The Housing Bubble

You can never run out of currency when you have a printing press.

The war on isis can be financed by selling some bonds. If the foreign investors don’t want them the fed will buy them. Problem solved my friend.

But any such dramatic event will also spur the closing of the open borders.

It didn’t last time.

Yeah, I think it was actually the opposite. There was big need for workers during WW2, so a lot of Mexicans were allowed in to work on farms.

On 9/11 they did close the borders for a bit. And we are miles down the road now from where we were in 2001. Now that we’ve effectively legalized 20 million we can close the borders for a while.

My dad subscribes to National Review, I was reading some issues of it over Christmas and every product or service advertised in that magazine is targeted at a demographic that is really, really, really old

As is virtually every other magazine, young people don’t buy magazines or have cable.

Interesting potential geopolitical situation here. Putin is Europe’s only hope. Because he and his people just might be the only ones willing to throw down when it comes to the spread of the caliphate. Would not surprise me to see this develop in the coming years.

Learn Russian, Europeans!

He is restoring the Russia Empire including its grounding in the Russian Orthodox church. It took the Malta Knights to stop Islam about 400 years ago, and it will probably take equally religious people to stop it the second time around. I think you are right, Russia is Europe’s only hope.

Buh-bye, NATO!

I hope that you’re wrong about that. That empire included Ukraine, the Baltic states and large portion of Poland.

Ha-ha, what do you want to bet that, at some point in the future, he solicits Anglo-American immigration to Russia? Something tells me he’s considered it, but is biding his time for the right moment.

There were a pretty large number of well-educated Russians who left Russia and moved to various countries around the world during the 1990s. If Putin was seeking immigration, getting those people back would probably be a priority. But even getting them to return to Russia would be very difficult.

“I hope that you’re wrong about that”

I’ll bet millions of Europeans are hoping I’m right, at this point in time. And what’s wrong with Poland and the Baltic States? I like most of the Poles and Czechs I’ve met. Can’t beat the Czechs when it comes to technology, either. Edison and Westinghouse would have been quaint little footnotes in history if not for their Eastern European employees.

“But even getting them to return to Russia would be very difficult.”

My guess is the Russian diaspora would return in a heartbeat under the right circumstances. Especially rather than live under the caliphate. I know I would.

And what’s wrong with Poland and the Baltic States? I like most of the Poles and Czechs I’ve met.

If Putin restored his empire, the Baltic states and much of Poland would be absorbed into it. You might like that. Millions of Polish people could end up looking for a place to live in western Europe, the US, Canada, etc. You’d have an opportunity to meet some more nice Polish people.

Of course, those four countries are NATO members, so we have a treaty obligation to help them defend their territory. A hot war between Russia and the West would not be pleasant.

We had an obligation to defend Ukraine too, for our promise to protect them they agreed to give up their nuclear weapons. Whoops. I don’t think NATO will even exist in twenty years and even if it does on paper Palmetto is right they will not stand up to an expanding Caliphate or a resurgent Russia.

“Millions of Polish people could end up looking for a place to live in western Europe, the US, Canada, etc. You’d have an opportunity to meet some more nice Polish people.”

Wouldn’t bother me. I have more in common with Stanislaus than I do with Ahmed, Ramesh, Diego or Pu.

However, that would never happen because the occupation government is too busy admitting folks from Syria, Middle East Africa and south of the border at this time. The poles and the eastern europeans don’t have the right amount of melanin in their skin.

Although, your idea would be the answer to the woman woes of bootsie and some other guys on the blog. Those Eastern European women would wipe the floor with the whining fem social justice two minute hate warriors.

Yep. Things are not looking good in Ukraine right now. Up next: howdy Uncle Vlad!

http://www.zerohedge.com/news/2015-02-26/ukraine-halt-currency-trading-again-any-minute

You see, this is the crap that the DC occupation gov’t does to countries. I forget who said this, but “It’s dangerous to be an enemy of the US. To be a friend is fatal”

“Ha-ha, what do you want to bet that, at some point in the future, he solicits Anglo-American immigration to Russia?”

US offer a lottery in Russia for Russians to immigrate to the US.

http://www.rususa.com/immigration/green-card-lottery.asp

I’ve never heard of any US immigration laws that discriminate against people with fair skin. Nevertheless, you have a point. EU membership allows Poles and Balts to move and settle in nearly any EU country. The UK is the most popular destination, so it would receive a flood of migrants. A lot people in those four countries wouldn’t be able to get out in time and would die in this theoretical war. And I suppose that Putin could do what his predecessor Stalin did and set up governments in the Baltics and Central Europe that wouldn’t allow their people to leave.

