2 Reasons To Stick With Emerging Markets [View article]
Add the fact that for the first time in 50 years real interest are 1% and not the usual 6% leaving bond holders in dissaray. Their first reaction was real estate, but now that prices have exploded it leaves only the stockmarket. Most brazilians have been brought up to believe that stockmarket is capitalistic gambling, a game, dangerous etc. that is why the stockmarket has rallied rapidly, but it will. 1% is a disaster for all pension funds, retirees etc..
Unfortunately you forgot the Mortgage Interest Deduction, which is a real subsidy based on Interest Rates which have plummeted by half. From a yearly 200 billion it is now 97 billion, canceling the argument of your article.
It is amazing that no one realizes that reducing a housing subsidy in the middle of a recession only makes the rebound take much longer.
What is happening with American economists? They all live off subsidized rents in housing lent by Academia?
Allow Interest Rates To Rise While Keeping Monetary Policy Accommodative [View article]
High interest rates are the base for the Mortgage Interest Deduction, and reducing it by half, Bernanke has reduced the one stimulus that was in place, right in the middle of a recession.
Curiously, only when inflation rises again to 3%, increasing intererest rates and MIDs will we be back to normal.
The 3 Most Potent Forces Underpinning The Real Estate Recovery [View article]
Reduced interest rates also mean reduced Mortgage Interest Deductios. After tax cost of housing has remained the same. Schiller index does not factor in the MID so it is essentially flawed. Fear of losing a job and not getting another one, has never been so high. Gallup. 54% will never buy a home with such a fear lingering on. So dont confuse pent up demand, which you are correct in pointing one, with sustained recovery back to norm. Dont forget France should belly up in 2013 or 2014.
Income Inequality For Households: A Long Biased History Of Gini And Mean Income [View article]
The gini indez should be normalized by Age. Older workers earn 3 to 4 times what a 20 year old earns, just trough experience. No one, except Stiglitz and Krugman, believes that a father of 2 at age 50, is unfairly earning more than is aprentice son. The top 1% , guess what, are older, not richer.
Record Low Mortgage Rates - So What? [View article]
Dont forget that Mortgage Interest Deductions are also at record lows. Because interest includes inflation ( aka principal repayment) they covered up to 80% of the loan, for high brackets, now they cover 40%. If you run the numbers and assume real interest rates are the same, houses have doubled in after tax or deduction price
Most americans do not realise that the inflation part of nominal interest rates is not an expense, as you are suggesting, but simply a debt repayment ahead of time. Sarcasm when your economy is going under because no one knows their inflationary math is a a real tragedy.
The key concept is real interest rates, not nominal interest rates which you are using in your analysis.
Most Americans use nominal interest rates, ant thing they are going up when inflation rises, but most latin Americans use real interest rates, that is why the see negative real interest rates more readily.
That is why the boom was mainly in Florida and Southern California, due to the negative interest rates during Greenspan
The use of nominal interest rates to price money is a gross pricing mistake, the cause of many of these financial crisis.
Nominal Interest rates make mortgages prohibitive in the first 5 years, and reduces significantly after the 15th year, due to inflation.
That's why American banks creates interest only, ARMS, and low down payments. If real interest rates were to be used to price mortgages, like in Canada and Brazil, initial payments would be much lower and affordable.
According to the US Budget FY 2011, the largest Tax Exclusions are Mortgage Interest Deduction 104 billion, and Capital Gains on Home Sales 31 billion per year. Take a 30 year mortgage, and a 3% inflation rate, that is US$ 6 trillion.
Whats bigger than 6 trillion "keynesian full employment incentive" on a 14 trillion mortgage market.
What's wrong with you guys. America is not getting out of its real estate mess, and with a 50% tax incentive already in place, it simply not working.
Why? Could the reduction in the tax incentive in the middle of a crisis be the fault ?
Were did you get the numbers. 1% getting a 104 billion tax deduction?
According to the US Budget FY 2011, the largest Tax Exclusions are Mortgage Interest Deduction 104 billion, and Capital Gains on Home Sales 31 billion per year.
Thats a lot of deductions for home ownership for the rich. So much for Keynesian incentives for full employment in the construction sector.
