...is that homeowners are so willing to complain about how miserable they are as compared to renters, and yet are so reluctant to become renters. Come on, people! If taxes, insurance, and worries about HELOC availability are so burdensome for you, what kind of masochistic streak forces you to ask government to keep you in your houses when you can easily join the happy race of tenants and get rid of that burden of property once and for all? Anyone? Alstry and the angry homeowners storming Bear Sterns buildings? [more]
This is the first honest statement from a candidate during this campaign. Sadly, it also means that McCain has no hope in hell of getting elected. [more]
The last 6 weeks have been a roller-coaster for mortgage rates in my part of the world. The rates would go down 0.3% one week, then go up 0.2% next week, then go down another 0.3%, and so on. The general direction is down, of course. I've been following the open house activity for these 6 weeks. My conclusion: there definitely exists a correlation between open houses and weekly mortgage trends. If Bankrate.com says on Tuesday that rates edged up during the last week, you can expect to see an increased number of open houses on Sunday. If Bankrate says the rates edged down, you are likely to see very few open houses being scheduled. In both cases it is the same inventory that the agency is trying to move. Just wondering if anyone else observes a similar correlation in his neighbourhood? [more]
Macroeconomics: There will be no recession in 2008. By that I mean, no official recession. What will happen unofficially to the real economic activity, I'm not sure, but I guess there will be a 1%-2% contraction. However, with the statisticians we have, we'll never suspect there was any contraction. The odds of official recession: 25% at best. [more]
Now, Bernanke is trying to convince us that supporting parasites is vital to our well-being: [more]
M2 growth in Feb was 6.9% vs. Feb 2007. But this is not all. Six months from Aug to Feb produced an annualized growth rate of 7.7%. But wait, it gets even better. During the last 3 months from Nov to Feb M2 grew at annualized 10.3%. The last number, IMHO, is closest to the actual inflation to be expected in 2008. [more]
Watching the market panic was absolutely terrific. I felt like a kid in a candy store, wanting to buy everything. I wound up buying more HDB, OMAB, KHD, LOW, DE, CX, TASR, CRESY, and MF, to name a few. I also added more KBH and would have bought more NVR, but my $500 limit did not get filled. Came close to buying ARLP at 34, but never pulled the trigger on that one. By and large, I am now satisfied with my homebuilder portfolio, having accumulated a full position in almost every stock I'm interested in. [more]
No, 0.25% and 0.5% will not do the trick because Bernanke knows that the market already expects something more than 0.5% and less than 0.75%. Now, 0.75% would be a surprise, but it won't really shock anyone, and Bernanke understands that a failed attempt to shock the market means one more wasted arrow in his quiver. 1.25% would be radical indeed, but it could raise the concern that he is spending his arrows too fast or create a panic on the oil futures market. To cut 1.25% and announce that this cut will be the last one would help avoid the dollar panic, but it would run contrary to Bernanke's intentions, because he knows he is going to go all the way to zero. So a 1% cut looks the most likely. [more]
"There's one simple reason this argument doesn't hold up: The Fed's housing lever doesn't work. [more]
Now, let's hold a vote: do you mind Bernanke slashing the federal funds rate to 0%? [more]
I am grateful to OPEC. This is my only hope for a recession in 2008, because the housing thing is a scarecrow and the banking crisis can't do much when Bernanke is so generous...
My previous post drew several derogatory comments, for an obvious reason. What matters, though, is that none of the critics has even attempted to refute one of these numerical facts. [more]
The Federal Reserve just released another scarecrow by announcing that homeowner equity fell below 50%. [more]
Everybody is whining about prices at the pump. But America is not a resource-poor country like Japan. In fact, it is one of the most oil-rich countries in the world. So why is it that there never seems to be enough oil? [more]
Well, here comes the moment of truth. Bernanke just confirmed that prices cannot fall, because as soon as they try to fall, the renters will obediently pay more taxes to prop them up. Now, how does it feel to pay rent to your landlord and then to pay the principle on your landlord's mortgage? Will you ever find another fool in the coutry who still wants to rent and bail out and pay taxes on renting and bailing out and put his few remaining dollars into savings which become worthless faster than they accumulate? Tomorrow morning, even the last sceptic will run to the bank and ask for the largest loan he can get, any term, any fees, any conditions, and that still will not get him anywhere because realtors will no doubt replace the stickers today in the evening. [more]
Tomorrow's election will set an interesting precedent: I believe it will be first time when a new president puts the picture of his hand-picked prime minister on his office wall. But then, this is Russia, of course.