Only One Way for Rates to Go
Americans have assumed the roller coaster goes one way, legendary bond manager Bill Gross told The Times this weekend. It’s been a great thrill as rates descended, but now we face an extended climb. While rising interest rates will reverberate throughout the economy, they are likely to have a particularly noticeable impact on the housing…
Americans have assumed the roller coaster goes one way, legendary bond manager Bill Gross told The Times this weekend. It’s been a great thrill as rates descended, but now we face an extended climb. While rising interest rates will reverberate throughout the economy, they are likely to have a particularly noticeable impact on the housing market. With rates on 30-year fixed mortgages currently in the mid-5-percent range, every percentage point rise can increase the cost of carrying a home by 19 percent, according to a Columbia prof. Whether there ends up being a proportionate decline in home values remains to be seen, but it’ll certainly add another headwind for the housing market just as some regions have started to see some stabilizing. The only good news for those with existing fixed-rate mortgages is that, to the extent that higher rates correlate with a rise in inflation, real interest rates on your mortgage could fall.
Consumers Face the End of an Era of Cheap Credit [NY Times]
Graphic from The New York Times
2nd stage @ April 12, 2010 6:20 PM.
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BHO thank you for keeping Reverand DIBS in-check with his blabbing. I have to work sometimes and can not stop him from spreading his bullish propaganda. Home prices could be going down 300% in New York City and he would still be preaching “home values are growing”. Some people just don’t want to accept reality. They bought into a bubble and now they want to get everyone in their bubble so they don’t feel so stupid.
” Lack of credibility doesn’t command this kind of attention. Truth, however, does.”
Don’t fool yourself into thinking you get attention because you are an all-knowing truth-teller. You get attention because you’re the loud, annoying one. That’s it. And only time will tell what the “truth” is … the fact that you don’t get that either is yet another blow to your credibility.
“And I don’t think that you get why I’m here. I’m here to simply call bullshit on home prices…”
No, I get it … it’s entirely clear that you’re simply here to “call bullshit”. That’s kind of the point (do YOU get it??). You don’t have cred (with most folks) as a bear because there is no nuance to your arguments. You’ve decided your mission is to call bs, and you simply regurgitate the same tired rhetoric without acknowledging how new data impacts your view or engaging in reasoned commentary.
“I’m here to simply call bullshit on home prices not to gamble in the capital markets (not that you can’t get lucky and make $).”
You’ve basically made the same point I noted above. Since your mission is “simply” about housing, not the capital markets, don’t crow too much (see 2:18 PM) about your DOW8000SP800 call. In your own words, the capital markets are outside your wheelhouse/mission, so it seems your SP800 call was “lucky”, not something we should take as evidence of any unique credibility/insight.
From the article…
“Household debt has been dropping for the last two years as recession-battered consumers cut back on borrowing”
Deflation. Most of the money supply is credit/debt. When it’s paid off or defaulted on and written off, the total money supply contracts and the existing glut of homes (shadow or listed) and goods chase fewer dollars.
“For young home buyers today considering 30-year mortgages with a rate of just over 5 percent, it might be hard to conceive of a time like October 1981, when mortgage rates peaked at 18.2 percent. That meant monthly payments of $1,523 then compared with $556 now for a $100,000 loan.”
And home prices then about 1/10 of what they’re asking/begging now after inflation.
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“BHO, you just don’t get how your rhetorical flourishes compromise your cred”
No, I don’t. Lack of credibility doesn’t command this kind of attention. Truth, however, does.
Arthur Schopenhauer’s three stages of truth: “First, it is ridiculed. Second, it is violently opposed. Third, it is accepted as being self-evident.”
And I don’t think that you get why I’m here. I’m here to simply call bullshit on home prices, not to gamble in the capital markets (not that you can’t get lucky and make $).
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>> My credibility was questioned when I called the housing bubble and bust, falling rents, rising crime and DOW8000SP800. I won’t stop now.
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BHO, you just don’t get how your rhetorical flourishes compromise your cred, even to those who are somewhat sympathetic to your view. This simple fact even further compromises your cred. You come off like a snake oil salesman. How’s that for a downward spiral?
As best I can tell, all the quote above shows is you’re basically the same as someone who caught a heater on a blackjack table but didn’t know when to quit.
“I won’t stop now”; Well good for you, but you should have quit while you were ahead…
This is debt burden, bkhabitat.
Bank Profits Dimmed by Prospect of Home-Equity Losses
http://tinyurl.com/ycpxdm6
My credibility was questioned when I called the housing bubble and bust, falling rents, rising crime and DOW8000SP800. I won’t stop now.
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Overpriced, bkhab. The problems since Lehman have not gone away. They’ve only left the balance sheet.
DIBS said “the debt burden”, not US Government borrowing. It was a general comment about debt. And defaluted debt is a liability/loss.
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BHO, bank failures have indeed been priced into the market, and Lehman’s failure was over a year ago. DiBS comment about the debt burden referred to US government borrowing, not to bank failures/hiding of bank liabilities etc.