I don’t think NATO will even exist in twenty years and even if it does on paper Palmetto is right they will not stand up to an expanding Caliphate or a resurgent Russia.

Well at least there’s a date on this doom and gloom prediction. I find it hard to believe that NATO would fold and allow Putin to take over the continent.

Putin is driving Russia into a ditch, and it won’t take 20 years for him to get it there. They’ve already built their own ghost financial district, full of empty skyscrapers. What’s left of their intelligentsia is pouring out of the country as we speak.

It’s pretty much game over for Putin if oil stays cheap, his closing society has nothing else to offer the world. Let’s hope the little megalomaniac doesn’t take the world down with him.

“Putin is driving Russia into a ditch, and it won’t take 20 years for him to get it there.”

You really should stop listening to Obama, he wouldn’t know the truth if it bit him in the azz:

http://www.bloombergview.com/articles/2015-02-26/no-obama-russia-s-economy-isn-t-in-tatters-?cmpid=yhoo

since the socialist government said to not worry and did nothing to plan for drought and population growth

Neither did the fascists before. Btw, Brazil has some socialistic aspects like most countries in the world but Brazil is not Socialist but China is Communist. Why do you pimp for the Commies?

Just like Obama on social security, six plus years of watching it go broke with no action.

Soc Sec going broke is a myth spawned to get the rich’s hands on it.

Social Security is going broke and our country will be suffering from all the debt Obama has run up for decades. How can you say a program that is only taking in about 73 cents for every dollar it is expending is not going broke? An interesting article on what our massive debt is doing to this country:

http://www.heritage.org/research/reports/2013/02/how-the-united-states-high-debt-will-weaken-the-economy-and-hurt-americans

You don’t understand Soc Sec.

Social Security Cannot Go Bankrupt

http://www.forbes.com/sites/johntharvey/2014/08/14/social-security-cannot-go-bankrupt/

“I’m not telling you whether you should be for or against Social Security, but the argument that it is going bankrupt is a non-starter.”

It is a logical impossibility for Social Security to go bankrupt. We can voluntarily choose to suspend or eliminate the program, but it could never fail because it “ran out of money.” This belief is the result of a common error: conceptualizing Social Security from the micro (individual) rather than the macro (economy-wide) perspective. It’s not a pension fund into which you put your money when you are young and from which you draw when you are old. It’s an immediate transfer from workers today to retirees today. That’s what it has always been and that’s what it has to be–there is no other possible way for it to work.

As Greece shows eventually you run out of OPM. The left never wants to believe it, but the left in Greece is getting educated as we speak.

Obama does like his Ponzi schemes:

http://cnsnews.com/mrctv-blog/terence-p-jeffrey/ponzi-treasury-issues-1t-new-debt-8-weeks-pay-old-debt

…eventually you run out of OPM. The left never wants to believe it

Maybe because the economy does better under Democrats, hence more “Other People’s Money”?

Study: Economy grows faster under Democratic presidents …
http://www.cbsnews.com/…/study-economy-grows-faster-under-democratic-pr...
Jul 30, 2014 - … more rapidly under Democratic presidents than under Republican presidents … lowers the unemployment rate, generates higher corporate profits and ….. country b/c… that’s the basic foundation and principle of capitalism.

But when the OPM runs out this happens despite the promises of liberal politicians, excerpt from the NYT (real journalists):

First in Detroit, then in Stockton, Calif., and now in New Jersey, judges and other top officials are challenging the widespread belief that public pensions are untouchable.

Gov. Chris Christie of New Jersey delivered the latest blow on Tuesday, when he proposed to freeze that state’s public pension plans and move workers into new ones intended not to overwhelm future budgets or impose open-ended demands on taxpayers.

The first crack came in Detroit, where a judge ruled that public pensions could, in fact, be reduced, at least in bankruptcy. Then, just a few weeks ago, an opinion by the bankruptcy judge for Stockton, which emerged from Chapter 9 on Wednesday, called California’s mighty public pension system, Calpers, a bully for insisting in court that pension cuts were wholly out of the question.

