Krugman: Mortgage Rates Still Too High
Despite having come down considerably in recent weeks, mortgage rates are still too high, says Paul Krugman in a recent blog post. Why too high? Well, the spread between 30-year mortgages and 10-year Treasurys historically is around 150 basis points. And now? About 300 bips. Krugman’s prescription: “Declare that Fannie and Freddie are backed by…
Despite having come down considerably in recent weeks, mortgage rates are still too high, says Paul Krugman in a recent blog post. Why too high? Well, the spread between 30-year mortgages and 10-year Treasurys historically is around 150 basis points. And now? About 300 bips. Krugman’s prescription: “Declare that Fannie and Freddie are backed by full faith and credit, and if that doesn’t work, have the Treasury borrow on their behalf.”
“When the Bond Market breaks you better have good ole cash on hand and that Gold thing is going to hurt real bad. The deflation monster is running amok! All asset classes got smashed this year (Real Estate, Oil, Nat Gas, etc..) and if you are on the wrong side of that it’s going to be very painful.”
Except when most commods and mtrls hit all-time highs this year. And of course now treasuries.
Our economy is going to money heaven and the govt is planning to flood the mkt with more paper yet bonds are hitting all time highs at auction. Fear of anything but cash? Maybe. But also maybe a showing of faith in the vitality of our nation’s economy. I don’t see any rush into other sovereign debt. My money says this faith shows up in other US centric assets sooner than later.
I see you’re trying to clean it up here What.
“Mortgage rates aren’t too high, it’s that treasury bills are too low. It’s like the government doesn’t want to face reality and is trying to encourage us to keep up our irresponsible spending.”
No one want to take on no more debt. People are spending less and paying down debt and repairing their balance sheets. Nobody want too be the “next sucker” in the imploding Mutant Asset Bubble. The music has stopped and the Asshats are looking for seats, that’s why you have a bubble in the Bond Market. Just like the last Depression.
“I’ve been thinking about this aspect myself What. It’s a puzzle. For sometime I’ve been pondering what the next bubble will be, where will the money go, where will people feel ‘ok’ about stashing it. It’s a puzzle. What is the ‘thing’ that everyone will seize on as ‘safe’.”
Ky Jelly…
The What
Someday this war is gonna end…
Well, I don’t think they are thinking about it that way. They’re thinking money in circulation is money in circulation. Full stop. It doesn’t matter to them what kind of money it is, or the repercussions, just so long as someone is circulating it. Otherwise, “pop go the weasel”, no?
Mortgage rates aren’t too high, it’s that treasury bills are too low. It’s like the government doesn’t want to face reality and is trying to encourage us to keep up our irresponsible spending.
“The Dumbasses don’t understand the gravity of the “Madoff Gambit”! Who will you trust with your money now?????!!!”
I’ve been thinking about this aspect myself What. It’s a puzzle. For sometime I’ve been pondering what the next bubble will be, where will the money go, where will people feel ‘ok’ about stashing it. It’s a puzzle. What is the ‘thing’ that everyone will seize on as ‘safe’.
I hanker for a hunk of cheese, yahoo!
– http://www.youtube.com/watch?v=U3jgo5ea_zc
“What are you going to live on in 2009?? Government cheese handouts!!!!”
You better pray to GOD that you don’t see people on a Cheese line.
” I bet you aren’t selling much real estate these days!!!!!”
I haven’t been in Real Estate since 2006 Dave. I knew it was time to get out.
“What – how did Amazon do this X-mas season?”
The Amazon number number was very good. They was aggressive on the price cuts and shipping. Amazon was smelling blood in the water from Circuit City and Best Buy and they took advantage of that. However when the Xmas number comes out the are going to be real bad. People was not going broke this year to have a Merry Xmas.
“so when treasury bubble pops where does all that cash go? gold? i doubt it.”
When the Bond Market breaks you better have good ole cash on hand and that Gold thing is going to hurt real bad. The deflation monster is running amok! All asset classes got smashed this year (Real Estate, Oil, Nat Gas, etc..) and if you are on the wrong side of that it’s going to be very painful.
“blessing in the madoff thing is that it’ll get rid of the wealth wasting fund of funds industry. no more people lining up to pay someone to pick someone else to manage money. all those fees are going back where they came from via madoff litigation settlements.”
The Dumbasses don’t understand the gravity of the “Madoff Gambit”! Who will you trust with your money now?????!!! The Government? Yeah right! Banks, RIIGGGGHTTTT! Hedge Funds? I don’t think so.
The only way that this mess will be cleaned you is all of the Baby Boomer must die and their children will clean up everything. Nice going Asshats….
The What (Dave blows stray dogs..)
Someday this war is gonna end…
As someone who has either owned or been part owner in small business for many years, it is silly to say that tax cuts result in hiring, and it is equally silly to say that the entrepreneurial class makes its decisions based on tax cuts. I make my decisions based on business conditions, not whether I pay 28% or 33% tax.
Let’s take someone else who can easily serve as a poster girl for letting the Bush tax cuts at least expire (I understand it wouldn’t be wise to raise taxes right now).
That’s Cindy McCain. Here’s a person who never worked a day in her life, who’s father left a business that she couldn’t be bothered learning or running, and who lives off dividends made possible by the work of others. She should be in the 90% tax bracket. What has she contributed to society? What did she do with her tax cut? Invest it in her business? Highly unlikely.