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Peter P
2007 Sep 18, 10:42am
since FED will need a lot of paper to print dollars now
How about HP? They sell ink, right? ;)
>>Pulp-paper futures should perform well too, since FED will need a lot of paper to print dollars now…
Dollars are printed on cotton - not dead trees.
Neither China nor Japan own dollars as an investment vehicle. The Central Bank in neither of those countries is aiming for a decent rate of return, they are aiming for overall currency and political stability.
Having said that, if their returns are too negative for too long, they may grow tired of holding only dollars. Hasn't China already said that they are officially diversifying into other currencies? This only makes sense, considering they do more trade with the EU now than with the US.
Maybe they should outsource dollar printing to China and save a bundle in transportation costs :)
Seriously though, one either should invest into something that big wall street crooks who hold the FED's balls bet on, hoping to get some breadcrumbs of their table or into something that our idiotic government can neither produce (print) or f&@k up - gold, silver, land or house - if they weren't already overpriced.
But then again, what does 'overpriced' mean when government can print as much money as it wants - costs more then the ink and paper needed to print enough money to buy it? Oh, I forgot to add the printing labor costs as well, hopefully with the eventual passage of "comprehensive immigration reform" labor costs are not going to be an issue.
Patrick
2007 Sep 18, 11:00am
O Canada
You mean the currency or the land? Or just move there? With global warming, there is a double incentive to buy Canadian.
CoutryWide is the way to go with gamble-able bucks
You think Countrywide stock will recover, or will plummet further?
House will go under, because house is dependent on income, and money printing doesn't necessarily sprinkle money evenly across all sectors. Whenever the Fed prints, the Wall Street gets the majority of it, leaving little for the rest of us.
Also, banks who got saved don't necessarily want to lend money out as aggressively as before because the pool of foreign buyers for CDO and MBS has dried up. We can't force Japan and China to buy our trash papers.
No matter how much they print, housing is doomed, it is just a matter of dying over a couple of years or over a decade. It looks like we may have to go through a prolonged ZIRP period like Japan.
[posted this on the previous topic, but it is more relevant to this one.]
Given the slide in the dollar so far, the question is whether it is now too late to completely ditch the dollar and convert everything I have into SFR?
SP
Remember when unemployment under 5% was called full employment and $40 oil would sink our economy?
Oil = $ 82
Gold = $ 730
Wheat = $ 9.00
Heaven help us!!!
Peter P
2007 Sep 18, 11:27am
I guess the million Mercedes March worked!!
Any worthy hedge fund manager can devise strategies to exploit every scenario.
I don't hear Soros crying for intervention.
Peter P
2007 Sep 18, 11:29am
Oh, btw unemployment is still 4.6% according to BLS
And core inflation is still around 2%.
Don't worry. Be happy. Drink your kool-aid.
SP,
what do you think the US has done so far to change the direction of its currency? I need to see a move or two to indicate that we are a responsible entity doing everything we can to uphold the integrity of our green paper. I think most foreigners look at USD the same way I do.
Having said that, it also depends on whether Euro will follow suit. If Euro also comes in with a substantial rate cut, then USD may find some support soon, if the other currencies hold their interest rate constant, we are in for another round of drop.
The dollar is down... And some think this is bad... now our goods will be more competitive overseas, and foreign goods will be less competitive here. So our trade deficit will decline and our employment will rise.
Of course import prices will also go up a little. However, with foreign trade being about 15% of our economy the total effect is greatly diminished. So with the dollar down by about one half of one percent the impact on inflation will be a brief and insignificant (less than 0.1%).
Largest import is CRUDE OIL
Of course import prices will also go up a little.
What is so nice about crude oil is that it's price increases does not flow through or feed into the price of other products or services!?! HAHA
I guess if my gold goes up and rent stays the same I am still doing alright!
Patrick you said: "I assume the Chinese and Japanese are pretty annoyed, given that the value of their US Treasury holdings just fell by, oh, a trillion or two."
Losing more than one trillion is quite difficult given that China and Japan collectively hold only have a bit more than one trillion of our debt to start with. If we do the math we see that a one half percent reduction in the value of the dollar reduces the value of their holdings by about $5 billion.
Peter P,
Did Bernanke send out the kool-aid ration with this rate cut? I didn't get mine!?!
Paul
Such an uncanny resemblance between US and Land of Oz. We used to have just Scarecrow without brain and Tin man without hart and now we just got the Lion without guts. Maybe we all need to have a little more faith in our government. In Big Government We Trust.
Paul, nearly all goods and services are also inputs to other things - but on a fractional/diminished basis. The price of oil often fluctuates daily by as much or more than the amount by which the dollar just declined. It is good to understand the contrext of things so as to not grossly overestimate their impact.
Of course the dollar could decline further, but it could also strengthen on secondary considerations.
It is just a few raindrops - the sky is not falling...
In fact it is quite the contrary - a little rain is a good thing.
DennisN
2007 Sep 18, 12:08pm
You mean the currency or the land? Or just move there? With global warming, there is a double incentive to buy Canadian.
Hey Idaho is just south of the Canuks....another reason I moved here after bailing out of my San Jose house in 2006. Should warm up and get wetter here over the next few decades.
Invest in guns and ammo. A type III Federal Firearms License is still only $30 for 3 years. You can purchase Mosin Nagants and Mausers for $100 or so and tins of ammo for same from east bloc countries for really cheap. Turk 8mm Mauser ammo or 7.62 x 54R ammo from Albania is only a few pennies a round.
