plus or minus $55 Trillion
derryb
Posts: 36,824 ✭✭✭✭✭
CFTC Announces It Is Undercounting Size Of Swaps Market By As Much As $55 Trillion
Close enough. "What is $55 trillion between friends?"
Close enough. "What is $55 trillion between friends?"
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
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Comments
GrandAm
<< <i>What come after a Trillion? A Gazillion? Boy that will be a monster won't it!!!!! We will soon be there.
GrandAm
Quadrillion...I believe. Not too many years from now the TV airhead will talk about Quadrillion, with a Q.
Quattuordecillion has 45 zeros. Cool name but that may take few more decades of fed accommodation to arrive.
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That is ALOT of ZERO'S
We've worried about this for the last 6 years yet silver is the same price now as then.
Knowledge is the enemy of fear
<< <i>It doesnt matter if it is a 1 followed by 3 zeros or 300 zeros. These are just paper contracts. Paper contracts get broken everyday.
We've worried about this for the last 6 years yet silver is the same price now as then. >>
One could argue that Silver is really one fourth of its price of 6 years ago as the pool of greenbacks has increased fourfold in that period.
Inflation is like a slow but large steamroller. It may take a while to run us over, but once rolling it cannot easily be stopped.
have missed out on the best market in a generation.
The Fed and US Treasury have shown that they will not let the derivatives market fail.
Remember that in 2008 they allowed Lehman to file bankruptcy on a Monday morning
and the next day at 4:15 PM they announced a bailout for AIG.
AIG was actually profitable for the US and even more profitable for investors in the IPO
at 29.
<< <i> One could argue that Silver is really one fourth of its price of 6 years ago as the pool of greenbacks has increased fourfold in that period. >>
"one" could indeed argue that, however any"one" with a modicum of logical reasoning ability would certainly dispute the assertion, and ask, "so, if that were true, then is everything "really" one fourth of its price of 6 years ago?"
Liberty: Parent of Science & Industry
<< <i>If you based your investment strategy on analysis from Zero Hedge you
have missed out on the best market in a generation.
The Fed and US Treasury have shown that they will not let the derivatives market fail.
Remember that in 2008 they allowed Lehman to file bankruptcy on a Monday morning
and the next day at 4:15 PM they announced a bailout for AIG.
AIG was actually profitable for the US and even more profitable for investors in the IPO
at 29. >>
AIG should have failed. Same for Chrysler and GM. Capitalism has its warts but self corrects. Socialism only fails. That is why 6 years later the economy still feeds heavily at the nipple of a free wheeling reckless and broken federal reserve system.
The ONLY way the FED can, and has been able to, prevent a derivatives market blowup is to continue ZIRP indefinitely and hope FED interest rate policy continues to trump market interest rate policy. The alternative is a $300+ Trillion FED purchase of interest rate deriviatives gone bad - good luck with dat.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>If you based your investment strategy on analysis from Zero Hedge you
have missed out on the best market in a generation.
The Fed and US Treasury have shown that they will not let the derivatives market fail.
Remember that in 2008 they allowed Lehman to file bankruptcy on a Monday morning
and the next day at 4:15 PM they announced a bailout for AIG.
AIG was actually profitable for the US and even more profitable for investors in the IPO
at 29. >>
AIG should have failed. Same for Chrysler and GM. Capitalism has its warts but self corrects. Socialism only fails. That is why 6 years later the economy still feeds heavily at the nipple of a free wheeling reckless and broken federal reserve system. >>
Yes, where would the equities market be without QE1 through QE-infinity?
Take out the $85B/month backstop over the past year and a half and I doubt the averages would be at 16k, 4k and 1800.
<< <i>CFTC Announces It Is Undercounting Size Of Swaps Market By As Much As $55 Trillion
Close enough. "What is $55 trillion between friends?" >>
And this after the BIS halved the world's otc derivatives at the end of 2008 by allowing them to be valued per model rather than to the actual market. This $55 TRILL today was $100 TRILL back in late 2008.
