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| User Info | Bernanke: How's The Vise Feel? in forum [Ticker] | |||
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Genesis Posts: 71432 Incept: 2007-06-26 
KD^2 
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http://market-ticker.org/archives/1069-B....
---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-05-29 08:04:25
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Heffalump Posts: 93 Incept: 2008-04-05
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Just nagging a bit: "...price is comprised of inflation expectations and risk of not being paid back." Of course, not inflation expectations but alternative return. If there is no inflation, the price for granting risk-less credit is the utility value of credited amount for the creditor. I can make a time deposit for a year and expect an interest, or I can use the money for some other purpose that gives me the same value (subjectively for me, of course!) during the same year. ---------- "If rate I raise, burst, the frothy bubble will. If rates I lower, inflation will I get. Unclear, is the housing market."
2009-05-29 08:16:59
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Themortgagedude Posts: 3930 Incept: 2007-12-17 
saint louis Online
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Nothing in there I disagree with and I'm probably closer to the situation than nearly anyone. In a macroview I think they lose real estate they lose everything. They shouldn't have placed there bets on real estate. I'm shorting the phonebook if they can't get rates to stabilize.
---------- "These are interesting times. We don't trust the government, we don't trust the legal system, we don't trust the media, and we don't trust each other! We've undermined all authority, and with it, the basis for replacing it! It's like a six-year-old's dream come true!"
2009-05-29 08:17:28
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Trader_kid Posts: 4012 Incept: 2007-09-27 
You sounded a little taller on radio
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zandi on cnbc advocating a double down by bennie. he must feel lucky.
---------- "People have predicted the end of America in the past and been wrong. But let's face it: If you're trying to borrow $9 trillion to save your financial system, and already half your public debt held by foreigners, it's not really the conduct of rising empires, is it?" - Niall Ferguson
2009-05-29 08:21:49
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Jjmurphy Posts: 5 Incept: 2009-05-21 North Carolina
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Genesis - Found your site a while back. Read it every day. Today's post, combined with you others, as well as the comments here, tell me that this will all end badly. If I am correct in reading your post, the Fed has shot all the arrows in its quiver. Bernanke is stuck. The problem is for me, as well as millions of others, what then? I don't imagine we'll all be standing around looking at each other thinking "well, that's it". Is there somewhere that I can get a prediction of the decent into economic armageddon and the way out? That may be a really dumb question, but what is there to lose by asking it?
2009-05-29 08:23:29
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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Oh he has more arrows, but an unknown number of them are explosive-tipped and unstable, such that when he tries to fire the wrong one it explodes in his face. Have a look at the 2009 Ticker (linked off the top of the site). ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-05-29 08:25:31
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Xanares Posts: 1288 Incept: 2008-11-10
London
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Poor Benny, he just wanted to sleep at the wheel and get paid for it.
2009-05-29 08:29:52
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Dji Posts: 720 Incept: 2009-04-21
Fleming Island
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 Wants to test his skills on how to solve a depressionBook smarts and common sense, which one do you think are on his resume? They only thing they know how to do is Kick the can down the road, retards!!! Federationist's UNITE!!!!! ---------- What goes up Must come Down- Alan Parsons Project THE TRUTH HURTS! -Dji
2009-05-29 08:30:14
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Baldy Posts: 6555 Incept: 2008-05-16
Pittsburgh
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Nice avatar Genesis!
---------- FY2011 Budget - Hist'l Tables (PDF 2.0 MB) http://www.whitehouse.gov/omb/budget/fy2011/assets/hist.pdf 1996-2011 budgets: http://www.gpoaccess.gov/usbudget/browse.html
2009-05-29 08:31:22
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Throxxofvron Posts: 2672 Incept: 2009-02-17
The Land of Bilk & Money
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Of course Ben will double down; He has His B.S. Thesis to protect and He cares nothing for the Citizenry. I wonder if He realizes how many People will want His head on a realty post for this... SOLD ---------- DIONYSUS: " Thou hast no knowledge of the life thou art leading; thy very existence is now a mystery to thee. " -from 'The Bacchantes' By Euripides “During times of universal deceit, telling the truth becomes a revolutionary act.” -George Orwell
2009-05-29 08:38:30
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Crow Posts: 172 Incept: 2008-02-25
Canada
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What do the Chinese say. 'Unless you change direction you're very likely to end up where your going' ---------- When does Keanu get here?
2009-05-29 08:40:13
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Alex Posts: 1649 Incept: 2007-08-03
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We're in the soup. UK is as well. Excellent Ticker!!
2009-05-29 08:40:57
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Richv Posts: 15 Incept: 2009-05-24
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Karl Been reading your ticker for a while and keep feeling a bit queezy each time. For a while I hoped you were overly pessimistic but unfortunately your assessment and predictions are aligning with the facts and actions of the government and fed. I have a couple of questions. If the fed & .gov were to immediately change course and adopt the best remaining policy (I don’t know what that would be this late in the game) what would be the best we could hope for in the next 2-3 year time frame, a severe recession, depression a la 1930s or worse? Personal finance question. My company sponsored 401k is managed by Fidelity and I have all of my money in the interest income fund & government money market funds – mostly short term government instruments. If we see a dislocation in the bond market what will happen to accounts like these? Unfortunately I can’t close out the 401k unless I leave the company so I’m stuck with very limited options. My first post here by the way.
