Good news on the interest rate front

[TooFarTampa]

Probably ride the coattails of the surfer wallet craze a bit longer but he'll continue to laugh all the way to bank as he does so. His simplicity has worked in his favor, although I too am annoyed at how he ties his personal stories into his "advice". But, he paints it simple for us simple folk and has been right on about pretty much everything he talks about of late which works for me. I also don't have expensive degrees or a lofty title to protect so I'm not intimidated by his approach and can read his column with an open-mind and perspective.

P.S. For the record, I haven't ever read this guy's books - just happened upon his column a month or so ago and what I've read has made sense to me.

The "peak oil" concept hasn't gone too mainstream yet. I'm not sure I buy into the doomsday scenario, but I do agree that it's a major long term concern, not just because of politics but because -- from what I understand, and someone correct me if I'm wrong -- the countries that do control the oil are not required to disclose exactly how much they believe they have left. So no one knows when the peak might be. Since our entire economy depends on oil, the implications are frightening. Mostly it makes me worry about my grandchildren. Here's the article that got me thinking, from Fortune magazine no less. Long but interesting:

Investing genius Richard Rainwater is freaked out

 

[6thGen]

Probably ride the coattails of the surfer wallet craze a bit longer but he'll continue to laugh all the way to bank as he does so. His simplicity has worked in his favor, although I too am annoyed at how he ties his personal stories into his "advice". But, he paints it simple for us simple folk and has been right on about pretty much everything he talks about of late which works for me. I also don't have expensive degrees or a lofty title to protect so I'm not intimidated by his approach and can read his column with an open-mind and perspective.

P.S. For the record, I haven't ever read this guy's books - just happened upon his column a month or so ago and what I've read has made sense to me.

I've linked an article below, and there have been several of the like in the WSJ and the like as well. I've always found it better when authors quote Friedman rather than some second rate hippie professor.

http://article.nationalreview.com/?q=ZGE4M2RlMDM1MmI0OGM1M2ViMGQ4MWUyYzc2YmEyZWU=

 

[spinDrAtl]

Many of the same speculators who got caught up in the stock market bubble are the same people who are now caught up in the real estate frenzy.

Do you know these people?

Add to those folks the home owners who cashed out equity to finance "bread and circuses," the people who were able to borrow large sums of money just by "fogging a mirror" using NINA (no income no assets) or "liar loans."

Wrong. A NINA loan is not a 'liar loan' as you call it. These loans are typically available to people with top credit scores that were built by paying their debts on time and in full. These customers are not required to provide income/asset documentation due to the fact their lofty credit scores satisfy the lenders that they will pay their debts.

And then the worse case of all--those who have daisy chains of houses who bought a $90,000 shack for nothing down, cashed out inflated equity, used that equity to buy 2 more homes, cashed out equity, used that equity to qualify for 2 condos and 2 pieces of land, etc., etc.

Nothing wrong with this unless fraud is involved.

HomeOWERS who cashed out equity in their homes or paid sky-high prices based on fantasy appraisals in a hot-hot-hot market may have to bring a check to closing because they find they are underwater on their loan--now that is a bad "investment."

Personal responsibility is a b*tch, ain't it. Fraud aside, some folks just make bad decisions.

 

[Indigo Jill]

The "peak oil" concept hasn't gone too mainstream yet. I'm not sure I buy into the doomsday scenario, but I do agree that it's a major long term concern, not just because of politics but because -- from what I understand, and someone correct me if I'm wrong -- the countries that do control the oil are not required to disclose exactly how much they believe they have left. So no one knows when the peak might be. Since our entire economy depends on oil, the implications are frightening. Mostly it makes me worry about my grandchildren. Here's the article that got me thinking, from Fortune magazine no less. Long but interesting:

Investing genius Richard Rainwater is freaked out

As far as the oil crisis goes, I'm not so concerned about running out of oil as I am about the economic consequences we could see with a greatly diminished supply - remember the billions of people in China and India with the evolving ability to afford cars and such? It's our reliance on oil at this point in time and all the other things going on in the economy simultaneously (the real estate/housing mess, devaluing of the dollar, our collective debt as a country, etc. etc.) that have me spooked. I have confidence in the human race, though, to innovate and come up with a viable solution - and I won't buy into the doomsday scenarios. I just fear the process won't happen quick enough and as we all know, desperate people do desperate things. I don't want to be witness to that.