To say that "nothing happened" over these past 6 years is quite a distortion of what really happened. During the 2008-2009 crisis approximately $30 TRILL in credit default swaps and $5-$10 TRILL in MBS came under
great stress and failed (50% or more of each market). The FED/US Treasury back stopped those failures and paid out $TRILLIONs to the winners on those trade....and kept AIG and others afloat as well. The problem just
didn't go away. It was papered over at the expense of the US taxpayers in future debt. What didn't get stressed at that time were the $300 TRILL or so in interest rate swaps carried by the US banks. That problem is so
huge they can't even begin to let it bubble over as there's no way they could come up with the dough to paper it over like they did the much smaller CDS and MBS markets. It's the real reason interest rates HAVE to stay small
for years to come. I've read some recent articles that claim the next big crisis in the world will be a currency crisis....and that the bank crisis is long behind us (ie solved). These guys seem to forget that the biggest Financial
Time Bomb ever created is still sitting out there unused but ticking away as long as interest rates aren't allowed to significantly rise. Similarly, a tsunami does no significant damage until it finds its way to shore.
Lehman failing was just 1 bank out of the 6 TBTF banks. Several of those banks dwarfed the derivative's positions carried by Lehman. And look what happened when that 1 bank was allowed to fail along with all its derivatives.
The return on those "liquid" assets once sold off netted approx 10c on the dollar (90% loss). What's the 90% loss rate of $1.2 QUAD notional in derivatives with a typical 30-1 leverage? How about $36 TRILL? And that's a
conservative number. If a bank is allowed to fail again, the notional amount has to be paid off. In the case of a JPM or BoA that's approx $70 TRILL each. Is it just a coincidence that FED's M0 bank reserves have increased
by approx $3 TRILL since the 2008 crisis started? (ie paying off the derivative winners as additional otc swaps have unwound). That $3 TRILL hasn't been lent out to anyone. Rather, the banks have used that margin to lever
up their stock, bond, and currency trades over the past 4-1/2 yrs.....essentially a back-stopped, fool-proof trade. It's a $3 TRILL pile of nearly free, FED casino chips to bet with....the main reason behind why the stock market is
where it's at.
<< <i>If you based your investment strategy on analysis from Zero Hedge you
have missed out on the best market in a generation.
The Fed and US Treasury have shown that they will not let the derivatives market fail.
Remember that in 2008 they allowed Lehman to file bankruptcy on a Monday morning
and the next day at 4:15 PM they announced a bailout for AIG.
AIG was actually profitable for the US and even more profitable for investors in the IPO
at 29. >>
The FED and Treasury did let the derivatives held by Lehman Brothers fail. And it caused them (US taxpayers) TRILLIONs of dollars. No one knows the real cost as there are TRILLIONs in currency swaps constantly being
renewed that are never accounted for in the totals (ie promises to unwind these swaps). AIG was hardly profitable for the US taxpayers as what $BILLIONs are claimed in so-called profits were more than wiped out by the
$TRILLIONs the FED paid out in slush money around the world (hundreds of recipients around the globe including most every major bank). The accounting being used to show AIG, Fannie, Freddie, etc profitable is nothing more
than an advanced shell game. The FED and Treasury learned in 2008 that a single bank would have taken down the whole system. Imagine what another 5 TBTF US banks could do plus another dozen or so foreign banks
holding even larger positions in otc derivatives? I would not characterize the outcome of these events as the "best market in a generation." How about the best Ponzi scheme in world history? Bank and corporate failures are
now considered "money makers" for the US citizens? What a Bizzarro world we've created. And as long as J6P can read it in the newspaper....it must be true.
A quadrillion comes after a trillion. And when the BIS realized in 2008 that reported otc derivatives had reached $1.14 QUAD notional they knew they couldn't allow that number to stand. By the next report on derivatives the
total number was cut to around $680 TRILL. This was accomplished by allowing the banks to mark to model once the FASB caved in on their standards. Voila...no more $1 QUAD derivatives market to have to explain.
Doesn't matter.
We did have QE. AIG and GM were saved.
The markets are making new highs every day.
Anyone could have bought SPY a year ago and be up 28%.
What might have happened is irrelevant.
Like where would people on Earth be without oxygen?
About the same place they'd be when $1.1 QUAD in derivatives blow up all at once. It will take the oxygen right out of the financial markets and world economies.
Consider fall of 2008 as a 5 min movie trailer in advance of the real thing.
Doesn't matter.
On the contrary, everything revolves around QE. Without QE, rates go up. If rates go up, the debt explodes. If rates go up, investment in plant & equipment stagnate or drop. If rates go up, all of the 401Ks begin to upchuck and everyone panics.
Yeah, it actually does matter.
I knew it would happen.
would fall in price including stocks, precious metals, real estate, etc.
US Treasury bonds would be one of the few assets that would increase in price.
In a deflation, asset prices fall, the purchasing power of cash increases.
<< <i>I believe that without QE we would go into a deflation and most assets
would fall in price including stocks, precious metals, real estate, etc.
