Entries Tagged as 'Mortgages'
Kaletsky Worries About Inflation In 2008!
Now that I’ve written my review of Anatole Kaletsky’s Capitalism 4.0, I have time to see what others have said about him in the past. I searched Forbes for “Kaletsky”and found a blog quoting an article written by Kaletsky in May of 2008: “Could oil mania be coming to an end?” Don’t you just love this opening second paragraph:
While the slowdown in Britain and Europe has only just started, the US economy now seems likely to avoid an outright recession as Washington’s huge tax cuts, interest rate reductions and bank and mortgage bailouts appear in the nick of time over the economic horizon, just like the US cavalry riding to the rescue in a classic cowboy film.
This was before Obama was elected and before Kaletsky knew the U.S. would spend trillions and before he knew it would have little effect on recovery or employment. It was also before he knew that Obama wanted to rescind those tax cuts while still in the recession.
As these measures start gaining traction we should see fewer of the panicky headlines about a return to the Great Depression…
When he writes about commodities, he suggests trend followers are just speculators and will get hurt, but doesn’t acknowledge the trend following speculators in housing. Kaletsky is worried about commodity prices:
…there is now only one key uncertainty marring the signs of improvement: the huge increase in energy, food and other commodity prices since the start of this year. This now poses a far greater danger to the world economy and financial system than the correction in US and British housing markets and the related credit losses suffered by leading banks.
Don’t you just want to laugh at such nonsense! He doesn’t see the risk in housing, but sure is worried about inflation just before prices fall off the table. When he wrote the article West Texas crude (WTIC) was about $125 per barrel and soon peaked at $147.90 in July, 2008. Six months later the price had fallen to $35 per barrel. Corn peaked with WTIC at $7.50 a bushel and by December was below $3.00. Copper peaked at $4.00+ and fell to $1.25. Gold was testing $1,000 about the time of this article then pulled back to below $700.
It seems obvious that Kaletsky regards Gold as just another one of the commodities and I suspect if he’d known the depth of the coming recession and how we did start to invoke the Great Depression, he would have trouble justifings Gold rise from $700, through $1,000 and peak over a year later at $1,200.
He writes that “Commodity inflation is worse than housing and bank deflation for three main reasons.”
- First, rising prices of food and energy hit poor people hardest and stir to action those who are politically apathetic. If I may, I think the premise is correct, Tea Party members for example, but they are really upset about housing and bank deflation brought about by government meddling.
- Secondly, inflation is inherently harder for governments and central banks to deal with than deflation. No it’s not! The FED is trying like crazy to inflate asset prices, but the deflationary tide is nullifying their efforts.
- Thirdly, the countries most exposed to the risks of commodity inflation - China, India and other large consumers of energy and food - are precisely the ones that the world economy now depends on for most of its growth. I suspect that China is most scared of deflation, a collapse of housing and a collapse of demand for their products. Unemployment is probably their biggest concern.
- To make matters worse, the political pressures caused by energy and food inflation in developing countries is provoking panic reactions such as trade restrictions, price controls and credit rationing schemes that now seriously threaten the progress towards global market liberalisation and will almost certainly make commodity shortages even worse in the long term. This I just don’t believe. I think a collapse in currencies and deflation might cause more panic.
The problem with elitists, economists and even pundits like me, is that we try to tell you what is bad and good and warn about events, but most of don’t know anything beyond our little existence. It is arrogant to try to manage an economy as large and as complicated as ours were at home. It’s hubris to try to manage the global market.
The Gall of Fannie Mae
A Beginner’s Guide to Freedom posts:
Fannie Mae, the wholly-owned subsidiary of the Federal Housing Finance Agency, recently announced it will take steps to penalize “strategic defaults.” A strategic default is when a homeowner who is underwater on his house simply walks away from the mortgage even though he can still afford to pay it back. From now on, borrowers who default in this way will be blacklisted from obtaining another Fannie Mae loan for a period of seven years, and in the states that allow it, Fannie Mae will sue the borrower for the balance of the loan.
Simply outrageous!
U.S. Home Foreclosures Climb 44% to Record in May
Bloomberg reports:
U.S. home foreclosures reached a record for the second consecutive month in May, with increases in every state, as lenders stepped up property seizures, according to RealtyTrac Inc.
Rick Sharga, RealtyTrac’s senior vice president for marketing, “…predicted last month that another 5 million delinquent mortgages will end in foreclosure in addition to properties that had already been repossessed.”
No Help in Sight, More Homeowners Walk Away
I wrote about “Jingle Mail” two years ago. The phenomenon had just begun, now the NY Times says that the number of folks with their home’s value below 75 percent of the amount owed on the mortgage has skyrocketed to 5.1 Million or about 10% of mortgages outstanding.
We’re now at the point of maximum vulnerability!
Attorney: Administration Threatened to Destroy Investment Firm’s Reputation
The argument to abrogate private property rights in eminent domain cases is justified by the theory of the greater good. In other words users of eminent domain justify their taking of private property by stating that the public’s need to this particular piece of property outweighs the rights of the owner of the private property.
Now, this president who is sworn to defend the Constitution where it is stated that we have a right to property, where contracts are supposed to be sacred and worth the paper they’re printed on, where a man’s word is his bond, this president says
“I don’t stand with them (Lauria’s clients). I stand with Chrysler’s employees and their families and communities. I stand with Chrysler’s management, its dealers, and its suppliers. I stand with the millions of Americans who own and want to buy Chrysler cars. I don’t stand with those who held out when everybody else is making sacrifices.”
In other words, the Constitution be damned! The greater good is more important than the contract you own. It’s a sad day for America!
It’s a sad day for America, also, when the president can marshal the press to destroy someone who opposes his grab for power. I feel uneasy just writing these words about the government in my country.
Please enjoy the article and comment below, email me at landfair3554@comcast.net or follow me @movermike
How Did It All Begin?
And the Democrats want another $700 Billion!
Hat tip to Instapundit!
Here’s A Must Read!
John Mauldin has a must read titled It’s more than Fannie and Freddie. The article is free, but you will have to register with your email. That means you’ll get this information the same time as I do. If I’m out of town you will read it faster!
Available Housing Inventory
Cecelia Maben, Associate Broker with Peter Anderson Realty Assoc., Inc., delivers a monthly newsletter to our door. It is always useful. It has a list of pending home sales and actual sales in the neighborhood. It allows me to be a nosy neighbor, to see how much the house across the street sold for without asking, “So, how much did this house cost you? Really, that much!” Then I get to tell Bev our comparable house just appreciated another $50,000. Well that was in the good old days.
Maben newsletter also gives a street view of the happenings in the Grant High area. This month she has a table that shows the available inventory in months in the Portland Metro area.
As the table indicates, we currently have 9.2 months of supply of homes for sale, about double last year and you have to go back to 2000 to see it near this high. The good news it did get better after 2000.
How does that compare with the rest of the country? Jesse’s Café Américain has this chart as part of a triptych on the housing slump.
Click chart to enlarge.
