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wazu
08-07-2007, 06:36 PM
I knew there was a reason debt was bad.

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http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/08/07/bcnchina107a.xml

China threatens 'nuclear option' of dollar sales
By Ambrose Evans-Pritchard
Last Updated: 6:00pm BST 07/08/2007

The Chinese government has begun a concerted campaign of economic threats against the United States, hinting that it may liquidate its vast holding of US treasuries if Washington imposes trade sanctions to force a yuan revaluation.

Two officials at leading Communist Party bodies have given interviews in recent days warning - for the first time - that Beijing may use its $1.33 trillion (£658bn) of foreign reserves as a political weapon to counter pressure from the US Congress. Shifts in Chinese policy are often announced through key think tanks and academies.

Described as China's "nuclear option" in the state media, such action could trigger a dollar crash at a time when the US currency is already breaking down through historic support levels.

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It would also cause a spike in US bond yields, hammering the US housing market and perhaps tipping the economy into recession. It is estimated that China holds over $900bn in a mix of US bonds.

Xia Bin, finance chief at the Development Research Centre (which has cabinet rank), kicked off what now appears to be government policy with a comment last week that Beijing's foreign reserves should be used as a "bargaining chip" in talks with the US.

"Of course, China doesn't want any undesirable phenomenon in the global financial order," he added.

He Fan, an official at the Chinese Academy of Social Sciences, went even further today, letting it be known that Beijing had the power to set off a dollar collapse if it choose to do so.

"China has accumulated a large sum of US dollars. Such a big sum, of which a considerable portion is in US treasury bonds, contributes a great deal to maintaining the position of the dollar as a reserve currency. Russia, Switzerland, and several other countries have reduced the their dollar holdings.

"China is unlikely to follow suit as long as the yuan's exchange rate is stable against the dollar. The Chinese central bank will be forced to sell dollars once the yuan appreciated dramatically, which might lead to a mass depreciation of the dollar," he told China Daily.

The threats play into the presidential electoral campaign of Hillary Clinton, who has called for restrictive legislation to prevent America being "held hostage to economic decicions being made in Beijing, Shanghai, or Tokyo".

She said foreign control over 44pc of the US national debt had left America acutely vulnerable.

Simon Derrick, a currency strategist at the Bank of New York Mellon, said the comments were a message to the US Senate as Capitol Hill prepares legislation for the Autumn session.

"The words are alarming and unambiguous. This carries a clear political threat and could have very serious consequences at a time when the credit markets are already afraid of contagion from the subprime troubles," he said.

A bill drafted by a group of US senators, and backed by the Senate Finance Committee, calls for trade tariffs against Chinese goods as retaliation for alleged currency manipulation.

The yuan has appreciated 9pc against the dollar over the last two years under a crawling peg but it has failed to halt the rise of China's trade surplus, which reached $26.9bn in June.

Henry Paulson, the US Tresury Secretary, said any such sanctions would undermine American authority and "could trigger a global cycle of protectionist legislation".

Mr Paulson is a China expert from his days as head of Goldman Sachs. He has opted for a softer form of diplomacy, but appeared to win few concession from Beijing on a unscheduled trip to China last week aimed at calming the waters.

BucEyedPea
08-07-2007, 06:52 PM
Geezus! I was just reading a book about the coming crash...and to invest in gold and stay liquid.

Where's Forward Dante now who claimed to be a monetarist and said this couldn't happen because they buy our debt.

I also read our dollar is going to be devalued too.

Perhaps the upside is that we don't buy their crap and they lose their biggest market. Then we start our own manufacturing again.

BucEyedPea
08-07-2007, 06:54 PM
Love your sig Adam.

Logical
08-07-2007, 08:16 PM
This is one of those areas where the Bush administration has proved itself idiotic in the past. I would not be suprised to see them cause this to occur.:cuss:

noa
08-07-2007, 08:26 PM
I'm sure the politicians in DC can fix this







ROFL

a1na2
08-07-2007, 08:58 PM
This is one of those areas where the Bush administration has proved itself idiotic in the past. I would not be suprised to see then cause this to occur.


I'm interested in your comment but I can't make sense of the last sentence. Care to edit?