US Treasury bonds would be one of the few assets that would increase in price.
In a deflation, asset prices fall, the purchasing power of cash increases. >>
We had deflation in 2000-2003.....why did the price of gold rise 50%?
Same thing happened during portions of the great depression (1933-1936) and the 1970's recession (1970-1973 and 1977-1978).
<< <i>
<< <i>
<< <i>If you based your investment strategy on analysis from Zero Hedge you
have missed out on the best market in a generation.
The Fed and US Treasury have shown that they will not let the derivatives market fail.
Remember that in 2008 they allowed Lehman to file bankruptcy on a Monday morning
and the next day at 4:15 PM they announced a bailout for AIG.
AIG was actually profitable for the US and even more profitable for investors in the IPO
at 29. >>
AIG should have failed. Same for Chrysler and GM. Capitalism has its warts but self corrects. Socialism only fails. That is why 6 years later the economy still feeds heavily at the nipple of a free wheeling reckless and broken federal reserve system. >>
Yes, where would the equities market be without QE1 through QE-infinity?
Take out the $85B/month backstop over the past year and a half and I doubt the averages would be at 16k, 4k and 1800. >>
Don't know if you are serious or pulling my leg CR. By the same logic, give every American $10,000,000 and we could all be rich. Rich until every store shelf was emptied in about 15 minutes.
<< <i>
<< <i>I believe that without QE we would go into a deflation and most assets
would fall in price including stocks, precious metals, real estate, etc.
US Treasury bonds would be one of the few assets that would increase in price.
In a deflation, asset prices fall, the purchasing power of cash increases. >>
We had deflation in 2000-2003.....why did the price of gold rise 50%?
Same thing happened during portions of the great depression (1933-1936) and the 1970's recession (1970-1973 and 1977-1978). >>
gold rose during those periods because most people were scared, and a small minority of them had money to buy gold and thought the world was going to end so it was the best thing they could think of to buy...
turns out, they probably should have gone long "America" and bought productive assets while prices were down for them, because gold ended up going back down and the other stuff back up
Liberty: Parent of Science & Industry
Gold rose in the 1970's because:
1) US Citizens were allowed to buy gold.
2) It was a period of high inflation.
<< <i>Gold rose in 1933 because FDR devalued the US $ against gold.
Gold rose in the 1970's because:
1) US Citizens were allowed to buy gold.
2) It was a period of high inflation. >>
Gold rose instantly 69% in when FDR instituted the Gold Reserve Act after banning private ownership of all but collectible gold and certain "for trade" industrial/retail gold uses. The official price was changed from $20.67/oz
to $35/oz, in essence a 40% devaluation of the dollar. That doesn't explain why gold stocks on the NYSE rose 5X from 1933-1936, essentially the best sector on the board....and really, the only way the public could participate in precious metals.
Parts of the 1970's saw higher inflation in tangible assets and specific commodities...especially the period 1978 through January 1980. But there were also several recessions during the 1970's that were certainly not periods of high inflation. One such period was Dec 1974-August 1976 when gold, oil, and other tangibles dropped like a rock. Gold dropped 47% in value....that wasn't inflationary. The 1970's were better described as combination of recession/inflationary bouts. Gold didn't rise through most of the 1970's because citizens could own all sorts of gold. In fact, the ban on most forms of gold bullion was in effect until Dec 1974. It was lifted in December 1974 just as gold was peaking in a 4 year rally from $35 to $195. This was an ideal way to hand over gold ownership to the public just as it was hitting the first mania/parabolic phase. It was a perfect set up to crush any positive thought's about gold that the people might have. They bought gold near the peak only to see it get smashed.
It wasn't until Sept 1976 that gold started the final parabolic move from $103 to $875. People could buy bullion gold then but most were too shell shocked from 1975-1976 to dare dip back into it again. Fwiw citizens could have bought US "collectible" $20 gold pieces at anytime in the mid-1960's to 1974 while the so called "gold ban" was in effect. Some other foreign gold coins were also not on the "banned" list. BU $20 Saints were in a bid/ask range of $38/$42 in the late 1960's. Pre-1933 US 90% gold coins were still a fairly inexpensive way to own gold at that time. Most people don't realize that gold rose internationally by 25% during 1966-1969. It probably would have doubled in price if not for the 3,000 tonnes of gold that the London Gold Pool (G-7 nations) dumped on the market from 1962-1968 as a means of price controls. The little guy (J6P) wasn't stacking bullion gold during this period so there had to be other reasons the price of gold rose by 25%....despite 3,000 tonnes of additional supplies dumped on the market. Silver more than doubled in price from 1962 to 1967 and gold would have followed if not for the LGP. Both metals came back down following the 1969-1970 recession. The LGP folded in 1968 probably because they ran out of available gold to sell. 3,000 tonnes of gold back then was huge. Consider that possibly less than 1,000 tonnes of real gold dumped on the market in the last 2 years has resulted in a drop in gold from $1923 to $1180/oz. Paper gold in unlimited key stroke quantity is the big thing today. Back in the 1960's you had to have the real thing to try and move the market....or be a good liar.