Such dogma “encourages dysfunctional strategies,” wrote the judge, Christopher Klein, chief judge of the United States Bankruptcy Court for the Eastern District of California. He said Calpers’s legal arguments were invalid, and he concluded that it lacked standing to dominate the courtroom discussion the way it had. Stockton did not even seek permission to freeze its pension plans, but the judge nevertheless wrote that it was entitled to do so and went on to cite steps that struggling cities in general should take to trim their pension costs legally.

For starters, he recommended negotiating with their unions.

It may be sheer coincidence, but New Jersey seems have taken Judge Klein’s instructions to heart, even though states cannot file for bankruptcy and thus lack that particular leverage. For months, a pension commission formed by Governor Christie has been working quietly with the New Jersey Education Association, normally one of the state’s most litigious pension adversaries. By talking to each other instead of battling in court again, the two groups managed to find enough common ground to issue what they called a “road map” toward solving New Jersey’s daunting pension problems.

the widespread belief that public pensions are untouchable.

Public pensions should not be “untouchable” if all of the money is not there. We’re all in today’s reality together.

Maybe because the economy does better under Democrats, hence more “Other People’s Money”?

They are better at creating bubbles and bubbles do create growth in the short term.

That’s right, it’s Obama who’s the idiot.

Finally, we agree but how could you disagree with such a foolish policy.

any private corporation that did it would soon be bankrupt.

Countries do not run on the same economics as private companies. Never have.

Countries do not run on the same economics as private companies. Never have.

Because the socialist Ponzi schemes are illegal in the private sector.

how could you disagree with such a foolish policy.

Like this?

“Had the U.S. government issued only 3-month Treasury bills since 1952, public debt would be 54.8% of gross domestic product, compared with 71.3% of GDP under existing policy–roughly $3 trillion less–they estimate.”

Summers: U.S. Should Gradually Shift to More Short-Term Debt

http://blogs.wsj.com/economics/2014/09/30/summers-u-s-should-gradually-shift-to-more-short-term-debt/

The U.S. government over time should alter its debt policies and issue more short-term Treasury securities and fewer long-term securities, former U.S. Treasury Secretary Lawrence Summers argues in a new paper.

Such a shift could dramatically reduce the cost of funding government debt because interest on short-term debt is cheaper, he and a group of co-authors from Harvard University argue in the paper, released Tuesday by the Hutchins Center on Fiscal and Monetary Policy. The risks of adopting such a policy aren’t as great as is widely believed, they add.

The proposal, coming from a former economic adviser to President Barack Obama who also served as Treasury secretary from 1999 to 2001, is sure to get noticed in Washington and on Wall Street. Investors are sensitive to the volume of long-term securities issued by the government.

A shift toward more short-term debt issuance by the Treasury could push long-term rates lower,

……..Interest rates on long-term Treasury debt tend to be higher than rates on short-term debt for several reasons. Investors demand higher returns for holding debt for longer periods because more can go wrong the longer a bond is held, such as an outbreak of inflation.

The authors argue that very short-term Treasury debt also has special qualities that make its interest cost especially low to the government. Because it is so secure and liquid, many investors hold it as a substitute for cash and are willing to accept low rates as a result. The government can save money by issuing more of it, the authors argue.

Had the U.S. government issued only 3-month Treasury bills since 1952, public debt would be 54.8% of gross domestic product, compared with 71.3% of GDP under existing policy–roughly $3 trillion less–they estimate.

The worry is that relying in short-term debt leads to volatility of interest payments, but the authors say that volatility is less than commonly supposed.

Works well during a period of declining interest rates and is a disaster during rising rates, the smart money knows which way they are going.

Works well during a period of declining interest rates and is a disaster during rising rates,

The Harvard study studying it 50 years after-the-fact indicates it works OK with rising and falling interest rates - in the long term. Rates went up from 1950 to the 80s and down from the 80s to now and yet according to the above study:

“Had the U.S. government issued only 3-month Treasury bills since 1952, public debt would be 54.8% of gross domestic product, compared with 71.3% of GDP under existing policy–roughly $3 trillion less–they estimate.”

http://3.bp.blogspot.com/-Scat_VEIW9I/URrH6UrACXI/AAAAAAAABqs/I6shP2ednNo/s1600/U.S.+Treasury+Bond+Interest+Rate+History.jpg

It seems that Summers wants the U.S. to cash out everything while he’s alive, and to leave it a smoking wasteland while he is gone.

Interest rates are rock bottom. The U.S. should be issuing as much long term debt as the Chinese are willing to buy.

I wonder if Summers believes the federal government could resort to forced rollovers of short term debt if interest rates rise?

