80 replies to this topic

[Anthony Bonner]

So is AB.

I'm always impressed how one person can so clearly interpret someone else's short one-sentence quip. (Me, with Sifton, there's a lot more meat on the bone.)

I'm talking about what had already happened for years and years with the cloaked, under-the-radar "nationalization" that facilitated (along with many other facilitators) the 2007-2009 housing implosion before the most recent unambiguous "in full daylight" nationalization. Let's just say that it's good to be a bondholder and it's less good to be a citizen.

Nothing in the future fixes that past.

For the record, I'm talking finances here. Everybody was guilty. Some more than others, but everybody was guilty.

P.S. And I know the NYT-Krugman cabal's "Fannie Freddie Phony" (google it) blog position on all this - "Maes were withdrawing from the market at the height of the bubble" (translation: massive facilitators in a major way all the way up to the height of the bubble and then they ran for cover), "the vast majority of the loans now going bad came from the private sector" (reality: those loans never would have existed for the most part without Mae purchases and/or insurance. Krugman can be a brilliant Nobel-prize winning economist if he opts to be, but most of the time when he is casted as a NYT journalist, he has a NYT axe to grind. Serious economists across the spectrum are in agreement on Krugman's sharp-tongued yet monotonous and ultimately dull (and even dimwitted) elephant axe. He knows better. It's truly sad that people denigrate the prestige of Nobel-prize winners by writing like that. For the record, Chambo would never do such a thing.

P.P.S. Google "Wynn Rant on Housing" and listen for 45 seconds if you so desire. "We are doing it AGAIN." For the record, I agree.

P.P.P.S. And these longterm mortgage interest rates sure can't make any sense to you if you're predicting middle-class-mauling inflation, can they? That's should be an easy way to make a patient buck if you are a true believer.

Look at asset values in Venezuela to see the future.

Anyway, housing around Hegia is still significantly overvalued.

I'm not up to date at all on VZ or Hegia homes. I'm all ears though and I'm trying to subtly steer the conversation back on track.

chamby I think we agree on somethings (doing it again, deflation as a risk::rates, etc) disagree on other things (FNM/FRE as culprits). I think you can see why i'm not as sanguine as you on the housing issues being fixed, but yes.

To bring it back on topic - sort of interesting to see the difference in home prices between Spain and France in this part of the world.

[g.johnson]

Why is the English Cricket Board buying Greek debt?

[Orik]

P.P.P.S. And these longterm mortgage interest rates sure can't make any sense to you if you're predicting middle-class-mauling inflation, can they? That's should be an easy way to make a patient buck if you are a true believer.

I'm a true believer in making a fast buck, but even people who have patience might be more interested in markets where mortgage rates are much lower an much more exposed to inflation (e.g. Israel with 2% inflation linked mortgages where the central bank just stepped in and forced a minimum 40% down-payment, a few years too late) and where the currency is very far from where it should be for all the wrong reasons.

The deflationary pressures are still here, for sure, but the current set of crises and the global tax bomb that's about to hit will make inflation more likely in a couple of years.

[Behemoth]

the issue that makes me laugh is the Germans accusing Trichet of pursuing QE solely for the purpose of protecting the French banks.

I may or may not disagree with policy, but there are reasonable ways to arrive at a multitude of options.

ETA: Additionally most of Europe has a proud tradition of nationalizing private assets so they don't have the barrier to good decision making (if you really think that's the right path - I don't but its silly that Americans freak out about it so much)

It's basically a cash bailout for the biggest Greek bondholders, which are....French and German banks. Germans are incredibly self-righteous about all this garbage until you bring up the Landesbanks.

Given the way Europe tends to operate I'm expecting
1) they raise rates
2) they raise taxes
3) we have a nice relaxing recessionary decade or two, which means Germans avoid their worst inflation fears... so yay!

That said, I guess I'd rather be living in Japan than Argentina.

[Orik]

You haven't seen Japantina yet. It does not rock.

[Anthony Bonner]

the issue that makes me laugh is the Germans accusing Trichet of pursuing QE solely for the purpose of protecting the French banks.

It's basically a cash bailout for the biggest Greek bondholders, which are....French and German banks. German are incredibly self-righteous about all this garbage until you bring up the Landsbanks.

that's the issue to German's its the ECB bailing out the French, when in the eyes of the ECB (and following the logic of a currency union) its the ECB bailing out Europeans.

It's like someone from NY bitching about bailing people out in FL from an economic perspective. Of course politically it is totally different.

[Orik]

It's just like Länderfinanzausgleich except the recipients aren't German.