<< <i> gold rose during those periods because most people were scared, and a small minority of them had money to buy gold and thought the world was going to end so it was the best thing they could think of to buy...
turns out, they probably should have gone long "America" and bought productive assets while prices were down for them, because gold ended up going back down and the other stuff back up >>
Of the 4 periods that I listed above, none of them resulted in the gold price going back down for any length of time. Even following the 19 month correction in '75-'76 gold ended up advancing over 4X if you just stood pat.
During those periods I mentioned gold out-performed most investment sectors, including the stock markets. It wasn't time to go long America until 1981-1982 and again in 2003-2004. Gold outperfomed stocks again from
2004-2011. As with anything, timing is everything. Recency bias will make everyone focus on Oct 2011 - Dec 2013......(ie stocks are great and gold sucks). The same argument held true in the 1975-1977 period where PMs
stunk and stocks ruled. But once stocks peaked in 1977 they stunk up the joint for the next 5-6 years. The expanding wedge (broadening top) pattern that stocks carved out from 1966-1973 (or 1966-1976) is very similar to
the one we've seen from 2000-2013. The whip saws in the stock market from 1966-1982 clearly show 3-5 recessions during that period, 2-1/2 of those in the 1970's. The worst recession being 1973-1975 where gold rose
rather sharply during much of that period. Gold doesn't need inflation to perform (ie as in the 2000-2003 recession). It just needs a lack of confidence in the currency and govt usually coupled with rising sovereign debt.
Historical Dow chart 1960's to 1980's - whipsaw city
"Where is a better location to live, London or the United States of America?"
edited to add: and I'm a guy who loves me both some gold and certain sectors of the stock market.. And I'd rather live in London (or Amsterdam, or Zurich, or Melbourne, or Auckland, or any number of other cities, than anywhere in probably 40 of the States
But best of all is to visit my favorites, in season.
Liberty: Parent of Science & Industry
the stock market. It's a fair comparison imo. Oil is probably the only other single commodity/tangible asset that I would consider comparing vs. the stock market as the whole world uses it in quantity. But, only gold
is a final extinguisher of financial system debt. Everything else just extends and/or increases the debt. Agreed, every asset has its day....even Beanie Babies....or in today's vernacular....Bennie Babies....
soon to be replaced by Yellin' Babies.
The dollar was only "devalued" against gold. Its value held vs chickens, labor, automobiles, ect. I'll have to check my records on mining company stock performance during this time but in general the entire market tripled. The darkest period of the American economy turned out to be a brilliant opportunity to buy stocks just a the relatively dark period of 2009 did as well. Again, placing bets against America have proven ill timed.
Knowledge is the enemy of fear
<< <i>The dollar was only "devalued" against gold. Its value held vs chickens, labor, automobiles, ect. I'll have to check my records on mining company stock performance during this time but in general the entire market tripled. The darkest period of the American economy turned out to be a brilliant opportunity to buy stocks just a the relatively dark period of 2009 did as well. Again, placing bets against America have proven ill timed. >>
It also meant that all of a sudden gold could buy a lot more chickens, labor and automobiles. Gold once again provided dollar insurance. Since that time the dollar has been devalued against everything else it purchases - thanks to a steady, "healthy" FED induced 2%+ inflation rate each year. Zero inflation is the only healthy inflation. Dollar insurance is like any other insurance, you are glad you have it when the need arises. As long as there is a need for a central bank to manage the economy, there will be an equal need for a golden insurance policy.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
Betting against Bernanke, Corzine, Geithner, Krugman, Obama, Rubin, Greenspan, Summers, Blankfein, Dimon and Lagarde isn't the same thing as betting against America.
Artificially low interest rates result in capital consumption, overvaluation of short term assets and wrongly focus investments on short term horizons.
I knew it would happen.