Logical
08-07-2007, 09:02 PM
I'm interested in your comment but I can't make sense of the last sentence. Care to edit?Change then to them, sorry.

wazu
08-07-2007, 09:02 PM
The answer is simple, just pay for it with the endless supply of debt that we ignore.

jiveturkey
08-07-2007, 09:12 PM
The only reason that I even watch economics is because of the crashes.

Ebolapox
08-07-2007, 09:17 PM
f*ck china.

how they ever got most favored nation status (MFN) is BEYOND me. we pander to those *insert racial slur* f*cks FAR too much.

wazu
08-07-2007, 09:24 PM
The threats play into the presidential electoral campaign of Hillary Clinton, who has called for restrictive legislation to prevent America being "held hostage to economic decicions being made in Beijing, Shanghai, or Tokyo".

Here's a nice little nugget. As usual, a Washington politician misses the forest for the trees. The problem is that we have a national debt, not that China is smart enough to buy it up and hold it over our heads. That's just a symptom.

Rain Man
08-07-2007, 09:36 PM
I'm not a macroeconomist and I don't understand paper money. What would happen if the dollar was suddenly devalued? It seems like we would pay more for imports, I guess, and shift more to American goods, and foreigners who own U.S. stocks would kind of get screwed over, but would anything else happen?

Taco John
08-07-2007, 09:39 PM
China would never do this, as it would screw them just as much as it would screw us. They're just doing it to emsaculate us. Thanks for the record debt levels, George. Worst of all time.

Just their sabre rattling over this is going to hurt us though. The only thing that is keeping the Dollar afloat right now is the fact that it is tied to Mid-East oil. The Euro is trying to make advances to get that switched. If they're successful, it'll mean serious trouble for the dollar.

...enter the Amero.

Taco John
08-07-2007, 09:43 PM
I'm not a macroeconomist and I don't understand paper money. What would happen if the dollar was suddenly devalued? It seems like we would pay more for imports, I guess, and shift more to American goods, and foreigners who own U.S. stocks would kind of get screwed over, but would anything else happen?



American goods? Who is making them?


Here is an MP3 regarding US economics that you might find interesting. (http://ronpaulaudio.com/rpaudio/RonPaulMikeMaloneyGoldSilver.com060707.mp3) Ron Paul goes into some detail about his view of economics, and the peril that we face if we don't right the ship soon.

Taco John
08-07-2007, 09:50 PM
Here is another MP3 file about the dollar crisis. (http://ronpaulaudio.com/rpaudio/RonPaulKorlinEconomicsReport072507.mp3)

tiptap
08-07-2007, 09:52 PM
Capitalism is best played if you have the largest reserve. After all you can buy the asset make it yours and secure your place as largest value. But in the case of devalue and asset revaluations the tables can be turned as to who has the highest reserve.

Suddenly the US will have developmental country access to securing new ownership. The devalued assets that can't be moved (like real, mineral and agricultural as opposed to manufacturing or ideas) can be purchased at the discount. Now I suspect the Chinese are not quite ready to do this, would rather wait a decade or more to build toward this but most world trade battles and currency wars start with trying to infuence other countries currency and build from there.

Mine you the final asset is human productivity and knowhow and Americans still are ahead. But that could be lost if we chose to surrender our scientific based knowledge as the engine to new wealth.

Braincase
08-07-2007, 09:53 PM
Thank you , China's number one trade partner, Wal-Mart.

wazu
08-07-2007, 09:57 PM
Thank you , China's number one trade partner, Wal-Mart.

Yeah, it's Wal-Mart's fault we have a national debt. They should go away and take all of their tax revenue with them.

Taco John
08-07-2007, 09:59 PM
Looks like Tony Snow got to Drudge. He completely scrapped the story and threw up last night's headline... Nice.

wazu
08-07-2007, 10:26 PM
Looks like Tony Snow got to Drudge. He completely scrapped the story and threw up last night's headline... Nice.

Wow. My respect for the drudgerepot just took a nosedive.

jAZ
08-07-2007, 10:27 PM
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patteeu
08-07-2007, 10:36 PM
Wow. My respect for the drudgerepot just took a nosedive.

