eternitus

Total Rating:
+18 / -11

37 Comments

    • Wed Nov 5th 12:56 PM | Rating: 0 -1
      Commented on:
      The Shallowest Generation
      In response to the person who says interchange "black people" with "boomers" in this article... you can call boomers whatever you want, but they were in charge while we embarked on a horrible, self-indulgent and unsustainable spending binge that has left their children and grandchildren holding the bag. It's quite sickening, actually. They deserve all of the reproach in the world and I'm glad that the author has the guts to put it in writing.

      In response to those harping on social security... it's probably the one sweeping government program that's ever completely served its purpose: to eliminate poverty among the elderly. I'm glad it's there, as it keeps our parents and grandparents independent and out of our homes.
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    • Mon Nov 3rd 10:39 AM | Rating: +1 0
      Commented on:
      JPMorgan Meets WaMu Homeowners, Face to Face
      I think it's a good move not leaking the "rules of the game." That way, it's impossible for deadbeat borrowers (if we're honest with ourselves, that's what they are) to game he system.

      This crisis was caused by house prices that were and are too high and deadbeat owners of overpriced houses not paying their bills. Helping these people will not stop the slide in house prices any more than Advil will help a brain tumor. The foreclosures are a symptom of unrealistically high housing prices, not the cause of their decline.

      The more quickly prices adjust and the market clears, the better off we'll be.
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    • Sun Nov 2nd 14:14 PM | Rating: +1 -1
      Commented on:
      The Shallowest Generation
      Well said.... it's time to stop whistling past the graveyard thinking that we can make something out of nothing and start living within our means before we bankrupt the country.

      While I think Boomers share much of the blame... our entire society has contributed to the mess that we're in.... from the Realtors pushing families into houses they can't afford to the borrowers taking on enormous debts to the lenders letting horrible loans go through to get this year's bonus to the politicians standing by encouraging it all (just keep the prosperity going until the next election)... we tried to borrow ourselves to riches without thinking about what was going to happen when we had to pay it all back. We also have a system that discourages saving (low interest rates that are taxed) and encourages debt (the holy grail of tax-deductibility of mortgage debt).

      The thing that ticks me off the most about the Boomers, though, is that they'll be laughing all the way to the bank with Social Security and Medicare while I'm struggling to pay their entitlements AND pay back all of the debt that they left me with.
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    • Sun Nov 2nd 09:29 AM | Rating: +1 0
      Commented on:
      U.S. Economy: Is the Glass Half Full?
      I agree with many of your points... we are going through a healthy correction process that's started to remedy enormous imbalances that had built up over a very long time. Part of our continued prosperity was an illusion brought about by consistently declining interest rates... obviously an unsustainable situation.

      Our political system contributed much to our folly. Politicians, most of whom face re-election every two years, are necessarily short sighted. They focus on "making things better now" in downturns but encourage the Fed to let the good times roll during booms. The result has been 25 years in which monetary policy was largely unidirectional... with the Fed dramatically lowering rates to limit downturns and never raising them quite as aggressively to smooth out booms and correct the imbalances caused by their intervention in the markets.

      What we are seeing now is the logical conclusion of this 25 year period of declining rates. At rates near zero, we no longer have access to the tool that enabled us to manufacture additional GDP growth and limit recessions through leverage and asset price inflation.

      The adjustment process will be painful, but we'll ultimately emerge with a healthier, more balanced economy. Ordinary people will be able to afford ordinary houses (did you ever sit down and try to do the math to see how a $70k family budget could support even a $200,000 mortgage? It's tough) and send their kids to college. Back to the good old factor inputs to generate growth... technology, labor supply and capital!
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    • Fri Oct 24th 12:56 PM | Rating: 0 0
      Commented on:
      The Right Way to Encourage Home Ownership
      In many areas of the country, this is the case, but you'll see we still have a ways to go in the sand states and coastal areas.
      View article »
    • Fri Oct 24th 12:55 PM | Rating: 0 0
      Commented on:
      The Right Way to Encourage Home Ownership
      I agree with Consider This. Home prices were fake, based on leveraged speculation, and had nothing to do with the ability of the average family to service the debt. In fact, home ownership was unworkable for the average American family and there is no better evidence than the foreclosure problem (remember, it didn't start because of an economic down-turn).

      If you want greater home ownership for average Americans, the math has to work for the average family, meaning all-in payments of about $1,500, which is 25% of a family income of $70,000. Including taxes and insurance, this means that prices should be around $200,000, assuming a $20k down payment. When this happens, housing will be affordable.
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    • Tue Oct 14th 15:06 PM | Rating: 0 0
      Commented on:
      The Crash of 2008
      The "everybody is calling a bottom so it isn't" argument is complete and utter nonsense. There were bottom calls every time the market has gone down this much (like both times). Guess what... someone, somewhere, was right!

      Anyway, if you are a long-term investor, who cares if this is the ultimate bottom or not? You have to be insane not to put at least some money to work at these levels (unless you think people are not going to just cut back but simply stop buying hamburgers, shoes, toothpaste, etc.) You have 30% downside to TTM earnings to work with for the market not to look cheap. We might get there in terms of earnings, but I haven't seen risk/reward look this good in a very long time... especially in light of stock's competition from treasuries, where the 10-yr out-yields the Dow by an incredible (sarcasm) 50 bps.

