...which only made the global supply & housing issues worse.
You're not making the point you think you are.
How bout those 7 percent mortgages?…
- Thread starter -lowcountrydawg
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You're not making the point you think you are.
Duh. I get that. I thought you were trying to make a more intelligent point than that.
My bad.
If you’re having fun now you should discuss voter suppression with him.
So you think with the unemployment payouts and ppp loans people went and bought real estate. Haha.
He's kinda like a pet on here, but he's our pet....warts and all. I appreciate him
It is possible but I don’t see it. Here’s a story to illustrate the difference. When I bought a house in 2005 I called my debt broker and said “hey I’m sending you my tax returns, W2’s, etc. for income verification”. He said “no need just fill out this form that declares how much money you think you’ll make next year”. I said “really, lenders don’t even verify?” “Nope”. My loan quote was 100 percent financing interest only for the term. From Lehman Brothers.
I didn’t bite off more than I could chew, but there was a whole segment of the population that financed 2x, 3x…..what they could afford because they required no down payment, no income verification, etc….so you had millions of folks making less than $100k a year buying $1M homes, folks making less than $50k buying $500k homes, etc etc. Lenders securitized the loans and within a year or two the defaults began.
It was money that didn’t exist. Money used to buy houses, TVs, cars, etc, etc. The economic prosperity of 2006 was fake. Money borrowed that would never be paid back. And ultimately the institutions holding the paper failed. Zero liquidity. Companies like GE couldn’t even make payroll without help.
I just don’t see it today. In 2009 folks had to sell homes because they couldn’t afford them. They don’t have to today. They put equity down. The banks dug into job status and income. Homeowners have jobs, cash, and low interest debt. If something happened that required folks to sell no doubt things would crash because doubling the interest rate on the same home is gonna tank the value. I just don’t see that event that is gonna force folks to sell. We had 10 percent unemployment then. 3 percent today. With cash. Like I said if rates stay at 7 percent for a long time, that could trigger some stuff but the fed would pivot back to get rates back down if that happened.
you can thank Fannie Mae, Freddie Mac and Bill Clinton for that earlier period you mentioned. Agree with your last paragraph, I don't see it either.
The housing market reminds me of the automotive situation.
The housing market has been a sellers market for a while now due to inventory shortage….just like the automotive.
Both are over inflated, hopefully the higher interest rates will help……just not sure though.
True for sure. They definitely cleared the way for folks that had no business buying any house to buy a really expensive one. Banks definitely had a role in it as well because they knew those were bad loans but figured they were fine so long as they sold the paper. Unfortunately the market for that paper dried up. It was a game of musical chairs where all the chairs were pulled away.
Biggest mistake this time was infusing liquidity into the system when we shouldn’t have - $1.9T second stimulus on party line vote. QE well after Covid was over or should have been over. I honestly believe if more fed officials lived in the South, they would have recognized the economy was healthy and Covid was on its way out. Way too much NyC, DC echo chamber folks making policy.
. “Good” news is that the one holding the bag this time is the US Government.
I was on my phone and should have elaborated more. I don't disagree with the real estate picture, my comment was more directed at the economy not having hit bottom yet, so we can't at this point know that the bottom will not equal be equal to TGR. The bond market has quadrillions in leveraged instruments (a la the CDO's of 2005-8).
The fed's rapid raising of rates will eventually cause credit markets to lock up, creating a liquidity crises and there is no way to predict what will break first and how bad it can get.
First, presidents don’t control the economy (other than wars); the Fed drives the boat. You should know this. All Pubs tout unfettered free markets but ignore the reality or prepare for boom to bust market swings. Lol. BTW, I don’t have to defend anything and 10% mortgage was a deal at be time. Inflation was in the high teens. Current inflation is the result of prior fiscal policy brought on by zero percent money for several years, necessary specific Covid policies, Saudi / Russian oil affects, and let’s not overlook Pubs TRILLION DOLLAR DEFICIT created during Orange Jesus reign of lies. NONE of those things are the result of Biden “policy nor leadership.” The pendulum will swing toward disinflation eventually.
Not specifically but it did positively affect the money supply, increase household spending, increase demands for goods and services (some housing) which will lead to higher inflation. Eco101.
In your post before, you said there were more jobs than people to fill them and reasoned that the people I mentioned would be able to get jobs. The overriding problem I see is that the training people have coming out of schools and the military does not match up enough to fill the jobs available. A large % of those people will have to retrain. So yes, there are a lot of jobs but no there are not enough people with the specific training to fill them. It means more borrowing to pay for training and it delays entry into the workplace. It also leaves a nice big "jobs available" number for dishonest politicians to brag about.
Also, when I look around my neighborhood, I see a lot more people not working than I used to see. What do you see in your neighborhood? What I'm getting at is the unemployment number count was rigged by Obama to drop off of the count total, those who stopped looking for work. Therefore the 3% MSM tells us about is a much larger number in reality.
I realize that my knowledge of aspects affecting the economy is not complete. But a shrinking GDP obviously means less not more. So, I have a hard time believing that your scenario will play out without considerably more pain than you envision. In fact, I have been accumulating cash and not buying property since 2018. I know for sure that cash is king when the going gets tough. I have seen it before and I believe we will all see it again.
