gunsandgold

The End of the Credit Crisis

I don't believe in this but even so this should only apply to speculators and not people that sold and bought new homes with the proceeds of your "bubble profits".


On Feb 28 12:41 PM prudentinvestor wrote:

> I'll propose another solution, which, I fear some will find shocking:
>
>
> When that house, that is worth only $300k, was sold for $500k, its
> seller pocketed a $200k "bubble profit". Seems to me that fairness
> dictates that the sellers who unreasonably profited by selling inflated
> real estate should be the first to contribute the unwinding of this
> bubble. Why not a "windfall profit tax" on sellers of real estate
> during the great bubble, just like we had on oil companies after
> the oil price spike in 1979. I'd suggest that this is more fair than
> charging the loss to those who have not participated, nor profited
> from the bubble.
>
> The treasury can create a table of "artificial inflation" percentages,
> defined by geographic area and by month/year of the bubble, and all
> real estate transactions in this area/month/year would be subject
> to an appropriate windfall profit tax, payable in installments over
> five years.

Not Your Grandfather's Great Depression

I'm so sick of this great depression talk, the media and these fear mongers are like gasoline on the fire by throwing the GD phrase around so all these people listen to their half baked analysis. They're going to end up causing it through the systematic spreading of panic. Sometime I think it's so they get Obama in the White House, then once he's in it will be all about how now we have hope and the GD can't happen again because Obama will save the world. GD isn't going to happen again, but if it does, I hope Schiff has a good left hook and can run fast, because that's all that will matter in his post GD world.

Fundamental Valuation: How Low Could We Go?

I agree with Muzie. All these people running for the hills, what the heck are they going to do with their money? People don't seem to realize or want to acknowledge, there is SO much money, trillions, on the sidelines sitting in cash, earning nothing. There will come a point soon, and we all know cycles have shortened in this world of immediate global information, that people will not be willing to earn nothing for the right to sit and wait for uncertainty to become certainty. Risk appetites will increase when all this money wakes up and realizes it will earn absolutely nothing in the next few years. As Buffet says, cash is a terrible investment. Now if you need it, that's one thing, but if you want to invest, cash IS a terrible investment, especially at today's rates.

Time To Hedge Dollar Exposure

Interest rates are the main factor in currency strength. US will not be cutting rates, Europe hasn't even started to cut, they are way behind, and will need to cut dramatically to stimulate their rapidly slowing economy. The reason the dollar rallied so strongly since July is because the prospect of US raising rates due to inflation diminished due to the drop in demand for oil and the commodity bubble deflating. Europe resisted cutting due to inflationary pressure which should not be a concern in a global slowdown. They most surely will be cutting rates going forward, while the US is already finished. The deficit is a factor but interest rates drive currencies. The Euro peaked in July, until the interest rate situation changes.

Banning 'Terrorism'

The whole "you can buy put options" argument even if they ban short selling doesn't make any sense. Maybe you can find some sole put seller out there, but no market maker will sell you a put without shorting the underlying to hedge himself. If the market maker can't hedge himself he won't be selling puts to you, there will be no market if he can't short. It will be like a private transaction, so good luck finding that seller for you if you want to buy puts.