Did you look at the page yourself or are you taking TJ's word for it? I just looked and the story is still there. I don't know what happened when TJ looked. He seems a little too quick to jump to the conspiracy angle though.

wazu
08-07-2007, 10:42 PM
Did you look at the page yourself or are you taking TJ's word for it? I just looked and the story is still there. I don't know what happened when TJ looked. He seems a little too quick to jump to the conspiracy angle though.

I actually did check it, and can confirm that it was down for at least 20 minutes while the oh so exciting "free antibiotics" article was on top.

And I'll admit, I did buy into the conspiracy a little when I saw it, although not necessarily involving Tony Snow. Drudge must have blinked for some reason, but as you say, the article is back up, so I'm happy.

Taco John
08-07-2007, 10:46 PM
The article was down for at least a half hour with last night's headline taking its place. I've never seen that happen, ever.

Cochise
08-07-2007, 11:16 PM
By what machines would China attack our currency? Sell it all? What do they do with it to hurt us?

Back in the 1990s when Soros and his cabal attacked the British currency, they basically bought so much that when they shorted it the act of them doing so caused a major devaluation. But their objective was to devalue it to take short-term profit individually.

Their actions caused interest rates to shoot up in the UK and such, but I don't see how that would behoove China. The debt is worth more to them in the long term, isn't it? If they devalued our currency, their exports wouldn't be as attractive to American buyers, and investment within China wouldn't be as attractive to American investors either. Those are the two things that have brought them into being a player on the world economic stage, that have modernized their economy. It seems counterproductive.

SBK
08-07-2007, 11:32 PM
Here's what would happen. We'd all piss and moan, a few people would get very rich on it, and life would go on.

Not that I want it to happen, but in reality it's not like it would be the end of civilization.

China won't do it though. The dollar is far to important to them.

SBK
08-07-2007, 11:33 PM
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Classic video. He's dead on right about it too. There's going to be a HUGE crash in real estate when banks start letting these builders lose their properties. Rates go up, foreclosures go through the roof, flood of millions and millions of bank owned homes in the US.

Good time to buy. :thumb:

Mr. Flopnuts
08-08-2007, 12:38 AM
Yeah, it's Wal-Mart's fault we have a national debt. They should go away and take all of their tax revenue with them.



Seems to me that if that happened we'd collect more taxes. Smaller businesses don't get the breaks that bigger companies have do they? I admit to being ignorant about all of this, but my assumption is that Americans will still spend the same amount of money. The taxes would just be paid at higher percentages and from more entities.

Mr. Flopnuts
08-08-2007, 12:44 AM
Classic video. He's dead on right about it too. There's going to be a HUGE crash in real estate when banks start letting these builders lose their properties. Rates go up, foreclosures go through the roof, flood of millions and millions of bank owned homes in the US.

Good time to buy. :thumb:



It is EXACTLY what I am waiting for. I feel sorry for everyone that is going to take a beating on this though. People should've known when they signed up for those great ARM mortgages that there ain't nothing free in this world.

Taco John
08-08-2007, 12:53 AM
You're waiting for rates to go through the roof before you buy?

Mr. Flopnuts
08-08-2007, 12:57 AM
You're waiting for rates to go through the roof before you buy?



No. I'm waiting for them to go through the roofs until no one can buy so that they must be lowered to record levels again. At least I hope that's how it works.........

Taco John
08-08-2007, 01:02 AM
No. I'm waiting for them to go through the roofs until no one can buy so that they must be lowered to record levels again. At least I hope that's how it works.........



Good luck with that one. I doubt we see the levels we're at now for at least 30 years... Or so history would indicate:

http://mortgage-x.com/general/indexes/prime.asp

Mr. Flopnuts
08-08-2007, 01:10 AM
Good luck with that one. I doubt we see the levels we're at now for at least 30 years... Or so history would indicate:

http://mortgage-x.com/general/indexes/prime.asp



If that's the case what happens? The banks sit on a bunch of properties they can't sell? That doesn't make any sense to me. I really don't know anything about this, but it sure doesn't seem promising.

