Zillow Advice: Housing Market - A Real & Workable Bailout Plan

my point of course being ...

Tue, 04 Nov 2008 10:52:00 GMT

my point of course being that most people count their home as a portion of their NW or as NAR would say

60% of homeoners claim that their primary residence makes up more than 40% of their NW^_)^

you need to run your figures ...

Tue, 04 Nov 2008 10:49:00 GMT

you need to run your figures again, the money supply is 15T, but the value of morts is also 15T meaning that such a transition would require either DOUBLING of morts or halving of avg joe's bank acct... and i seriously doubt assets like stocks, bonds, gold, etc is included in that 15T this is important because if i liquidated enough stocks i could loan myself enough to buy that house @ 0% interest 0.o

By the way, after a couple ...

Mon, 03 Nov 2008 04:00:00 GMT

By the way, after a couple large flood events, you not only need to release water, you need to remove silt, settlement, branches, and other debree that has collected behind your dam, or you simply won't have the needed capacity.

The banking industry just got too comfortable putting off the inevitable, figuring someone else would do it under a different budget.

Besides, the best "financial" ...

Mon, 03 Nov 2008 03:50:00 GMT

Besides, the best "financial" intererest for a water provider is drought conditions, as they can charge substantually more for providing substantually less. Thus the reason government entities often manage the water supply instead of private industry, as government's responsibility is to provide for the needs of all regardless of conditions and without a profit motivation.

(Yes, I am suggesting the banks purposely created our present financial mess for their own profit; that is the nature of industries only driven by profit that lack proper regulation).

I sort of liken the banking ...

Mon, 03 Nov 2008 03:45:00 GMT

I sort of liken the banking system of any country to a system of dams and reservoirs. Obviously you want to mantain as much water in the reservoirs as possible, especially for summer months when the demand is higher and the replenishing supply is lower. But the dams are also to prevent flooding. Each dam is designed to handle a given number of flood events of a given magnitude. If you don't release water in a timely manner, you risk not only major damage from flood conditions, but you risk placing too much force on the dam and loosing the entire dam.

Thus the ones opperating the dam have to take into acount the risks, the probabilities, and the needs, and carefully ballance them, making the best decission they can at any given point in time, knowing that in most cases you cannot both optimise protection from flood protection and maximising future water supply. One also needs to be conserned about potential contamination. If there are known polutants in various locations , you don't want those being washed into the drinking water supply.

Though one may think that each can act independently, for their own best interest, the channels they dump into may be common, thus a lack of coordination may be disastrous.

At minimum a well defined set of guidelines is needed, and good communication between jurisdictions. But in many cases, good regulation with good oversite is REQUIRED!

How the U.S. banking system could have progressed this far without realizing that, I have no clue. Almost like they forgot what a major flood was!

I do expect to see double ...

Mon, 03 Nov 2008 03:25:00 GMT

I do expect to see double digit interest rates for some types of loans for some credit ratings within three years; we already have some now; But due to money the government is dumping into mortgage industries, I don't expect to see double digit interest rates for most conforming mortgages where the documentation is adequate, and the credit rating is good.

I'm a little concerned about the typical California Vetran's bond act that we see again on our ballot (Prop 12) as the statment is "they have always made their payments in a timely manner". THat's what we heard for a lot of other loans recently, but in a declining market, the "always" typical occurances may not remain typcial. If they pay too much, they may still walk away.

Even without an automatic ...

Mon, 03 Nov 2008 03:13:00 GMT

Even without an automatic tax increase due to a combination of a progressive tax and lack of automatic adjustments for inflation in the tax stucture, 0% inflation cannot work well for any government, 1) because there is no insentive to buy now as compared to waiting as the price will be the same fixed price in the future, and

2) because when people don't get raises and "return" for holding onto property, they "feel" like they are not "progressing", and thus must be "declining".

3) By maintaining a modist amount of inflation, one can always claim that the GNP or GDP is "increasing", even though that is really just the decline of the monitary value.

And of course if a government borrows money, it is always cheeper to pay it back with money that is worth less.

Thus a 1% to 5% annual inflation rate is "reasonable", and a 10% annual inflation rate is "tollerable", but to try to force the inflation rate to 0 or even negative is not ussually a good idea.

If the just printed ...

Mon, 03 Nov 2008 01:34:00 GMT

If the just printed was used to buy the 10yr what would happen?

long bond rates are ALREADY ...

Mon, 03 Nov 2008 00:48:00 GMT

long bond rates are ALREADY about 4% (10yr 3.96 30yr 4.36) Now, add in a risk of default, and some overhead to run it, your at mortgages about 6%.... I think this is what the government is basically doing with fannie/freddie now.

for further consideration, the ongoing financing of the US govt. is already quite difficult. The possibility of a failed auction/ rapidly rising interest rates is very real, and throwing the ongoing need to auction a couple more trillion dollars could push interest rates up, despite FED cuts. We are already seeing this in the yield curve.

Ben Stein said he favored ...

Sun, 02 Nov 2008 22:32:00 GMT

Ben Stein said he favored a nationalized banking system but I dont. I favor much stricter control of wall st and banking , but not taking it all over.

I do agree that the gov would be far better served to sell long bonds to investors and then turn around and lend that money out as mortgages.