bostonbubble.com

[john p]

So you have your wealth in the form of cash?

If someone sold their home in 2005 at the peak and invested their equity in the stock market do you think they would have been better off today than if they just held it? Basically, what has fallen further, stocks or housing?

How long do you plan to hold your wealth in cash? Do you think that if we get inflation, the dollar you're holding might have less buying power? Do you think if we get inflation because the FED will continue to lower rates and the government offers the low interest to first time buyers that prices go up in the short term? I have a feeling based on pent up demand that prices might go up in Boston if mortgage rates drop to 4.5% for first time borrowers, after that mortgage rates might go up because the future value of the dollar will be worth less in the long run because the FED is flooding the economy with money?

We're in the situation we're in because we're swamped in debt. Massachusetts is in trouble because of the Big Dig debt. Obama's Plan seems to combine both problems, we're going to borrow even more to pay for about what, 50 Big Digs across the United States? "Still Renting", if I am such an idiot or what the fuck did you call me, a juggernaut, tell me how borrowing hundreds of billions to start 50 Big Digs across the Country will work.

Given the current situation, I'd challenge you to consider that a growing force will be elderly or those close to retirement who have seen huge losses in their savings in the past year, how will this segment affect the market? I'd imagine it will keep some planning to retire still in the workforce, and many retired considering relocating to a place where property taxes are lower.

See, I'm mad at politicans because I wouldn't promise that I could lower property taxes unless I had a dam good idea that it was possible and had a plan and a back up plan to make it happen. Would you step in to do CPR if you weren't trained? It bothers me when these egotistical politicans who write books about themselves become so poisoned with their own vanity that they make promises that they can't keep and they use their persuasion skills to manipulate people. When Patrick promised to lower property taxes, many elderly believed him and may have planned their future based on these promises. If Patrick was to be true to his word, he would have had to cut spending more agressively, which he didn't. Now, because he didn't chip away at it little by little, a whole wave of hard working public servants will get pink slips during this, the worst economy in decades. Now, the elderly have lost a lot of their nest eggs because of the subprime mortgage crisis that created the banking meltdown, and now they get tucked higher property taxes because the government can't control spending. Is that a rant or is that reality? These surges, this turbulence causes a lot of stress on society and the more I read, the more I can only imagine how much it is hurting innocent people.

The reason why controlling government spending is the answer is because our infrastructure is failing because government spending grew so quickly that they took road repair out of the general budget to allow other pieces of the pie to grow into the infrastructure share. They invented new revenue streams like the tolls, the gasoline tax, the lottery, and this new proposed casino scheme. Paying for 50 Big Digs on a credit card doesn't make sense. Scaling back each State's Budget and cutting out fat so that we can pay for infrastructure out of our General Fund is the answer.

All you young renters waiting to buy might be happy in the short term, but if we go on a short term spending spree on these Big Dig projects, how many will go over budget? How will we pay for these other than on our National Credit Card? How will that help you young folks long term?

[admin]

I'll answer part of this from my own standpoint.

[john p]

Here is an article about how Japan tried the whole boondoggle construction to stimulate the economy.

http://www.chron.com/ ...truncated...

I agree that this whole 4.5% thing is a stunt, I say the politicans are behind that stunt. This year we had a big wave of subprime ARMS resetting and next year we'll have the next wave of Alt-A's restting. I think they learned their lesson about not taking this measure prior to the subprime resets and realized that if people were upside down and facing steep ARM resets this whole popsicle stand would go up in flames as it did. What gets me mad is that I saw this wave of ARMS resetting and I said that they ought to do this sort of thing. My critics laughed and gave me the whole "Oooh John, silly John, the FED has nothing to do with mortgage rates". Silly John saw that if they didn't, we'd be in deeper yogurt and after spending hundreds of billions to bail out this situation, they might need to take this measure to protect ourselves from this next tidal wave. Did anyone think the FED and the Treasury were in the business of bailouts?

Lets talk real terms here. Predict this or the issues surrounding this: Say you want to buy a starter house that currently sells for $350k. Today, you could get it with a what, 5.25% conforming mortgage right? So say you've got your 10% down payment, you keep it in cash; how long have you had that money in cash? When did you pull it out of the market, or has the cash just been building with savings? How much value is there in the stock market because people are in cash positions? How much pent up demand in real estate exists because many younger people have decided to stay renting? I remember there was a little babyboom after the recession of the early 90's because people put off having children for a few years. We have a couple years of people waiting to buy a house, 07 and 08, so if you add that to the class of 09 and we get this low interest rate it may create a slight uptick as you mention. I feel that the next wave of Alt-A's will create enough supply of foreclosed homes to deaden much of that potential. Boston might be different, however, because we started this cold a year before the nation. So, you guys think that that $350k house will sell for what $300k? What will the interest rate be and which purchase price will yield a lower mortgage payment?