Taco John
08-08-2007, 01:33 AM
If that's the case what happens? The banks sit on a bunch of properties they can't sell? That doesn't make any sense to me. I really don't know anything about this, but it sure doesn't seem promising.



There are so many factors that go into this, it's hard to even guess. You're best bet is to just find a house that suits you, and that you can afford, and then pray for the best.

A lot of this really depends on what market your in. It seems like they can't sell houses fast enough where I live. The couple across the street from me just sold their house for $25k more than they bought it for. Not bad for a 2 year investment.

I feel your pain though. My wife and I are ready to trade in this house and get a house to live in for the next 20 years. It's hard to know what the best path to take is. I think we're just going to ignore the noise around us, and do what we conclude is right for us step-by-step.

Mr. Flopnuts
08-08-2007, 02:21 AM
There are so many factors that go into this, it's hard to even guess. You're best bet is to just find a house that suits you, and that you can afford, and then pray for the best.

A lot of this really depends on what market your in. It seems like they can't sell houses fast enough where I live. The couple across the street from me just sold their house for $25k more than they bought it for. Not bad for a 2 year investment.

I feel your pain though. My wife and I are ready to trade in this house and get a house to live in for the next 20 years. It's hard to know what the best path to take is. I think we're just going to ignore the noise around us, and do what we conclude is right for us step-by-step.


It's just not gonna happen then. Seattle is a f*cked up place to be right now housing wise. Rent has doubled over the last couple of years. Housing has shot through the roof. 2 years ago I moved to Charlotte NC. At that time in Snohomish County (just north of Seattle) there were exactly 2 houses on the market for less than 200k.

Now that I'm back that stat is the same but the numbers are around 300-400k. These are low end. My parents home has appreciated in value almost 80k in 3 years. The income out here doesn't support it. Combine that with the fact that subprime lending has all but been eliminated you are seeing a shit ton of houses with for sale signs up but no one to buy.

Finally, with all of the balloon payments coming due on those fantastic arm mortgages that the desperate signed for 18 months ago, people are screwed. They can't make their payments, they can't sell their houses. The only thing left to do is try and pass that cost on to the renter to save the home. It's not working.

Apartment complexes seeing the rise in housing costs have jacked their prices up as well. In the Queen Anne neighborhood of Seattle, they did a news story the other day on the rent hikes in that neighborhood. They were effectively eviction notices. An example given was a lady paying $1200 a month for her apartment and the rent was going up to $2200 the following month. This market can't take it. Shit's about to hit the fan is my guess.

KC Jones
08-08-2007, 05:14 AM
It is EXACTLY what I am waiting for. I feel sorry for everyone that is going to take a beating on this though. People should've known when they signed up for those great ARM mortgages that there ain't nothing free in this world.

Yeah, I see it coming too, but I have jack squat saved up so I won't really be able to take advantage of it.

chagrin
08-08-2007, 05:16 AM
The article was down for at least a half hour with last night's headline taking its place. I've never seen that happen, ever.

oooh, must be RWNJ's at it again - a glitch or editing process was underway and look there's another plot to take down dissenters, or even more - protect Bush!
Dude, turn the switch off, reboot and you just might find that sometimes, things are exactly as they seem.

freak :shake:

chagrin
08-08-2007, 05:20 AM
If that's the case what happens? The banks sit on a bunch of properties they can't sell? That doesn't make any sense to me. I really don't know anything about this, but it sure doesn't seem promising.


Don't buy into the scare tactics and doom reports, it's playing on the greed of the borrowers.

Try to remember that back in the 80, rates were in the teens and twenty's. We had a pretty bad crash in 88-89 and things turned around pretty good, didn't they?

The sky is not falling and maybe if people would stop thinking about how much money they can make, and focus on just buying the home that fits their needs AND BUDGET.

DaKCMan AP
08-08-2007, 06:17 AM
ehh, it'd be a double-edged sword for them.

StcChief
08-08-2007, 07:14 AM
Default and then Nuke 'em

Fat Elvis
08-08-2007, 08:04 AM
It's just not gonna happen then. Seattle is a f*cked up place to be right now housing wise. Rent has doubled over the last couple of years. Housing has shot through the roof. 2 years ago I moved to Charlotte NC. At that time in Snohomish County (just north of Seattle) there were exactly 2 houses on the market for less than 200k.