1982 oil, adjusted for inflation today would equal $100/barrel.
If rates didn't get cut, more damage would be done by the increase of foreclosures on the economy which would shrink lending and contract consumption - which accounts for 70% of GDP. Although, I do agree that we are bailing out the bad with the good, it needs to be done.
BTW, foreign investors hold Treasurys not fed funds, so the Fed Funds rate reduction does not reduce their interest rate earnings. In fact, the 10 year Treasury rate went up today, so they will now earn (slightly) more interest on new bond purchases. So looking forward, lending to the US just got better.
Deep shit my ass.... The total effect of all these things is not only not significant, it is barely measurable.
"...Invest in guns and ammo. ..." and they are not making any more of old Russian ruffles, just like land...
Today patrick.net community lost agains FED ... what is your option now. Would you recommend Peter Schiff europac.net?
Hey John,
It will not be long and you will get your inflation adjusted crude at $100. It's great we are all ok with lost purchasing power and feel the need to justify / adjust for inflation.
Paul
Turk 8mm Mauser ammo or 7.62 x 54R ammo from Albania is only a few pennies a round.
Does this mean Turkey and Albania will become booming affluent economies while the US degrades into anarchy and barbarism? or will it just mean a few people will have boxes of ammo on their shelves while their savings go under...
the 4 Corners story on the mortgage meltdown amusingly points to the family who had amassed tins of baked beans and ammo, etc, only to find they were overcommitted on 'investments'... what's the secondhand ammo and baked beans market like?
PAUL BARRY: Jim and his family fear earthquakes, terrorism, civil disorder and a rising crime rate, which is why they’ve stocked the house with emergency rations and have five guns close to hand.
JIM ADAMS, RIVERSIDE HOMEOWNER, CALIFORNIA (to Paul Barry): There’s one, just about one hidden in every room in the house.
PAUL BARRY: But what hit Jim Adams between the eyes was something he never imagined - his own desire to make a killing.
Paul,
I am not finding a way to justify inflation. Inflation, for now, is tame. I am saying that we have to pick between the lesser of two evils, per se.
AP
House Votes to Aid Struggling Homeowners
Tuesday September 18, 7:22 pm ET
By Marcy Gordon, AP Business Writer
House Approves Plan to Help Struggling Homeowners Avoid Foreclosure
WASHINGTON (AP) -- The House on Tuesday approved a plan to expand federal backing of mortgages in hopes of helping struggling homeowners avoid foreclosure. Despite some White House objections, the Bush administration and House Democrats took conciliatory stances pointing toward resolving their differences.
The bill passed the House 348-72. It would allow the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, to back refinanced loans for tens of thousands of borrowers who are delinquent on payments because their mortgages are resetting to sharply higher rates from low initial "teaser" levels.
Brian Montgomery, the Housing and Urban Development assistant secretary who heads the FHA, said the legislation could enable more than 200,000 homeowners whose loans are excluded from federal backing to come under the agency's umbrella.
"This is a historic day for FHA," Montgomery told reporters after the vote. He said the administration remains concerned about specific provisions -- notably much higher limits in the bill for mortgages that could be insured by the agency, as much as $729,750 in high-cost areas compared with the current $362,000. However, Montgomery added, "I feel optimistic we'll work out these differences" as the legislation moves through Congress.
In the Senate, the Banking Committee is expected to vote Wednesday on a version of the legislation proposed by panel chairman Sen. Christopher Dodd, D-Conn., and its senior Republican, Sen. Richard Shelby of Alabama.
The House measure is Congress' first stand-alone bill passed in response to the mortgage-market tumult of the summer, which came amid a rising tide of defaults and foreclosures. The Senate last week approved spending legislation that includes $200 million in aid to nonprofits and other groups that offer counseling and information to help homeowners avoid foreclosure.
"The American dream is in peril for many families in this country as foreclosures rise and dreams shatter," Rep. Betty Sutton, a Democrat from Ohio, a state particularly hard-hit by the default wave, declared in House debate before the vote.
Rep. Barney Frank, D-Mass., chairman of the House Financial Services Committee, said he wanted to whisk the new House measure to the Senate along with a bill to tighten government oversight of mortgage finance giants Fannie Mae and Freddie Mac. The administration has insisted such legislation was needed before restraints on the amounts of mortgage securities the two government-sponsored companies are allowed to buy and hold could be eased.
....
I am not finding a way to justify inflation. Inflation, for now, is tame.
Yeah, right inflation is tame. Let's see, the Fed likes CPE and core CPI, both cooked to such an extent that they exclude the things everyday people use the most - food, energy, and (at least regarding its impact on daily budgeting) purchased housing. Just ask yourself a common-sense question: does my current paycheck go as far as it did X years ago? For most Americans, the answer is clearly no.
Once again, today patrick.net community members lost ... go buy a house now. Are there any other options??
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Well, Bernanke is no better than Greenspan after all. He has completely given up on the fight against inflation, and killed the dollar as well. Who would want to own dollars and get low interest rates, when US inflation is clearly a problem? The graph is the number of Euros that $1 will buy today. This is a record low for the dollar.
I assume the Chinese and Japanese are pretty annoyed, given that the value of their US Treasury holdings just fell by, oh, a hundred billion or so. So they may stop buying treasuries, and then where will the US Government get the extra funding it needs? Does this mean the government is just going to stop? They can print money, but that's yet more inflation and an even lower dollar.
Damn, I need an inflation hedge quick.
Patrick
#housing