<< <i>placing bets against America have proven ill timed >>
It's not the same Amerca that most patriots think it is. The sooner one realizes this the better he/she can prepare for the resulting paradigm shift. Understanding that it is not the same America is not the same as relenquishing ones patriotism. Some of our best patriots were Americas biggest critics.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>The dollar was only "devalued" against gold. Its value held vs chickens, labor, automobiles, ect. I'll have to check my records on mining company stock performance during this time but in general the entire market tripled. The darkest period of the American economy turned out to be a brilliant opportunity to buy stocks just a the relatively dark period of 2009 did as well. Again, placing bets against America have proven ill timed. >>
It also meant that all of a sudden gold could buy a lot more chickens, labor and automobiles. Gold once again provided dollar insurance. Since that time the dollar has been devalued against everything else it purchases - thanks to a steady, "healthy" FED induced 2%+ inflation rate each year. Zero inflation is the only healthy inflation. Dollar insurance is like any other insurance, you are glad you have it when the need arises. As long as there is a need for a central bank to manage the economy, there will be an equal need for a golden insurance policy. >>
Just as the stock market has provided dollar insurance?
Yes, people have criticized the USA since 1776 and every time their prognostications of its demise have been proven wrong.
PMs have proven to be a bad insurance policy the last few years. The unpatriotic will hope and pray the storm worsens.
Knowledge is the enemy of fear
<< <i>placing bets against America have proven ill timed
Betting against Bernanke, Corzine, Geithner, Krugman, Obama, Rubin, Greenspan, Summers, Blankfein, Dimon and Lagarde isn't the same thing as betting against America.
Artificially low interest rates result in capital consumption, overvaluation of short term assets and wrongly focus investments on short term horizons. >>
I can't agree. What a great time it is to take out a 30 yr mortgage. Or like Disney issue 50 year bonds.
And in 1935 people bet against Rockefeller, Roosevelt and Kennedy. Only the names change.
Knowledge is the enemy of fear
<< <i>
<< <i>placing bets against America have proven ill timed >>
It's not the same Amerca that most patriots think it is. The sooner one realizes this the better he/she can prepare for the resulting paradigm shift. Understanding that it is not the same America is not the same as relenquishing ones patriotism. Some of our best patriots were Americas biggest critics. >>
Read a comment by one of them this morning that was interesting. He said the USA equity markets have become, "another arm of the U.S. government". Similar to other federal government departments or agencies, it will be funded "as required". Food for thought.
<< <i>What a great time it is to take out a 30 yr mortgage. >>
seems we heard that right before 2008. I know, "this time it's different."
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>
<< <i>What a great time it is to take out a 30 yr mortgage. >>
seems we heard that right before 2008. I know, "this time it's different." >>
Armstrong doesn't agree with this. His 78 year real estate model shows RE already peaked in 2007 and headed into a long term bottom in 2033. The last bit of relief is into fall of 2015 as the bounce out of the 2007-2011 crash. While interest rates might be low, I'd be more concerned about the rate of return of the base investment. The "housing" paradigm from 1955-2007 that all of us have been ingrained with isn't about to be repeated any time soon. But, this will be a hard lesson to unlearn after the 1970's, 1980's, 1990's, and 2000's. Few could think it would ever be any different. Interesting how over the past 300+ yrs, the model shows several 52 year rises followed by 26 year declines. The 26 years represents 3 of his 8.6 year economic confidence/business cycles. A thinning of the urban sprawl that was created over the past 60 years as people migrate back towards cities would support a declining RE trend....along with baby boomers being put out to pasture. Nursing home RE might be worth a premium though. The Case-Shiller 100 yr home price history doesn't quite jive with Armstrong. But there were major economic forces at work that could explain those deviations. In any event the 1929-1942 corrective period was basically sideways. The parabolic increase in home prices in the 1995-2007 period still looks to need more reversion to the mean.
Armstrong models - pg 80-82 for RE
100 year home price history
As long as wages increase and raw materials increase real estate prices will rise.
If you believe the bond market will collapse then you are a fool to not take advantage of low long term rates.
Knowledge is the enemy of fear
<< <i>
<< <i>What a great time it is to take out a 30 yr mortgage. >>
seems we heard that right before 2008. I know, "this time it's different." >>
Well, I never heard that, but I see a clear difference. Mostly that real estate prices are 1/2 what they were. Just as I see PM prices 1/2 or more of what they were.
Knowledge is the enemy of fear
<< <i>As long as the US population grows and the FED prints money real estate will continue to increase.
As long as wages increase and raw materials increase real estate prices will rise.