Now that I'm back that stat is the same but the numbers are around 300-400k. These are low end. My parents home has appreciated in value almost 80k in 3 years. The income out here doesn't support it. Combine that with the fact that subprime lending has all but been eliminated you are seeing a shit ton of houses with for sale signs up but no one to buy.

Finally, with all of the balloon payments coming due on those fantastic arm mortgages that the desperate signed for 18 months ago, people are screwed. They can't make their payments, they can't sell their houses. The only thing left to do is try and pass that cost on to the renter to save the home. It's not working.

Apartment complexes seeing the rise in housing costs have jacked their prices up as well. In the Queen Anne neighborhood of Seattle, they did a news story the other day on the rent hikes in that neighborhood. They were effectively eviction notices. An example given was a lady paying $1200 a month for her apartment and the rent was going up to $2200 the following month. This market can't take it. Shit's about to hit the fan is my guess.


Seattle has a vibrant economy, plus they have a huge influx of population from Cali and Asia where housing prices make Seattle look relatively bargain basement. Those two factors contribute to a healthy housing market in the Pugent Sound area. The Seattle market is going to keep chugging along, I believe.

StcChief
08-08-2007, 08:12 AM
Seattle has a vibrant economy, plus they have a huge influx of population from Cali and Asia where housing prices make Seattle look relatively bargain basement. Those two factors contribute to a healthy housing market in the Pugent Sound area. The Seattle market is going to keep chugging along, I believe.

these high rent districts around the U.S.A. are bound for a REAL correction.

Fat Elvis
08-08-2007, 08:56 AM
these high rent districts around the U.S.A. are bound for a REAL correction.

Compared to KC, Seattle is expensive; compared to Cali, it is still cheap. The Seattle market can support it, for now at least.

Cochise
08-08-2007, 09:16 AM
Classic video. He's dead on right about it too. There's going to be a HUGE crash in real estate when banks start letting these builders lose their properties. Rates go up, foreclosures go through the roof, flood of millions and millions of bank owned homes in the US.

Good time to buy. :thumb:

I was looking to buy maybe at the end of this year or early next year, but I might wait longer to see if the market gets any worse (or for a guy like me, better)

banyon
08-08-2007, 09:58 AM
Good luck with that one. I doubt we see the levels we're at now for at least 30 years... Or so history would indicate:

http://mortgage-x.com/general/indexes/prime.asp

Rates would go up, but prices should go way down, since the supply of qualified buyers will be much lower.

FD
08-08-2007, 10:04 AM
Geezus! I was just reading a book about the coming crash...and to invest in gold and stay liquid.

Where's Forward Dante now who claimed to be a monetarist and said this couldn't happen because they buy our debt.


Sorry I'm late. And yes, this cant happen. Why would China do anything to devalue the dollar when they are the world's largest holder of dollars? This is simple political posturing by some low-ranking officials as a response to the silly political posturing going on in the US with the China tariff bill. Neither one will amount to anything. Calm down.

banyon
08-08-2007, 10:25 AM
Sorry I'm late. And yes, this cant happen. Why would China do anything to devalue the dollar when they are the world's largest holder of dollars? This is simple political posturing by some low-ranking officials as a response to the silly political posturing going on in the US with the China tariff bill. Neither one will amount to anything. Calm down.

Why would China continue to threaten Taiwan, utilize slave labor, jail journalists, and buy a country's Treasury Bills that clearly cannot come up with the funding to make good on them?

They are trading economic power for political. Countries do not always act solely in their best economic interests. See this country for an example.

Taco John
08-08-2007, 10:43 AM
Rates would go up, but prices should go way down, since the supply of qualified buyers will be much lower.



Of course... The problem for a lot of folks, though, in addition to the inflated prices, is coming up with the 20% down payment. Five years ago, you didn't need a down payment to get a loan. These days, banks want to make sure you're invested in the risk.