      I'm with Burton Malkiel... nobody has ever made money consistently selling America short.
      View article »
    • Sun Oct 12th 20:26 PM | Rating: 0 0
      Commented on:
      The Crash of 2008
      The government will stop at nothing to stabilize the financial system, avoiding a great depression scenario.

      Forget charts and historical comparisons (a sample set of 2-3 tells you nothing of consequence). There are too many variables that are different right now. If you drop the Dow's profits by 30% (I think this is unlikely, given that bank profits will actually rise as a result of the TARP and Fannie and Freddie stealth TARP), the Dow will still only be trading at a PE of 15 and yielding 3%+... this will be at a time when cash on the sidelines (there is an enormous amount of this) is counting its returns in basis points.

      Buy wide-moat, established companies with low debt, high cash flow, solid yields and <60% payout ratios, and get paid to wait for the flood of sideline money to float your stock values higher.
      View article »
    • Sun Oct 12th 08:17 AM | Rating: 0 0
      Commented on:
      How Does Deflation Actually Happen?
      A $100 loss on a loan reduces a bank's lending capacity by $1,000. Reduced bank lending causes asset prices to decline, which causes another $100 loss on a loan, which further reduces the bank's lending capacity by $1,000 and so on and so forth.

      Deflation occurs when the bank accepts principal repayments without lending a corresponding amount back into the system. In the situation above, the bank must curtail lending by $2,000 to maintain its capital ratios, effectively destroying the money it created by expanding credit.

      This is why the banking system must be recapitalized... to stop this phenomenon from occurring.
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    • Wed Sep 17th 09:15 AM | Rating: 0 0
      Commented on:
      AIG: Hardly a 'Bailout', Absolutely Necessary
      Reasonable? If not for a Bear Raid, there would have been no downgrades and no capital needs. The company has $80 billion in equity and generates $8 billion a quarter in cash flow. It would have to have an $8 billion loss 10 more times to get to the same position of insolvency that FNM and FRE had. The government is expropriating long-term value from the shareholders and solidifying a hatchet-job by shorts.

      Lender of last resort? Try Mobster of last resort. This is a Tony Soprano deal... the government will make $100 billion on this.
      View article »
    • Sun Sep 14th 10:22 AM | Rating: 0 0
      Commented on:
      Crunching Numbers: Why I'd Buy AIG
      I've done the math and I agree with the calcs. Liquidity is not an issue for this Company.... It's an insurance company with an enormous portfolio of liquid assets, plus several strong business units it can liquify .

      I think it would be irresponsible for rating agencies to downgrade based on a massive short surge (where there was no news on AIG), which would cause it to destroy a bit of long-term value by posting additional collateral.

      Ton of money to be made long AIG if you don't soil your pants... look for a huge short-covering rally soon.
      View article »
    • Fri Sep 5th 11:29 AM | Rating: 0 0
      Commented on:
      Rent vs. Buy Datapoint of the Day
      Housing affordability was at an all time low in 1983 (prices didn't correct down in nominal terms (I think) and mortgage rates were between 12 and 15%). The NAR's presentation of the data is disingenuous at best. Follow the link below.

      mortgage-x.com/trends....

      If you look at the chart, mortgage rates are anomalous between 1979 and 1986 (only time they were >10%) and data from that period should be disregarded, especially if your aim is to create some type of affordability benchmark.

      Do you pay attention to what a used car salesman says? Then why would you listen to a bunch of used house salesmen?
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    • Wed Aug 27th 11:11 AM | Rating: 0 0
      Commented on:
      AIG and the Lunacy of GAAP Reporting
      AIG is being punished too much and the stock price is ridiculously low. I wouldn't be surprised if their cash losses amount to less than $5 billion, looking at the actual securities.

      The thing that's holding me back from buying more shares is uncertainty over how much capital the mentally impaired rating agencies will force them to raise based on these GAAP numbers market to an inefficient, illiquid and frightened market. They've already had to dilute the heck out of investors by raising $20 billion at a low stock price.
      View article »
    • Mon Aug 25th 13:28 PM | Rating: 0 0
      Commented on:
      Let's Not Emulate the Hoover Administration
      Over the long-term, don't lower housing prices positively affect our economy? This frees up income for households to consume or to invest and put their money to more productive use.
      View article »
    • Tue Aug 5th 08:57 AM | Rating: 0 0
      Commented on:
      Credit Crisis Review: ARMed for Failure
      Is anyone blaming the real estate cheerleaders who were telling people to buy homes whatever the cost and to get into the property market any way they could (and happily took their commission checks and ran)? You know, the folks at the NAR who published a book showing a helpless family on the cover with a home helplessly out of reach above their heads titled "Are you missing the real estate boom?" Our entire society was pushing families into houses that they couldn't afford without a second thought, until it was too late, and the real estate industry was behind it all.
      View article »
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