Thursday, Mar 15, 2007
Ok, ok I was wrong, we clearly need MORE money to be printed
Investment News Daily: Cut rates or face recession, says analyst
If the Federal Reserve doesn't lower interest rates, more stringent credit standards among mortgage lenders might lower U.S. home prices by 10%, leading to a recession, a Merrill Lynch & Co. analyst said in a report, according to Bloomberg.com.
This analyst is clearly insane, imho
Posted by lvmreader @ 08:19 PM (181 views) Add Comment
8 Comments
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1. Whiteknight said...
I would still like to see every analyst or any person make a "free" comment in the press have to state their real estate portfolio position.
Imagine .... i write for the front page of a major newspaper in the UK and I am going into arrears on a mortgage. What is to stop some extremely debatable reporting? or at least a bias.
What would happen if you were to do the same to a stock?
Transparency is best on this issue to avoid charges of conflict of interests at best.
2. Whiteknight said...
Again.... Stagflation? certainly.......
This is what the "markets" with their "all priced in" nonsense have failed to observe.
Each time there is inflationary information they think that the FED will need to raise rates. Each time there is news of a slower economy they think that this signals the FED will not need to raise rates and will be able to decrease rates "to avoid recession."
This simply shows that most people current involved in markets are under the age of 35 with a large proportion under the age of 30 and the rest have been on the Coolade
When they finally realise that rates will need to go up whatever happens (or a currency collapse - pick your poison) then we will see some approprate redress of the imbalances of recent years and the market will start to assess risk in the ballpark of something useful.
I have observed in almost everything that bailing out people from their mistakes just removes personal responsibility. This is what has now happened in financial markets. Previous problems being smaller and earlier in the cycle have been able to be bailed out (LTCM etc.). Hence everybody starts to behave in a less controlled manner. Eventually THERE IS NO BAILOUT because THERE IS NO MORE MONEY.
It also keeps money gong to places where it is used inefficiently. Better get back to an economy where efficiency and sensible investment is rewarded and other things are punished, as they should be. That is how it is supposed to work.
The reality is that both the economy will weaken AND rates will need to go up.
This is primarily due to the earlier mis-management in the last 5 years of thinking you can reduce rates to silly levels and essentially print money. to get out of trouble.
Central Banks will be forced to keep raising rates so that people will want to buy into their currencies (or at least wont wont to sell them off) relative to other currencies. Then you had better have something other to offer than houses.
3. george monsoon said...
My only portfolio is my O'level art folder from way back in the early 80's
My objective view is that this housing market is going to crumble this summer. The spring flood of buyers will fail to materialise, leaving the VI's slightly panicky. Why won't the spring buyers appear? because Gordon's budget will put paid to anyones idea that they can afford to buy anything at all
4. Layersoftheonion said...
IMHO The house of cards will tumble when, and only when the PTB decide the market is at its optimal ripeness for fleecing Joe Public. However, when these ARMs reset in H2 '07 we should see a major route of the sub-prime market, but then the fed and BoE could reduce rates and keep the whole illusion going for some time.
Definitely living in interesting times and getting much closer to what we have all been saying for years now!
5. layers said...
IMHO The house of cards will tumble when, and only when the PTB decide the market is at its optimal ripeness for fleecing Joe Public. However, when these ARMs reset in H2 '07 we should see a major route of the sub-prime market, but then the fed and BoE could reduce rates and keep the whole illusion going for some time.
Definitely living in interesting times and getting much closer to what we have all been saying for years now!
6. bingo said...
I have always held the same belief as layers, that the whole housing market is totally contrived by the Chancellor and the city, and will only collapse when they decide they can't get any more air into the bubble. I believe the same thing has happened with personal pensions in the last few years,,, what has happened with those has been nothing short of criminal, yet noone seems to be taken to task over it. The only people making money out of all of this will ultimately be the government and the financiers... I am NOT a conspiracy theorist by any stretch of the imagination, I just see things as they are and do not quite understand how these people can take so much money out of the financial system in profits and bonusses without there being someone who loses... Pensions are an obvious example, why do you think your FSA is driving around in a Range Rover, it's not because he making you lots of money....
7. lvmreader said...
8. george monsoon said...
the cartoon is absolutely fantastic!