Comments on: Market Reaction

By: Bryan

Bryan — Wed, 10 Aug 2011 06:04:20 +0000

It isn’t just the price, it is the reality that the way the banks have screwed up the real estate records, you can’t get title insurance that is worth whatever you pay, and you have no idea who property belongs to.

The friend that I do rehabs for would like to buy again, but he can’t find anything for sale that has a clear title to the land. He has looked at a couple of places, and the county records are missing one or more transfers that he is aware of from talking to the neighbors. They were newer houses than his usual choices and in decent neighborhoods, but he can’t be sure what his money would be buying.

He doesn’t ‘flip’ houses, he rents them, and he has had to reduce the rent on a number of properties to keep them occupied.

I don’t owe anything I can’t pay off with a check tomorrow, but, by taking out the loan, rather than paying cash, I still make money off the cash. IOW, the interest on the loan is less than the interest on the cash, so it made sense to use the loan.

By: Badtux

Badtux — Wed, 10 Aug 2011 04:42:32 +0000

Luckily(?) I don’t owe money. I deleveraged before deleveraging was good, selling my house before the housing crash, paying off my car, and paying off my credit cards. My story, BTW, is why the housing market isn’t going to come back anytime soon. Every time I look at buying a house, it becomes clear and apparent that the housing market is *still* too screwed up to even think about it. If I can rent cheaper than I can own, buying a house makes no sense at all given that housing prices continue to decline.

– Badtux the Housed Penguin

By: Bryan

Bryan — Wed, 10 Aug 2011 02:29:37 +0000

I’m focused on the effects of deflation on everything. Loans don’t deflate, so if you owe money, you are screwed by deflation. It happened to a great-uncle who had a thriving dairy farm. People continued to need milk, but the price dropped until it wouldn’t cover his mortgage, and he lost it.

He made it through with a job with the WPA building the high school I graduated from as my Mother had before me.

Zero isn’t trying to burn down Washington, like the Tea Party, but that’s only because his bosses still have more to loot before they leave.

By: Badtux

Badtux — Tue, 09 Aug 2011 16:25:47 +0000

The difference between Zero and the Teabaggers, Bryan, is that Zero wasn’t threatening to default. The threat of default is the only thing that could cause investors to flee Treasuries. So from investors’ points of view the Teabaggers are an issue, Zero isn’t.

Of course, from *our* point of view Zero is weak tea, his only redeeming virtue is that he’s a tool but he’s not batshit crazy like the ‘Baggers or Michelle Bachman, but we’re not the people with billions of dollars in Treasuries.

Yes, I’m fairly liquid right now. I got out of the stock market the last time my portfolio lost a sizable percentage of its value, which was when I realized that the game was rigged and I was never going to get that money back. Which is why I laugh at the people who claim money will flee Treasuries for… what? Other rigged games? ROFL!

– Badtux the Finance Penguin

By: Bryan

Bryan — Tue, 09 Aug 2011 00:23:29 +0000

At this point either the re-election of Zero or the teabaggers would yield the same result – long-term deflation. Neither seem to understand what the problem is, or how to solve it.

I assume that you are in liquid assets. I know that what I have certainly is. In addition to the major unemployment problem, we have people with money expected deflation, so demand is even further reduced. WASF

By: Badtux

Badtux — Mon, 08 Aug 2011 23:24:06 +0000

As I pointed out yesterday, investors are assuming that teabaggers are going to be out of office within 16 months, and thus buying 10-year Treasuries is not a risk. Now, if teabaggers retain control of the House next year, then investors may re-assess. But that’s a big “if”.