And for the record, I'm not trying to piss on anybody's parade here. Owning a home is a sacred dream as far as I'm concerned. But there are some realities that people who are sitting on the sidelines praying for a bad market should be aware of. People who are losing their homes aren't losing them based on yesterday's interest rates. They're losing them based on the trend that is sending interest rates upwards and making thier monthly payments skyrocket. If you're looking to get in when the market is breaking other people's backs, you should be aware of the long term cost of doing so. Rates aren't going to magically plummet like they did after 9/11 unless there is some sort of economic event that drives them down. It's more likely that they will inch their way down (if they go down at all) as the market looks for a sweet spot. Banks are in the game to make money, not fulfill American dreams.

Go in with both eyes open, and remember that there is always opportunity for people who are looking for it.

noa
08-08-2007, 05:23 PM
Here is an interesting tidbit on the subject from the DailyDish today

Years ago, there was a silly movie called "Rollover." The premise of it, as best I can recall from wasting two hours watching this absurdity once, was a conspiracy by Arab countries to wreck the U.S. economy by selling all of their dollars at once. Although fanciful even by Hollywood standards, the idea that our creditors can somehow ruin us through this sort of action lives on among the conspiracy-minded.

The latest version of the Rollover scenario comes from Ambrose Evans-Pritchard in this morning's London Daily Telegraph. Says Evans-Pritchard, whom some may remember for his lurid tales of Bill and Hillary Clinton's wrongdoing back in the 1990s, the Chinese are getting ready to dump their dollars if Congress enacts legislation restricting Chinese imports.

Of course it would be bad policy to impose tariffs on Chinese goods. But the idea that China would retaliate by causing the dollar to crash is absurd. For one thing, it is extremely difficult to target imports from only one country when they can easily be rerouted through other countries. Also, there would be an immediate backlash against those politicians who just made many popular goods more expensive with new tariffs, which are, of course, a form of taxation--one that falls most heavily on the poor.

But the most important reason why China will not retaliate the way conspiracy-mongers like Evans-Pritchard think is because the Chinese would suffer a massive capital loss if they tried to hurt us by dumping their dollars. That is because their dollars are not sitting around in wads of $100 bills, but fully invested in U.S. Treasury bonds. Bond prices go down when interest rates rise or there is a threat of inflation that would erode the value of the bond's principal.

If China started heavily selling its bonds, the added supply on the world market would cause interest rates to spike. If investors started to become concerned about our ability to finance our debts, it could cause the dollar to plummet, which would further depress bond prices. How much bond prices might fall under such a scenario cannot be estimated. But China would certainly suffer capital losses on its bond portfolio of tens of billions of dollars and possibly much more.

The fact is that the more dollar-denominated assets China holds, the less likely it will do anything stupid like Evans-Pritchard suggests. They will work around any trade restrictions we impose just as the Japanese did in the 1980s. But the Chinese will not risk destroying one of their largest economic assets: their portfolio of Treasury bonds.

As economist John Maynard Keynes once explained, "Owe your banker 1,000 pounds and you are at his mercy; owe him one million pounds and the position is reversed" (Collected Writings, vol. 24, p. 258). In short, the more money we owe the Chinese, the more power we have over them. Evans-Pritchard has the whole relationship exactly backwards.

http://andrewsullivan.theatlantic.com/the_daily_dish/2007/08/monetary-meltdo.html

wazu
08-08-2007, 06:38 PM
Sorry I'm late. And yes, this cant happen. Why would China do anything to devalue the dollar when they are the world's largest holder of dollars? This is simple political posturing by some low-ranking officials as a response to the silly political posturing going on in the US with the China tariff bill. Neither one will amount to anything. Calm down.

Okay, all good then. Let the national debt continue to skyrocket.

SBK
08-09-2007, 12:43 AM
Of course... The problem for a lot of folks, though, in addition to the inflated prices, is coming up with the 20% down payment. Five years ago, you didn't need a down payment to get a loan. These days, banks want to make sure you're invested in the risk.