I think that the US Dollar was once a medium of exchange for our Nation, a measure of worth or value. Now, I think it is going to move up and down like mercury in a thermometer. We're not in an insualted house anymore with a stable temperature, we've knocked down a few walls with NAFTA and with China so the dollar, the temperature is finding equilibrium with a diverse range of values. The US Dollar is only as good as what Marge and Homer can pay back, and that measure is reading less and less and Marge and Homer want their bailout check and want their flat screen when they get it. This is decadance, or fermentation from decay.

I'm so frustrated because we don't know if this 4.5% is bullshit or not. How is this not currency manipulation, the kind of economic chaos that 2nd tier countries suffer from when their governments control the economy? We don't know what the hell the government is going to do, how can responsible people plan or invest? I honestly think that Obama might not end up spending the type of money on infrastructure that he's talking about. My concern is that if we go into this with the mindset that we're just flooding the market to keep people employed, we might not be disciplined in how we spend the money and we might not get much bang for our buck.

The good intention of Obama is that he wants to keep US Dollars in the United States. Destroying the value of the Dollar by going trillions into debt on projects that most likely will run overbudget has to be handled very carefully and there is nothing that gives me confidence that this set of politicans are up to that task.

I didn't vote for Bush because I thought we'd spend too much money for the cause, nationbuilding. For the same reason people hated Bush for the perception of arrogance, if we devalue the US Dollar, we devalue the amount that our creditors will get back. They will despise the arrogance of our people for not restraining our spending and getting so bad that we have to devalue our currency to devalue our debt. That is an ugly American.

Editor's Note: This post was edited to abbreviate a URL which was widening the page due to the way that the forum software lays out posts. No other changes have been made, and the URL still points to the original destination - only its display has been shortened.

[admin]

[john p]

My critics were technically right as traditionally the FED has an indirect relationship with mortgage rates, and no relationship to bailing out banks and the automotive industry.... I was saying that the time to prime the pump was then. Honestly I didn't want the government interaction to the degree we have it today, I was thinking that if government interaction was to be considered it would have had more impact prior to 08's Spring Selling Season. In addition the lever the FED did have was pushed the wrong way in my view because raising short term rates created a scarcity of short term lending capital and those that needed working capital and ran on thin margins got knocked overboard.

I am not an expert on the powers of the US Treasury or the FED. As I said, my feeling was that if government intervention was going to be used, prior to last Spring, prior to the wave of Subprime ARM resets was the time to do it.

So the first wave (subprime) came in and hit us and now the second wave(Alt A's) is going to come. If I were thinking of buying I'd want to know if we're going to bite the bullet or if we're going to see governent interaction. Naturally, we have a lame duck and a new Administration and the rest of us are taking our cues from the type of people Obama is picking. I do think the grass roots ought to kick some of these proposals around because this is a government of the people and a lot of this stuff wasn't mentioned during the campaign. I could be wrong, but I didn't hear about the massiveness of Obama's Infrastructure Plan during the election. Further, it is pretty clear that the talking heads are not really savvy in economics, they are savvy in the art of politics and persuasion.

Obama is in control with the Government Interaction. He is Master and Commander. No bailout plan will go forth without his approval. He is the Wizard of Oz. I am baffled that people can't make the connection between the masses sitting on the fences waiting to see what and when the government does as far as interaction but doesn't find it valuable to analyze the disposition of the person who will dictate those moves.

Talk about Predictions, Obama has the power to control this market and everything that I know about him leads me to think he will not tread lightly, he will make bold moves. Running for President when you self admittedly don't have the experience is a tell sign that he will jump in feet first to a situation and figure it out along the way. The way he speaks is political, careful and precise, but his policy is pretty bold, there are too many digits in his proposals for my taste. Knowing he's bold and not knowing what he's going to do should be of concern to many right?

[balor123]

I like some of john p's ideas but sorry I don't have the patience to read through all of them. In any case, he's one of the most active posters on this site so if he's a juggernaught I say he's a welcome juggernaught.