If you believe the bond market will collapse then you are a fool to not take advantage of low long term rates. >>
Your assumptions are based on the "old" market mechanism. Pop and money supply grew since 2008 and real estate prices decreased. Welcome to the new central bank paradigm. Embrace it and all of the changes it brought.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
<< <i>As long as the US population grows and the FED prints money real estate will continue to increase.
As long as wages increase and raw materials increase real estate prices will rise.
If you believe the bond market will collapse then you are a fool to not take advantage of low long term rates. >>
With $900 TRILL in interest rate swaps held by the world's 1-2 dozen biggest banks that are directly linked to their own sovereign bonds.....yeah, I have some concerns about a bond market blow up. And if these things could
have been safely netted out, it would have been done years ago. They can't be netted out because both sides have them listed at cost or at a profit. And in most cases they are near worthless. Both sides can't win. Half the
banks (or all of them) have to go down in a heap as they properly value these things.
<< <i>
<< <i>
<< <i>What a great time it is to take out a 30 yr mortgage. >>
seems we heard that right before 2008. I know, "this time it's different." >>
Well, I never heard that, but I see a clear difference. Mostly that real estate prices are 1/2 what they were. Just as I see PM prices 1/2 or more of what they were. >>
Housing prices in the Midwest have made a full recovery. Some areas in the Midwest have higher prices now than in 2007. There are very few locations still at 1/2 of their 2007 levels (which is where many were in 2009). Connecticut, Nevada, spots in CA and AZ but overall in the U.S. we're at 80% of pre-bust levels and going higher by the month. My brother's house outside San Fran was $450k when they bought in 2002 and went to $900k by 2007 then back to $450k in 2009. Now? $750k easy and moving up. If the easy money keeps flowing for another year or two (and we all know it will), by 2015 we'll be above 2007 levels nearly everywhere in country with 1 in 5 Americans gainfully employed. Not a recipe for anything but more USD creation ad infinitum.
<< <i>
<< <i>
<< <i>
<< <i>What a great time it is to take out a 30 yr mortgage. >>
seems we heard that right before 2008. I know, "this time it's different." >>
Well, I never heard that, but I see a clear difference. Mostly that real estate prices are 1/2 what they were. Just as I see PM prices 1/2 or more of what they were. >>
Housing prices in the Midwest have made a full recovery. Some areas in the Midwest have higher prices now than in 2007. There are very few locations still at 1/2 of their 2007 levels (which is where many were in 2009). Connecticut, Nevada, spots in CA and AZ but overall in the U.S. we're at 80% of pre-bust levels and going higher by the month. My brother's house outside San Fran was $450k when they bought in 2002 and went to $900k by 2007 then back to $450k in 2009. Now? $750k easy and moving up. If the easy money keeps flowing for another year or two (and we all know it will), by 2015 we'll be above 2007 levels nearly everywhere in country with 1 in 5 Americans gainfully employed. Not a recipe for anything but more USD creation ad infinitum. >>
That kind if differs from derryb's assessment.
There is no such thing as "old vs new" paradigm or this time is different. Embrace it.
Knowledge is the enemy of fear
<< <i>There is no such thing as "old vs new" paradigm or this time is different. Embrace it.
Post 2008 FED begs to differ. Most of those now on the hook for Wall St. risk (taxpayers/bank account holders) would also disagree. It's a not so brave new world out there, embrace it.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
A lot of people who didn't have cash or cash flow lost their mortgages in the '30s because the '20s had been a great time to borrow to buy real estate or stocks. They didn't mention that back in history class at any point along the way, did they?
I knew it would happen.
What a great time it is to take out a 30 year student or automobile loan.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey
I can guarantee you my area (Eastern, CT) will not be back to 2006-2007 housing levels by 2015. My own home is currently about 75% of its 2007 peak. There is no way in the world it's going to recover that remaining
25% lost again. I'll be happy if it stays the same over the next 2 years. I guess sellers can ask whatever they want. But, there is a huge back-log of homes for sale in this region. You can only build so many McDonald's and
Walmarts to bring "new jobs" into the region. For every new job coming in, it seems like 2 good ones are leaving. Been that way for the past 10-15 years. This is not a very business friendly state.
I look back to the 1990 housing correction here and my Dad's house went from $340K in 1990 to $215K when he finally sold it in 1995. That very nice 4 BR house didn't make it back to $340K in 2007.
"Interest rates, the price of money, are the most important market. And, perversely, they’re the market that’s most manipulated by the Fed." - Doug Casey