According to the US Budget FY 2011, the largest Tax Exclusions are Mortgage Interest Deduction 104 billion, and Capital Gains on Home Sales 31 billion per year. Take a 30 year mortgage, and a 3% inflation rate, that is US$ 6 trillion, which does not seem to us a trivial sum, given that total mortgages today are 14 trillion. Not factoring these numbers seems to be a big mistake in most analysis Ive seen to date. Your calculations are based on cash "accounting" and not accrual accounting, which is the correct norm to calculate financial matters.
Why The Housing Plan And QE3 Will Fail [View article]
Another reason jobs are hard to find is due to the difficulty of relocating a two income family. To risky to have 2 members in brand new jobs in another city.
2 Reasons To Stick With Emerging Markets [View article]
Most brazilians have been brought up to believe that stockmarket is capitalistic gambling, a game, dangerous etc. that is why the stockmarket has rallied rapidly, but it will. 1% is a disaster for all pension funds, retirees etc..
Hidden Housing Subsidy Update [View article]
From a yearly 200 billion it is now 97 billion, canceling the argument of your article.
It is amazing that no one realizes that reducing a housing subsidy in the middle of a recession only makes the rebound take much longer.
What is happening with American economists? They all live off subsidized rents in housing lent by Academia?
Allow Interest Rates To Rise While Keeping Monetary Policy Accommodative [View article]
Curiously, only when inflation rises again to 3%, increasing intererest rates and MIDs will we be back to normal.
The 3 Most Potent Forces Underpinning The Real Estate Recovery [View article]
Fear of losing a job and not getting another one, has never been so high. Gallup. 54% will never buy a home with such a fear lingering on.
So dont confuse pent up demand, which you are correct in pointing one, with sustained recovery back to norm. Dont forget France should belly up in 2013 or 2014.
Income Inequality For Households: A Long Biased History Of Gini And Mean Income [View article]
No one, except Stiglitz and Krugman, believes that a father of 2 at age 50, is unfairly earning more than is aprentice son.
The top 1% , guess what, are older, not richer.
Record Low Mortgage Rates - So What? [View article]
If you run the numbers and assume real interest rates are the same, houses have doubled in after tax or deduction price
Why Houses Are Still Not Cheap [View article]
Sarcasm when your economy is going under because no one knows their inflationary math is a a real tragedy.
Why Houses Are Still Not Cheap [View article]
Most Americans use nominal interest rates, ant thing they are going up when inflation rises, but most latin Americans use real interest rates, that is why the see negative real interest rates more readily.
That is why the boom was mainly in Florida and Southern California, due to the negative interest rates during Greenspan
The use of nominal interest rates to price money is a gross pricing mistake, the cause of many of these financial crisis.
Nominal Interest rates make mortgages prohibitive in the first 5 years, and reduces significantly after the 15th year, due to inflation.
That's why American banks creates interest only, ARMS, and low down payments. If real interest rates were to be used to price mortgages, like in Canada and Brazil, initial payments would be much lower and affordable.
Why Houses Are Still Not Cheap [View article]
According to the US Budget FY 2011, the largest Tax Exclusions are Mortgage Interest Deduction 104 billion, and Capital Gains on Home Sales 31 billion per year.
Take a 30 year mortgage, and a 3% inflation rate, that is US$ 6 trillion.
Whats bigger than 6 trillion "keynesian full employment incentive" on a 14 trillion mortgage market.
What's wrong with you guys. America is not getting out of its real estate mess, and with a 50% tax incentive already in place, it simply not working.
Why? Could the reduction in the tax incentive in the middle of a crisis be the fault ?
Why Houses Are Still Not Cheap [View article]
According to the US Budget FY 2011, the largest Tax Exclusions are Mortgage Interest Deduction 104 billion, and Capital Gains on Home Sales 31 billion per year.
Thats a lot of deductions for home ownership for the rich. So much for Keynesian incentives for full employment in the construction sector.
Why Houses Are Still Not Cheap [View article]
Take a 30 year mortgage, and a 3% inflation rate, that is US$ 6 trillion, which does not seem to us a trivial sum, given that total mortgages today are 14 trillion.
Not factoring these numbers seems to be a big mistake in most analysis Ive seen to date.
Your calculations are based on cash "accounting" and not accrual accounting, which is the correct norm to calculate financial matters.
Lessons From Lincoln, Grant, Cleveland And McKinley On The Economic Crisis [View article]
Why The Housing Plan And QE3 Will Fail [View article]
Why The Housing Plan And QE3 Will Fail [View article]
Why The Housing Plan And QE3 Will Fail [View article]