Are you assuming that short term rates will higher in the future than long term rates are now?

Yes. Unless we are somehow at the end of history.

The dollar is up today largely because Bullard was saying (I believe I saw him on CNBC) that interest rates need to rise 375 to 400 basis points, with that coming losing the opportunity to lock in low rates is clearly putting political considerations before the nation’s best interest. (pun intended)

I loathe to agree with Rio, but what she says is generally correct thinking. Anyone borrowing for a longer term on a fixed rate generally pays some kind of premium for the benefit of not taking the interest rate risk over the term of the borrowing.

This is why SOME uber-wealthy I know only borrow floating over Libor. While they know they’ll take their lumps from time to time as rates rise, over the LONG term, they’ll come out ahead (as the Harvard study suggests).

HOWEVER, at least one uber-wealthy person that I know took out a 30-year loan on their paid-for house, because he saw today’s 30-year rate as unsustainably low, and they perceived being able to lock in that rate as a gift.

Today’s 30-year treasury rate is 2.6% nominally. On a real basis, this is only 0.6% (assuming 2% inflation). Yes, it is higher than the negative real rate on short term borrowing. However, I think if Harvard were to study it, they would say that a 0.6% real rate on 30-year borrowing is among the lowest it has ever been, and negative short-term real rates are NOT common (ie. they won’t last either).

For perspective, in 2010, it was more than 4.5% (making the real rate of interest then almost 4x today’s real rate).

So IMHO, a better policy would be to lock in the 30-year rate today (where the anomaly of the 0.6% real rate will last for 30 years), and at other times, borrow short term.

Agreed that was my point these are once in a century rates.

homedebtors for certain. Not renters.

Renters do not pay sales and income taxes to support public workers and have their rents raised when their landlords get their property taxes raised?

You don’t remember?

Landlord expenses are never automatic passthrough costs to tenants.

Landlord expenses are never automatic passthrough costs to tenants.

It is not automatic but in a low vacancy market it will be passed through to the renter. High taxes tend to create low vacancy markets by taking the profit incentive out of owning rentals.

There are no “low vacancy” markets.

Does vlad want a pipeline through syria?

No. But are Islamic wing nuts do.

Retail gasoline is down 40%.

Retail fuel oil is down 45%.

All positive news.

The worst part about Bubble jobs being lost is that they were ever created in the first place.

In the meantime, retail NG is 40% lower.

Gotta love falling prices. It’s nothing but cash in the wallet.

I have hardly had to turn the heater on in february. my jan bill was 68.00.
I have been using about 8 kw of power / day.

gas went up about 50 cents/ gallon. my little 4 banger gets about 25 mpg.

Using as little as I can.

I have hardly had to turn the heater on in february.

Me neither.

With heat so cheap, who cares how high I run it?

There is plenty of gas in the NE, despite whatever the drumheads are squawking.

Matters none. Shut off the gas and feed the boilers fuel oil. That’s the beauty of steam plants.

My FICO is over 800.

Me too. Not bad for a “Socialist“.

“would a bank give me a slightly negative mortgage as an incentive to keep me from walking and keep paying down that principal?”

You already doubled down on your losses and financed a depreciating asset.

Rio says re FICO 800 Not bad for a “Socialist“.

LOL, thanks. To be expected — we moderate Dems believe in pay-as-you-go financing. My friends on the right are the big deficit spenders

“My FICO is over 800.”

I have a card that shows me my credit score on statements, which is now 791 (down). A note says it would be higher if I had installment loans like an auto of home loan to show I am credit worthy. LOL.

your debt slave score?

“My FICO is over 800.”

Mine was, but I haven’t borrowed one red cent the past couple of years now.

The Fed has failed in its job. That does not mean the free enterprise system has failed to advanced living standards, it is why China in 1979 before it adopted free market reforms, workers were making less than ten cents an hour while Taiwan had a standard of living of many European nations.

The national debt is our own damn fault (in a represented sort of way).

It never could have reach these levels without the Fed monetizing it, thus making it less of a concern to the voters. If their interest rates were going up as the deficit went up, they would have demanded cuts in government.

If you looked at the longer fuel trend, you wouldn’t be impressed at all by the last few days’ fluctuations.

falling asset prices are not acceptable but falling gasoline prices are ok?

Is inflation just a code word for printing currency to pay off debt?

I’m working on a patent for my sh@tter decor. I’m looking for angel investors. Don’t steal my ideas!