[Behemoth]

You haven't seen Japantina yet. It does not rock.

I have seen it. Lebanon in the 1980s -- surrealism is having the guy with the vegetable cart giving you live FX rates when you went to buy tomatoes.

But seriously, do you see stagflation in Europe? I'm not convinced that external price pressures will be enough to offset deflationary pressures within the EU for the next few years. I should think it catches up with the US and UK far sooner(?)

[Chambolle]

chamby I think we agree on somethings (doing it again, deflation as a risk::rates, etc) disagree on other things (FNM/FRE as culprits). I think you can see why i'm not as sanguine as you on the housing issues being fixed, but yes.

Not culprits per se, not culprits to be solely singled out, just first-class facilitators.

I'm not sanguine on housing. That was an extremely sarcastic "worked out pretty well, right?" before. Sarcastic on steroids!

To me, housing is surreal at this point. Everything about it is artificial. In my mind, on that one point, I'm clear. And I'm not attempting to predict future housing prices because there are no limits to surrealism. And, frankly, who cares what any one person thinks about housing prices. Housing prices where? Which house?

And if anyone here believes that people can predict future asset values (or inflation) better than a Shakespearan dart-throwing chimpanzee, you'd better read this quickly. There are about 6 people in the world who can do this and half of them are retired. And nobody knows who the other three are, although 30,000 posers are raising their left hand and putting the right hand across their heart, hope to die.

Here is the biggest secret of the financial world. This secret is never supposed to be let out of the bag. Never. Ever. And I'm going break the news right here on Mouthfuls.

No matter how fancy that suit, no matter how Goldman those slacks, no matter how shiny and bespoke those shoes, no matter how slick that hair, no matter how slick those words, no matter how Ivy that education, no matter how (senior) vice presidential that bizniz card, no matter how managing that director, no matter how much of a partner they profess to be ...

Other than those three guys still working that I just mentioned above, nobody in the financial world has any real clue about future asset prices. Nobody. Nada. Zero. No one.

Don't forget this! I just saved you a fortune over your lifetime.

And to think that the hedge fund / private equity asset classes have trillions in it now and all these investor sheep believe that they are going to outperform the overall market and these sheep willingly plead and beg to hand over 20% of THEIR GAINS (not to mention a 2-3% of assets for "expenses" !) to these legal thieves when equity markets naturally rise over long periods of time (due to population growth and productivity improvements) is so logically ludicrous that if defies explanation.

By the way, those investor sheep today are "the so-called smart money", "the wealthiest of the the wealthy" and the endowments for educational institutions to educate the next generation and pension funds for municipalities / cities / states and their firefighters and policemen and teachers and ...

So, just in case you might have been daydreaming one day and wondering about this stuff and leaning towards the same conclusions but decided that you couldn't be right because somebody would have called BULLSHIT on this previously, ahem, YOU WERE RIGHT!

I don't begrudge the hedgies and the PE players. Heck, if someone wants to hand over their assets to me, I'll accept them willingly with a smile on my face.

And if any of you fine folk out there want to write me into your wills, please PM me for my real name and address and social security number.

Okay, I feel much better now.

Moving on.

Hey Orik, how's Hegia housing, by the way? Did ya see anything with massive walls, a moat and a dreamy drawbridge nearby? I'm in the market and willing to spend big.

[Behemoth]

Eh, I read Malkiel in college too. (Actually isn't Taleb sort of making the exact opposite argument, if you think about it?)
Unfortunately many people with little interest in speculation still have to make a guess at this stuff because real businesses are at stake.

[Orik]

Other than those three guys still working that I just mentioned above, [b]nobody in the financial world has any real clue about future asset prices. Nobody. Nada. Zero. No one.

While many people (especially ones with stuff to sell) are very optimistic about the quality of their predictions, many people have real clues about future asset prices and their volatility. Ed Thorp is probably the most obvious example.

[Anthony Bonner]

Ed Thorp is probably the most obvious example.

oh god you are such a cliche.

[Orik]

Hey Orik, how's Hegia housing, by the way? Did ya see anything with massive walls, a moat and a dreamy drawbridge nearby? I'm in the market and willing to spend big.

Go for it:

[Chambolle]

many people have real clues about future asset prices and their volatility. Ed Thorp is probably the most obvious example.

You like Thorp, fine.

Thorp, Chambo and one other. Good luck finding him or her.

Might as well play "Where in the World is ... Carmen Santiago"? Venezula, no?

[Orik]

Ed Thorp is probably the most obvious example.

oh god you are such a cliche.

Just for that I won't tell you the story of how he nearly smacked Sivan in the face.