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New York, 12:39 AM
Mon Nov 9
10 posts in the last 24 hours
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11/05/09
11/05/09
11/05/09
11/05/09
anyway, all these low rates around the world have allowed folks to rack up additonal debt that they might not have otherwise been able to afford... be it mortgage debt in some markets, lines of credit, other loans etc. this has provided the desired support in the housing market, as well as provided cash for clunke...i mean cash for spending. great depression averted.
so, historically low interest rates have led to much higher debt loads, though the cost of carrying that higher debt load is cheap. so the cash flow situation in the household is quite all right.
but, when inflation kicks in at some point in the next 18 to 24 months, and rates begin to rise...all that super high debt load that was very affordable isn't affordable anymore (hey wait, i think we've heard this record before)... kaboom. large scale economic problems could once again abound.
policymakers are hoping the recovery in the economy 18 to 24 months from now will be strong enough to absorb this second shock to the system...
at that stage, your wise diversification into goats and projectile weaponry will be awfully handy! #moneymatters
11/06/09
So it's another bubble-popping/passed buck, with greater hell to pay later, analogous to what happened with adjustable-rate mortgages in the larger subprime Cluster F. #moneymatters
11/05/09
11/05/09
Maybe it's a brand I don't know, or maybe we're entering a world where beans are considered a frill. #thepoors
11/05/09
11/05/09
11/05/09
Hmmm, I think this is a garbled reference to a passage in "Life of a Homesteading Woman" (I'm reading it now on my poor-man's kindle -- the iPhone!) wherein some nice ladies made flour bags into chemises and rice bags into panties for a less fortunate young homesteading lady who had no fashion with which to woo men. They also traveled into town (which took a week!) to buy her some sandals and hair ribbons to go with her finery.
Very creative, those homesteaders! #thepoors
11/05/09
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11/05/09
[www.iupress.indiana.edu]
Well, her husband and my gg-something were best friends. Basically it tells the story of why you shouldn't pump millions of dollars into moving tailors from Kiev onto the prairie without teaching them how to farm, or keep warm without having to sleep with animals. #thepoors
11/05/09
11/05/09
OMG -- coooool!!!! It's on my list now.
Wow, her life sounds incredibly challenging. The chronicle I'm currently reading takes place in the west, and in many ways, I think California is just an easier state to thrive in for a variety of reasons.
I can't wait to check this out, thanks!
(I'm digging these homesteading stories lately. So weird how much life has changed in the U.S. and so amazing what these people accomplished to the benefit of the rest of us.) #thepoors
11/05/09
11/05/09
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11/05/09
How odd that by virtue of something's value - $20 million, a sum only a true plutocrat could spend on a single piece of art - it became less precious in terms of the daily appreciation it could have received from its owner. #sinewhouse
11/05/09
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11/04/09
11/04/09
11/04/09
11/04/09
11/04/09
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11/04/09
11/04/09
Lady Gaga? #trendwatch
11/04/09
11/04/09
11/04/09
Already happened! Loan loss reserves are already creeping to like 10-15% at major owners of assets backed by CC debt.
Commercial real estate hasn't deflated yet.
But the biggest asset bubble of all is in the underlying currency at this point - the sheer amount of USD and the unwillingness of the Fed to constrain the availability of dollars means you're starting to see pricing impacts that are a direct result of dollar weakness. Across all asset classes! At some point that will hit the real economy. #trendwatch
11/04/09
Complete agreed on the Credit Card thingee. #trendwatch
11/04/09
But why worry about currency deflation when we can charge it all to our credit cards, right? Also, I'm all right with the government loaning the banks money to cover their CC gambles, but only if banks give government the right to call everyone of their employees during dinner and harangue them about their "obligations" to their creditors. #trendwatch
11/04/09
Things weak and weakening currencies do, holding all else equal:
1.) Make your exports more attractive
2.) Decrease the "real" value of debt relative to assets not denominated in the currency
3.) Makes your debt less attractive to investors
4.) Increase the nominal value of assets denominated in the currency
How will those factors affect us? There is no consensus. #trendwatch
11/04/09
It's been a pretty big splat.
Deflation is horribly for debtors. If the "real" value of a dollar increases, your debt has more value. If it decreases, it has less. Debtors (read: the middle class) should be rooting for inflation to make their debts irrelevant in real tearms. William Jennings Bryan was asking for inflation in the "Cross of Gold" speech.
Example of this effect: say tomorrow we go full Zimbabwe and suddenly $100,000 is the purchasing-power equivalent of $1 today. Your mortgage is paid! Congrats! #trendwatch
11/04/09
11/04/09
Think about it. These people have made their bones. Whatever they're drawing down on the long slow march off the cliff is what they've got. They've paid their mortgages. Once they run through it, it's gone.
I'm sure the most powerful lobby in America, the almighty association of relegated pricks, will do all it can to ensure their fully paid health entitlements are for them alone and that nothing changes ever amen.
But yeah, I've lived in countries post-hyper-inflation. You have to carry around your cash in grocery bags. It sucks.