ” Gelineau said.
It’s called dual-tracking — proceeding with a foreclosure while negotiating a loan modification — and it’s a violation of the $25 billion National Mortgage Settlement signed last year by the country’s five largest lenders.
More than a year into the landmark agreement, Florida borrowers and their attorneys say they are still struggling with customer-service issues required by the settlement, such as having borrowers deal with a single bank employee instead of a different person on every call.
Comment(s)
LaraineAnne
Don’t leave your house n don’t send them a dime.Ever.Get the sale vacated through the court n that’s it.
5:01 p.m. May. 25, 2013
http://www.palmbeachpost.com/news/business/consumer-complaints-persist-despite-national-mortg/nX3jt/ - -
Wages and Salaries as a percentage of GDP.
http://research.stlouisfed.org/fred2/graph/?g=2Xa
Got deflation?
The U.S. hit peak household wealth during Nixon’s term in office, after which it has been a steady downhill slide for middle-class workers who depend on a paycheck for their permanent income.
Wages and incomes probably have fallen but the graph is aggregate data and does not allow for the aging of the population. Retired people depend on passive (investment) income.
50% of americans are broke and live paycheck to paycheck.