If nothing else, we just need the discussion to start as Mr. Rainwater stated.

 

[Babyblue]

My God, I don't get all this blah, blah, blah...How can an economy w/less than 5% unemployment, a moderating gdp of 3-3.25%, a downwardly revised deficit, at the top end of a rate cycle equate to all this "down in the mouth" postulating...Shelly, you are unbelievable...How is the Fed pausing uncharted territory (I can't imagine why they think your stupid)...that's what you get after a RAISING CYCLE - A CUTTING CYCLE...A great many "true" economists call these situations Goldilocks

Bob, if oil prices keep going up how can rates do anything but come down...the market will be doing the Fed's job for them and they'll be forced to cut...the Middle East has been screwed up for 60 years, this time is no different except that by giving the Iranians a bloody nose maybe they'll slow expansion...

The feds have blown it again just like they did with the stock market in late 90's. The party is over and the fat lady is singing! :funn:

 

[redfisher]

Babyblue, please quantify...

 

[Sandcastle]

Richard Rainwater is truly a genius, and he?s had a lot more winners than losers. However; not everything he touches turns to gold, at least not for other investors. He founded CEI (Crescent Real Estate Investment Trust) to buy properties in Houston. I?ve been underwater on that one for years ? but it?s done better than Enron.



A very good friend of mine worked for Rainwater and the Basses. He has nothing but praise for Rainwater.

 

[SHELLY]

Richard Rainwater is truly a genius, and he?s had a lot more winners than losers. However; not everything he touches turns to gold, at least not for other investors. He founded CEI (Crescent Real Estate Investment Trust) to buy properties in Houston. I?ve been underwater on that one for years ? but it?s done better than Enron.

My checking account interest has done better Enron

 

[goofer]

I am bullish on American ingenuity and resourcefulness. We will muddle through all these obstacles as we have always done in the last hundred years through hot AND cold wars. Innovation and new technologies will be the problem solvers as they always have been. And many of these innovations will be coming from the Far East and from India too. The profit motive is the greatest of all incentivizers. As far as the death knell in real estate and banking.....I think their demise is a bit premature. Part of the normal business cycle. We survived the RTC debacle of the 80's.....the debacle of the over leverage hedge funds like Long Term Capital and the currency fiascos of Asia and Russia of the late 90's. Whatever the next financial calamity will be, and there always is one lurking out there, we will survive it and move on. That is the way the "system" heals itself. Life goes on and opportunities always present themselves. Stay Tuned.

 

[SHELLY]

Do you know these people? .

I know a few--and I think one or two of them are still convinced that "Grandpop" really can pull a quarter out of their ear .

Wrong. A NINA loan is not a 'liar loan' as you call it. .

The operative word in the statement was NINA "or" Liar's Loans--I explained NINA after the statement and I'm pretty sure a goodly amount of the viewing audience know what liar's loans are ;-) . I also know that both have been used during the RE boom a wee too much for comfort and in some cases stretched beyond the limits of intention and the law.

Personal responsibility is a b*tch, ain't it. Fraud aside, some folks just make bad decisions.

Yeah, during the boom there's been a good amount of fraud and much stupidity...But since "stupid" is still legal in 50 states (and the D.C. area, which is ground zero), I guess there will always some way to part a fool from their money (interest-only and option ARMs spring to mind).

But as they say in the biz:

INTEREST: The financial process whereby money is transferred from stupid people to smart people.