Agree. I think the risk mitigant to that situation is that as much as the fed wants to fight inflation, they can’t do so at the expense of a liquidity crisis. The fed “created” the situation so they have a bunch of room to peel it back if need be. There’s kind of a backstop on the upside and downside in the economy in that the fed will adjust accordingly. There is actually chatter today about some issues in the financial plumbing in the treasury markets, and you are starting to see fed officials begin to hedge their message. The article in thr WSJ today is specifically discussing this and the sole reason the market is up today. Yields dropped 10 bps on this article.
All that sounds good until you factor in the party line vote to hand $1.9T to Americans that didn’t need it (too much demand), and the idiotic extensions of school / business closures in blue states, quarantine requirements that kept people from producing goods and providing services (supply). You aren’t wrong about much of what you say, but these specific things are on one side of the aisle and absolutely have fueled inflation.
I agree with all that. We trained a certain segment of our population that they don’t have to work. Eventually their money will run out, maybe quickly if they have margin loans on stock portfolios that are way down. I agree with what you are saying I just don’t think it will lead to big jumps in unemployment.
No….they just cancel student loans, give money away and declare war on gas their first day.
What possibly could go wrong….
No doubt it effected the money supply. That wasn’t what he was saying. Government lending and spending got us into the jam. Printing money. Other things helped. 3 million workers still sitting on the sidelines as well. I know you want to go back and tie this around Donnie’s neck. But the Buck stops with the President. He could have done things to help. He didn’t. Chose to say the economy is fine and went back to eating his ice cream.
It may be opec raising the gas prices, but they are enjoying hurting Biden at the same time. It is on purpose. This along with crazy job regulations, raising taxes on businesses, who are scared to see what he does next etc. printing and spending money left and right for bs. No one wants to help someone who is doing nothing but trying to hurt them. Would you? Indirectly or directly, this is on him and the progressive policies. Watch it change quickly when he is out of office.
An example of the energy industry is opec doubling down twice on decreasing the supply of oil. After Biden bitched about the first slow down.
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The problem with the Fed basing rate decisions on "looking at the data" rather than forecasting, pausing, and waiting for the data to catch up, is that it takes many months for the effects of rate decisions to show up in the data. I am seeing cost stabilization on the wholesale level right now, just as I was seeing double-digit inflation on the wholesale level as early as Q4 2020. It will likely be late Q1 or even Q2 before it trickles down to CPI numbers, but that doesn't mean that the previous hikes aren't already having an impact.
It's my thing. I do it every day. Your analysis and conclusions are that of a 15 yo child.
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No doubt. And the way they measure shelter cost in cpi is severely lagging ignoring real time movement in rents and instead focusing on the lease turns which are totally dated. Also when folks aren’t buying homes, they are staying in apartments and putting upward pressure on rents. Unintended consequence of raising rates that actually contributes to rent inflation.
All that said, I believe the fed is saying what they have to say and it is obvious there is a concerted effort for everyone to stay on hawkish message. They will do that literally up until the moment they pivot and pause. In the meantime they can point to the cpi data as cover for their hawkish stance, but I believe they know that they are already making headway on inflation and the data will lag.
You may want to quit while you're behind.
Quit what? Most of you cheerleaders haven’t added anything to the convo besides sitting on the sidelines and high giving each other.
Nope. Living in the USA is not a free lunch and it's funny Pubs tout "individual responsibility" until they have to exercise some. Biden inherited an economy on the brink of inflation created by Lying Donnie being in office 48 months with Pub Congress and spent a TRILLION DOLLAR DEFICIT on BS.... like a frigg'n wall. Fax 'R FAX. Other extraneous factors played a part. Saudis don't GAS who's in office ... they're purely chasing the most oil revenue possible. BUT, I do think they're stupid for lowering oil output.... it really doesn't serve their ends and creates a slackening of oil demand. It's upside down thinking. If you somehow think that a 180* reversal of all of Biden's Dem's policies would automatically wipe out inflation then you need some powerful meds. But.... just for shits and grins... how would YOU handle the the current inflation climate? Please be specific. Your final grade depends upon it.
The point is what was already done on party lines that created inflation. $1.9T when Covid was clearly over and we had vaccines. And blue states shutting shit down for production and services for months and months while red states opened up and kept things moving. Now that it is here I guess we have to count on the fed to thread the needle although they have already gone way too far, and count on government to quit spending so much effing money - hint: loan forgiveness and the climate bill is exactly the opposite of this. Stick with the social issues. No one really cares that much about them but at least it is a debate. Inflation is on the left. Full stop.
Damn you’re grades. Inflation will come down when Biden’s policies are removed. He owns this mess he has gotten this country into.
You couldn’t help it. Had to put the blame on anyone else but who is actually at fault. Solid tds.
Personally, I wouldn’t have raised the rates quite so fast. It is already doing its job. Now it is just hurting people. First and foremost put money into fixing the supply line faster. Whatever it takes. Not into fluff and the other bs put into every bill. Get the 3 million sitting on the bench voting like you do back to work. Transition to clean energy in a way that works. Over time and don’t make the public pay and suffer for your policy in the process. Just to name a few. There are a million things to do.
First and foremost, get the compromised, cheating, idiot out of office. And the policies that obviously don’t work out with him. All the stuff you raved about with taxes and what would change, went into the shitter.
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What does this mean? Explain interest rates to customers buying and selling homes.
if coco can’t see that the inflation is transitory was a smoke screen to keep rates artificially low and further exacerbated the issues we see today i don’t know what to tell you. Coco is so in the tank he will deflect to follow his savior the democrat party.
The deal is; his real reason for voting with that bunch is not something he will tell the truth about. He knows they are evil. He made his choice.
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