Low Interest Rates — Then & Now Three (four?) years into the housing market downturn, what conclusion is it possible to draw? In retrospect, it seems obvious (at least to me) that it was a liquidity-driven phenomenon. Add a tsunami of cash, subtract any vestige of underwriting standards, and real estate will go up. Subtract...Read More
Life after Life Support There are no atheists in foxholes. –Famous aphorism There are no free market Republicans in today’s housing industry. –Real estate version When it comes to the housing industry today, even the Republicans sound a lot like Democrats. For now, at least, people of all philosophical stripes understand that the housing market...Read More
No Change in Mortgage Rates (Yet) I have just received the following telegram from my generous daddy. It says, ‘Dear Jack: Don’t buy a single vote more than necessary. I’ll be damned if I’m going to pay for a landslide. –John F. Kennedy Almost a month after The Federal Reserve completed its massive, $1.2 trillion...Read More
Borrow at 0%, Lend at 3%, Make Billions Is it customary, when someone is charged with fraud and awaiting trial, to leave them in possession of the victim’s credit cards, and, indeed, to continue to allow them to spend and gamble the victim’s money? In the corporate arena, apparently the answer is “yes.” U.S. vs....Read More
The Dog That Didn’t Bark? So, the Federal Reserve finished its massive, $1.25 trillion purchase of mortgage securities almost three weeks ago. Have mortgage rates spiked upwards since then? Nope, they’re basically unchanged. What could that mean? Other investors — supplying fresh capital — have taken their place (the “supply explanation”); a weak economy is...Read More
Strategic Defaults Driving Retail Sales? A penny saved is a penny earned. –Benjamin Franklin, circa 1780 A penny defaulted on is a penny earned. –Benjamin Franklin, 2010?? No, I have no way of knowing whether a modern-day Benjamin Franklin would have uttered the second quote. In fact, he didn’t even say the first one (that...Read More
