patrick.net

Surfer-x,

Keep the loan and invest the money that you would use to pay it off with.

3.75% fixed is very cheap money. Even the highest rated borrower in the world is paying more than that now. If I could borrow at that fixed rate I would literally borrow every penny that the lender would be willing to lend to me, and reinvest it in 10 year treasuries or other AAA fixed rate instruments paying more than 3.75%. I would borrow $billions if they would lend it to me. 1% of a $billion is $10 million… every year. Locked in! With no risk as long as everything is in the same currency.

Do not bet on currency swings unless you think you are a better investor than Warren Buffet. So far he has lost $billions betting against the US Dollar.

However, if you will just spend the money on relatively useless stuff, then you should probably pay off the debt instead.

Surfer-x,

My comments above were intended as a no risk baseline. With a mix of Treasurys and other AAA credits you should be able to yield about 5% with no real risk. However, if you want to take some real risk your choices expand considerably.

Do not bet on currency swings unless you think you are a better investor than Warren Buffet. So far he has lost $billions betting against the US Dollar.

Long term success in sepculation does not depend much on the short term success in a few trades though.

USD is just inherently weak in all fundamentals. I may lose (paper loss anyway) in the short term, I know very well I will come out ahead by not staying in USD-denominated asset.

Btw, Buffet is still firm on his negative outlook on USD, just a bad trade that is all. I am not speculating, I am investing, against USD, that is.

Zephyr, thanks man! :) nope not a spender at all, I buy most if not all my shit second hand. I have a nice stereo, bought piece meal on ebay, only purchased because my other one was 12 years old and dying. Appreciate the info.

Peter P, the interest is now deductable, my wife doesn't work. Otherwise Uncle Sam would be using the exit port as a mud flap.

Peter P, the interest is now deductable, my wife doesn’t work. Otherwise Uncle Sam would be using the exit port as a mud flap.

I would definitely keep the loan at least for now then. :)

NOT INVESTMENT ADVICE

Peter P,

I agree that long term success does not depend on short-term success in a few trades. However, Buffet has been losing big on his bet for two years now.

When the Euro was new it fell to about $0.80 and I expected it to recover and further appreciate as it gained market share as a reserve currency. Our low interest rates for a while pounded the dollar down, bringing the Euro to $1.33 or so. This was more than I expected and as it approached $1.33 I expected a correction on the wave of interest rate increases. It has done this and now I expect very little change this year, but I do think the Euro will gain on the dollar in 2007.

I agree that the USD is fundamentally deteriorating. It has been for decades. However, most other currencies also have weak fundamentals. It is the relative strength that drives the exchange rates.

When the Euro was new it fell to about $0.80

I went to Germany when this happened, it was when they just switched over. I was shocked on how cheap everything was, imagine my shock when it doubled. Dusseldorf rocks!

However, most other currencies also have weak fundamentals. It is the relative strength that drives the exchange rates.

Very true.

What if Heli Ben fails to keep interest rate at or above the "neutral" level? What will that do to the greenback?

I have never “invested” in gold or foreign currencies because I have not been willing to make bets that are pure speculation. I only invest in assets that produce income. I don’t like bets where something has to happen in the short-run that is unexpected by the market and favorable to my position. Betting on gold or currencies is this kind of bet.

Peter P, If that involves a lower interest rate, then I would expect the USD to decline.

I only invest in assets that produce income.

Some currency trades, like Yen carry, do produce "income" (interest rate differential) though.

Zephyr, we have much to learn from you. Thanks for being here.

If you are investing in foreign assets that generate income then the foreign exchange exposure is just an overlay - a risk that must be considered. ...could help or hurt. However, I am reluctant to buy an asset for the foreign exchange overlay. Too me it is too much like buying something you don't really want but you expect a nice rebate.

Too me it is too much like buying something you don’t really want but you expect a nice rebate.

LOL very true.

Is this also newly acquired liquidity readily diminishing or is this the true tipping point of insanity?

More like insanity.

Go, go, go, said the bird: human kind
Cannot bear very much reality.
Time past and time future
What might have been and what has been
Point to one end, which is always present

T.S.Eliot

newsfreak, the zero sum game? So basically they are suing to get their deposits back? If it's free money, I'm all in, what with missing the last two rounds of free money and all.