2009-05-29 08:51:00
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Euclid216 Posts: 10 Incept: 2008-12-03 New York
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Well, chief liberal economist, Paul Krugman, has weighed in, and I believe he has provided plenty of fodder for Genesis to dispute. Have at him, Karl. http://www.nytimes.com/2009/05/29/opinio.... P.S. I'm sick and tired of Krugman being given credibility just because he "won" the Nobel prize.
2009-05-29 08:53:59
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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The issue isn't inflation Euclid; it is debt overhang and our refusal to deal with it. Go back and read the Ticker again, specifically this paragraph: Quote:Now we hear that "6% mortgage rates will sabotage the economy": The demand is in fact for 4% rates. Folks, do you realize what this means? That's a 33% decline from where rates were just a year or two ago! As debt load rises lower and lower rates are required to keep the economy from imploding, but in fact risks rise with higher debt load (that you won't repay) which in turn demands higher, not lower rates. This cycle cannot end well; at some point you must take the medicine, as rates (obviously) cannot go below zero and forcing rates below the required risk-adjusted return you are simply making the severity of economic contraction to come worse. This is the true lesson of The Depression and yet nobody seems to have learned it; by interfering with debt liquidation The Fed and Government have effectively forced the nation into a corner where all the remaining options are bad! ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-05-29 08:55:30
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Jjmurphy Posts: 5 Incept: 2009-05-21 North Carolina
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Genesis - Thanks, I think. Reading 2009 scenario now. Whoa!
2009-05-29 08:59:11
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Trader_kid Posts: 4012 Incept: 2007-09-27
You sounded a little taller on radio
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i read a krugman editorial that was reprinted in my local paper yesterday. he said that tax rates just had to be marginally increased to cover the interest payments, which will be greater. in a "rational world," worries about the credit rating of the united states are unfounded, he said.
---------- "People have predicted the end of America in the past and been wrong. But let's face it: If you're trying to borrow $9 trillion to save your financial system, and already half your public debt held by foreigners, it's not really the conduct of rising empires, is it?" - Niall Ferguson
2009-05-29 08:59:12
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Snowman Posts: 1040 Incept: 2009-03-09
avoiding yellow snow
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maybe TMD or Karl can expand, but with the prime mortgage deliquent rate/default rates increasing - where the real next/now problem is - what is the mortgage refi interest breakage point where the average mortgage holder will walk away (ie where and how close to the edge are they)? 8%, 10%?
2009-05-29 09:08:05
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Language_games Posts: 868 Incept: 2008-02-09
St. Louis
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I'd bet your avg mortgage banker will be saying something like this: "Well, borrower what you need to do is squeeze the seller for an extra point or 2 or 3 and then apply that to prepay on the note, that'll bring your rate down a quarter or half point". And thus the pressure on the sellers continues... ---------- "It's not faith, it's work" Sister Helen Prejean - Dead Man Walking
2009-05-29 09:10:12
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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Its not about the rate point, it is whether you can "save" at-risk mortgages. You can't when the refi rate available is essentially the current rate of the note. Generally-speaking you need somewhere around 100 bips of rate reduction to be worth it when you include refinance costs into the mix; some people will say that its worth it for 50 bips, but that's the lower boundary. A lot of loans were written in the 05-06 timeframe where long rates were in the 6%ish range. As we get beyond 5.5% the impetus to refinance those disappears. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me
2009-05-29 09:11:11
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Snowman Posts: 1040 Incept: 2009-03-09
avoiding yellow snow
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sorry, pressed send while editing. I.e., if the current deliquent rate is 9.2% and foreclosures at 1.37% (prime borrowers 29% of this), which presumably is at the current mortgage levels, what then would the mortgage rates need to be to double deliquencies/foreclosures, triple? thanks
2009-05-29 09:12:17
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Greenrebellion Posts: 429 Incept: 2009-01-03
Los Angeles
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This post could've used the word skull****ed in it somewhere. 
2009-05-29 09:15:43
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Genesis Posts: 71432 Incept: 2007-06-26
KD^2
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For 30/fixed mortgages there is no particular number where this matters, since the rate you pay is the rate you pay. However: higher rates directly hit the value of your home and thus force you further underwater. As an example if the rate was at 5% and goes to 6% a $100,000 principal value payment goes to $89,611.65 at the same monthly payment. This is an EFFECTIVE reduction in the value of your home of about 11%, since virtually everyone finances home purchases and thus is inherently always shopping payment, not price. The problem comes when you NEED to sell (e.g. you have to move) and are $50,000 underwater. Now you got problems. ---------- "The monetary base in ALL modern monetary systems is the sum of unencumbered assets against which one is both WILLING AND ABLE to borrow." - Me Last modified:
2009-05-29 09:17:28 by genesis
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Language_games Posts: 868 Incept: 2008-02-09
St. Louis
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Yep, Gen - good point...I was considering more new home sales.
---------- "It's not faith, it's work" Sister Helen Prejean - Dead Man Walking
2009-05-29 09:17:51
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Snowman Posts: 1040 Incept: 2009-03-09
avoiding yellow snow
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thanks, got it I was looking at inability for people to refi or sell due to rising rates. like the voodoo doll
2009-05-29 09:18:13
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