And for the record, I'm not trying to piss on anybody's parade here. Owning a home is a sacred dream as far as I'm concerned. But there are some realities that people who are sitting on the sidelines praying for a bad market should be aware of. People who are losing their homes aren't losing them based on yesterday's interest rates. They're losing them based on the trend that is sending interest rates upwards and making thier monthly payments skyrocket. If you're looking to get in when the market is breaking other people's backs, you should be aware of the long term cost of doing so. Rates aren't going to magically plummet like they did after 9/11 unless there is some sort of economic event that drives them down. It's more likely that they will inch their way down (if they go down at all) as the market looks for a sweet spot. Banks are in the game to make money, not fulfill American dreams.

Go in with both eyes open, and remember that there is always opportunity for people who are looking for it.

I'm with you on this. The catch is the HUGE amount of notes that are going to go bad, and the HUGE amount of builders that are going to go under.

I would rather see some sort of changes made that will keep this from happening, but I wouldn't count on it. The people that are prepared, and know what they're doing are going to buy a lot of property for nothing before long.......

Saggysack
08-09-2007, 05:16 AM
Housing may go down. But everything else goes up. Like I have said in the past, since I am a consumer a strong dollar is better suited for me. A weak dollar makes my everyday costs go up. No thanks.

chagrin
08-09-2007, 05:38 AM
Rates aren't going to magically plummet like they did after 9/11 unless there is some sort of economic event that drives them down.

I seem to remember working at Citibank, in the mortgage division before 9/11 and our interest rates on mortgages were very low, 9/11 only brought ours down a point or two. The ARM's were plummeting but the fixed was still being offered below 7 but not even as low as 6 - that took a while.

I disagree about your opinion on why people lose their homes though - make no mistaqke, people lose their homes because they are house broke. They get lured into buying a home from all the advertising. I don't know Idaho, but Florida - with one of the busiest housing markets in the country - we have people making alot less money than I am, buying 300,000 homes. It's not wonder the mortgages companies are going broke and getting no backing to support their lending.
The irresponsibility of lenders, Fannie Mae in particular, should carry much of the blame for this - not 9/11 - not terrorist - not George Bush.
Lenders giving every dipshit who has a job, home phone and checking account a home they cannot afford, is the problem.

SBK
08-09-2007, 08:38 AM
I seem to remember working at Citibank, in the mortgage division before 9/11 and our interest rates on mortgages were very low, 9/11 only brought ours down a point or two. The ARM's were plummeting but the fixed was still being offered below 7 but not even as low as 6 - that took a while.

I disagree about your opinion on why people lose their homes though - make no mistaqke, people lose their homes because they are house broke. They get lured into buying a home from all the advertising. I don't know Idaho, but Florida - with one of the busiest housing markets in the country - we have people making alot less money than I am, buying 300,000 homes. It's not wonder the mortgages companies are going broke and getting no backing to support their lending.
The irresponsibility of lenders, Fannie Mae in particular, should carry much of the blame for this - not 9/11 - not terrorist - not George Bush.
Lenders giving every dipshit who has a job, home phone and checking account a home they cannot afford, is the problem.

Ding ding ding. I used to say if you could fog a mirror you qualified for $500,000.

banyon
08-09-2007, 09:25 AM
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BucEyedPea
08-09-2007, 09:53 AM
The irresponsibility of lenders, Fannie Mae in particular, should carry much of the blame for this - not 9/11 - not terrorist - not George Bush.
Lenders giving every dipshit who has a job, home phone and checking account a home they cannot afford, is the problem.

Saw this quoted by SBK and I gotta agree....up to a point.

I said this while it was happening.However, let's not kid ourselves....it's a government sponsored and backed enterprise in a nation where equality is everything and advantage need not be earned—just restributed.

It's full name is: Federal National Mortgage Association
Thus it is subject to congressional oversight via the Office of Federal Housing Enterprise Oversight (OFHEO) even if its stock is traded on the New York Stock Exchange.

Still it's an innovation of the New Deal where owning a home is a "right." It isn't. They borrow at subsidized rates so it is not a free-market entity. It does NOT compete on the same playing field as its competitors.

"Fannie Mae is representative of all that's wrong with central planning institutions: it is a government-created conduit for carefully crafted financial and market socialism that the bureaucrats uphold for the purpose of propping up their fantasies for pandemic social engineering."-- Mises

Conclusion: This may not be caused by terrorism but the responsibility lies with GOP congress under the neo-conservative WH leadership who invited the public to come with them on their drunken spending binge, taking us down with them in the process.

