30-year Bonds, Then & Now A financial Rip Van Winkle who awoke from a 30 year sleep this Fall would be suffering from vertigo, for a variety of reasons. Reason #1: the 30-year U.S. Bond they purchased in Fall, 1981 would have just matured. Instead of collecting a risk-free 15% the last 30 years — perhaps the all-time best investment...Read More
Safe Harbor Scramble Drops Rates Mortgage lenders are anticipating as much as a full point increase in interest rates over the next month. What’s less clear: whether the transition will be smooth (weekly, incremental bumps of say, .25%) or a more abrupt re-pricing. I’ve certainly heard this from lenders before ” like, quarterly for the...Read More
Upper Bracket No Longer Immune The rich are different than you and me. –F. Scott Fitzgerald When it comes to escaping the scourge of foreclosure, the rich have three singular advantages — and one distinct disadvantage — relative to mere financial mortals. First, the advantages: One. Bigger financial cushion. More affluent home buyers frequently put down...Read More
Is the Fed Repeating Wall Street’s Sins? Joe Nocera: At a certain point, Wall Street ran out of clients to sell [securitized debt] to. So the only way it could keep the machine going was to buy it themselves. Jon Stewart: So, they infected themselves. At the end, they themselves became vampires. [Which suggests] a...Read More
Cutting to the Bone Can 30-year mortgage rates — now quoted at a previously unheard of 4.25% — go much lower? Regardless of what the economy (or Fed) does from here, it may be hard for rates to decline much more, simply because banks’ overhead to originate and service mortgages is about that much (or...Read More
Boon For Wall Street, Goose Egg for Savers Want to place a bet on how long the Federal Reserve’s current policy of zero percent interest rates (“ZIRP”) continues? Consider who it helps — and hurts: ZIRP Winners: –U.S. Treasury (debt service kept artificially low)— Wall Street (free money — how nice!)–Mega-Corp Borrowers (ditto. IBM just...Read More