Ahhh, but if you put nothing down, and just basically agreed to buy the condo for 500K, got yourself a NAAVLP, and as part of your real estate empire super savvy finance wizardry, flipping was on the horizon, then you wouldn't be zero sum, you would be signing your name and collecting 100K in imagined equity. I want some imagined equity. You see Judge I bought the condo to flip and real estate only goes up, therefore they owe me 100K.

True den of imagined equity?

den of equity

Wow. newsfreak, I'm floored --that's borderline genius.

Intersting read about brokeback mountain

http://www.rense.com/general69/prop.htm

astrid Says:

> FAB, I wouldn’t say going profanity free or
> pesticide free is CSR, it’s just giving the customers
> what they want."

Do you really think that the "customers" (the people that actually buy gangster rap CDs) really want them profanity free?? Or that the "customers" (working class people who shop at a typical grocery store produce section) want to pay Whole Foods aka "Whole Paycheck" prices and spend a days pay just to make a salad??

> I do think you’re shortchanging the earnestness
> and enthusiasm of a lot of organizations.

Over the years I have not seen many people that won't sell out... They don't get a pot of cash and have to shut up, they get to feel important and are usually "hired" to work on their issue and get pushed away from actually doing anything (Willie Brown does this better than anyone in history)...

> I don’t agree with their premise, but I don’t doubt their
> earnestness. After all, those PETA idiots can’t in it for
> the money or for the popularity.

Many of the PETA people are just nuts (many people don't know this but "activist" is actually a synonym for "insane" so when you hear anyone self identify as an "activist" you know ahead of time that they are insane, "and" did not have anyone pay attention to them as a child) plus every protest has at least a handful of young guys who just want to get laid...

You have a better chance of seeing Halley's comet in 2062 than for all your dreams to line up to be a home owner on your terms.

1st half price home.. Only if the lands on a bombing range, or middle of a superfund cleanup site.
Over the past 232 years since the land was stolen from the indians, it's price has done nothing but go up. It isn't going down.

The economy for home prices has mirrored this rise in price.

So a half price home isn't going to happen without very low standards. FWIW: Here in my area, there was a crack house and a chicken coop. Both priced at $50,000.00 Neither one was worth $5.00.
And it definitely wasn't the land that made it worth those prices.
The chicken coop couldn't control chickens.

Then you have the obvious currently happening. Homes being foreclosed on left & right.. Ripe for your 50% buyout you say.. Not.. Though some may sell at a loss to avoid the stigma of a foreclosure. So far it hasn't reached the panic status to provide half price homes yet.

Then you have to weigh in the human crooks manipulating the housing market now. 'Flipping', crooked bankers, and mortgage providers. Why this magnanimous gesture of billions of dollars from the banks with no pressure from the gov't to bail out this current disaster ?

Simple.. Even though our gov't can't find a seriously wounded elephant in Central park after a snowstorm when it comes to the IRS.
It wouldn't take magic or much digging to count the number of crooks or their scams in the current housing market to make a bad situation even worse.

1 small example: Miss, or be late on ANY payment on ANY credit card, for ANY amount.
This is reported to anyone doing credit with you. Those livable payments you've been scraping by with are now DOUBLED because you didn't read the small print on those credit apps over the past 20 years.
And now not being able to afford the doubled payments, you really are in trouble and missing more payments with those payments doubling..

This right here [chasing the loan sharks out of the credit business] would do more to get the U.S. back on it's feet than any single law they can pass. Not going to happen. The bankers own congess. And they don't want the gov't digging into how they're destroying the country.

Whole lotta talk about the homeless. But no one's doing anything to change it but putting them in jails, and chasing them out of town.

But why should you buy a house despite all the above instead of rent.. Let's go with just a single month of rent vs own.

1st month, tv said you pay $2000+ a month rent.
You can get a nice home for that kind of payments.

At the end of the single month of owning vs renting.
What do you have to show for the $2000+
1 rent = a paid rent slip showing you stuck $2000+ in someones pocket.
2 Own = $2000.00 in YOUR POCKET toward NO MORE monthly housing payments.

Even a 2nd grader that can do simple math could see the advantage of OWNING that $2000+ vs giving it away to someone else every month.

And while you are buying, you can keep on waiting for that half price home, and if it ever does appear, if you can sell your current home for $1.00 more than you paid, you've made a profit.
But try and get someone to cash in those rent slips for you.. Not going to happen. Even paper isn't worth enough in recycling to make those rent slips worth anything.

You're throwing away more than $2000 a month. No wonder you're riding a bicycle. And it has nothing to do with gas prices. You can't afford anything by lining other peoples pockets with your money.