Keep feeding us Bread & Circuses because if we're happy and getting what we want other policies, such as aggressive invasions of nations not responsible for 9/11 are questioned. Then our leaders get to brag that the economy is good and strong because real estate drives a lot of the economy.

We have a fake economy based on a mountain of debt which is not based on real true productivity gains. It is artificially stimulated by the govt via debt. This creates the boom bust cycles...and the busts are taking longer to get out of than if the market were allowed to correct on its own.

Cochise
08-09-2007, 10:02 AM
I seem to remember working at Citibank, in the mortgage division before 9/11 and our interest rates on mortgages were very low, 9/11 only brought ours down a point or two. The ARM's were plummeting but the fixed was still being offered below 7 but not even as low as 6 - that took a while.

I disagree about your opinion on why people lose their homes though - make no mistaqke, people lose their homes because they are house broke. They get lured into buying a home from all the advertising. I don't know Idaho, but Florida - with one of the busiest housing markets in the country - we have people making alot less money than I am, buying 300,000 homes. It's not wonder the mortgages companies are going broke and getting no backing to support their lending.
The irresponsibility of lenders, Fannie Mae in particular, should carry much of the blame for this - not 9/11 - not terrorist - not George Bush.
Lenders giving every dipshit who has a job, home phone and checking account a home they cannot afford, is the problem.

It's 2002. Someone who would not normally have the creditworthiness to buy a house, who would not normally have the income to buy a house, suddenly finds themselves perusing offers for ridiculously low rates, less-than-perfect credit, etc.

They get approved and buy all they can possibly afford and a little more under the current market conditions. "Well, I think I can afford a payment of $1,500 a month, where do I sign?"

They signed on an adjustable rate. They bought too much house. They didn't do the math, that the perfect world would have to continue forever for them to ever end up paying off the house.

Who's being irresponsible here?

BucEyedPea
08-09-2007, 10:10 AM
Who's being irresponsible here?

Both govt sponored lender and consumer. The lenders should not be accepting such loan applicants either. The sword of accountability cuts both ways. I'd say the lender is in the enabler role more.

Cochise
08-09-2007, 10:15 AM
Both govt sponored lender and consumer. The lenders should not be accepting such loan applicants either. The sword of accountability cuts both ways. I'd say the lender is in the enabler role more.

So, what's your position, that the government should have some elaborate formula by which they determine how much you can afford, and some sort of regulation prevents you from borrowing more than that?

Ah ha! We just need more government to fix this problem... run our finances for us... we aren't smart enough to do it... save us from ourselves, please.

BucEyedPea
08-09-2007, 10:27 AM
So, what's your position, that the government should have some elaborate formula by which they determine how much you can afford, and some sort of regulation prevents you from borrowing more than that?

Ah ha! We just need more government to fix this problem... run our finances for us... we aren't smart enough to do it... save us from ourselves, please.
My position is what I stated in my above post about how FannieMae is a govt entity—not a private one. The govt has no business here. So why are you trying to finger me for seeking a govt "elaborate formula." What we have is a "govt formula" already—a promiscuous one. ( easy cheap credit and money)

I thought my post implied that if it was a private institution, it would take more care to not lose it's future money from defaults by carefully screening applicants using their own successful formula if they want to remain in business or survive. That's a case for a more completely market driven mortgage industry. Is it not?

Amnorix
08-09-2007, 10:46 AM
We have a fake economy based on a mountain of debt which is not based on real true productivity gains. It is artificially stimulated by the govt via debt. This creates the boom bust cycles...and the busts are taking longer to get out of than if the market were allowed to correct on its own.

You don't know how much you don't know.

BucEyedPea
08-09-2007, 10:51 AM
You don't know how much you don't know.
Ya' know I could say the same about you.
I'm a Misean. I believe in a different system and went to classes on it.
So I'm educated in that. How much do you know about that?
It changed my mind about a lot of things we take for granted or accept unconditionally because that's how post secondary education educates today where one will find most mainstream economists.
I am not a Hamiltonian like you. I'm a Jeffersonian.