tag:blogger.com,1999:blog-6616959642391988608.post6970140930398671785..comments2024-03-28T00:18:25.641-07:00Comments on Calafia Beach Pundit: The bond market is bracing for the return of inflationScott Grannishttp://www.blogger.com/profile/14028519647946868684noreply@blogger.comBlogger20125tag:blogger.com,1999:blog-6616959642391988608.post-47138464380119548022010-10-08T06:17:42.150-07:002010-10-08T06:17:42.150-07:00Daniel,
To answer your question, there are severa...Daniel,<br /><br />To answer your question, there are several reasons why banks offer such low interest rates for 30-year fixed mortgages and not for other types of loans not associated with housing.<br /><br />First, with a house, the bank has some collateral. If your fail to pay back the loan, the bank can sell the house and likely get its money back, especially if you have 20% or more equity CFP, EAhttps://www.blogger.com/profile/01745165113059985912noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-53009167053320974132010-10-07T22:12:58.818-07:002010-10-07T22:12:58.818-07:00Daniel: if you have a home you could refinance or ...Daniel: if you have a home you could refinance or take some equity out and replace it with a small loan.Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-68270230112590552822010-10-07T15:28:40.166-07:002010-10-07T15:28:40.166-07:00Is it possible to get a 150K loan at 4.5% for 30 y...Is it possible to get a 150K loan at 4.5% for 30 years without the obligation of buying a "home"? Why wont banks lend the money to people that qualify? why does one have "own" something to get a loan at 4.5%?!?. Rates are so low, I would love a 150k at 4.5% over 30 years. Maybe buy a small investment condo, and pay off debt with the rest.... sorry for the off topic Danielhttps://www.blogger.com/profile/17218368702832658780noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-86268808635375005382010-10-07T14:27:42.222-07:002010-10-07T14:27:42.222-07:00Family Man,
You'll notice that I also said th...Family Man,<br /><br />You'll notice that I also said that people should keep their mortgage to between two and three times income - 2.0-2.5 if your have other responsibilities such as kids, other dependents or relatively high other debts and 2.5-3.0 if you're fairly unencumbered.<br /><br />On top of that, obviously, you should have a stable income.<br /><br />If people followed those CFP, EAhttps://www.blogger.com/profile/01745165113059985912noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-16437419099099179762010-10-07T11:58:03.526-07:002010-10-07T11:58:03.526-07:00CFP
So, if your idea spreads around we have new re...CFP<br />So, if your idea spreads around we have new real estates bubble:)<br />Banks should sell it as Anti Inflation Shelter.Family Manhttps://www.blogger.com/profile/10304538166086313103noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-91701268712028543832010-10-07T09:10:56.175-07:002010-10-07T09:10:56.175-07:00CFP: excellent point, and I stand corrected. I'...CFP: excellent point, and I stand corrected. I've been touting the attractiveness of 30-yr fixed rate mortgages for quite some time, and neglected to mention them again in this post. They are a great way for the layman to place a bet on rising inflation. And I would add that if inflation really heats up, then housing prices are almost certain to rise significantly in coming years, making a Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-69111960212499590862010-10-07T08:36:33.336-07:002010-10-07T08:36:33.336-07:00Scott,
I might quibble with you on one point. You...Scott,<br /><br />I might quibble with you on one point. You state that people have to pay a very high price for inflation protection, using TIPs yield, the low dollar and gold as proof. While those are all certainly true, I'd argue that many individuals - at least homeowners - have a once-in-a-lifetime opportunity to buy massive inflation protection at a never-seen-before low price: Your CFP, EAhttps://www.blogger.com/profile/01745165113059985912noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-72616289952689894102010-10-07T07:12:20.518-07:002010-10-07T07:12:20.518-07:00Scott:
One of your best and most lucid posts. Fr...Scott:<br /><br />One of your best and most lucid posts. Frankly, with interest rates approaching the zero boundary, taking the inflation punt seems to be a very low cost option with a very attractive asymmetric return.Frozen in the Northhttps://www.blogger.com/profile/04901959687094626879noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-28289556202379682052010-10-06T19:02:00.476-07:002010-10-06T19:02:00.476-07:00Kenneth Rogoff writing about gold here:
“In my ...Kenneth Rogoff writing about gold <a href="http://www.project-syndicate.org/commentary/rogoff73/English" rel="nofollow">here</a>:<br /><br /><br /><br />“In my view, the most powerful argument to justify today’s high price of gold is the dramatic emergence of Asia, Latin America, and the Middle East into the global economy. As legions of new consumers gain purchasing power, demand inevitably randyhttps://www.blogger.com/profile/16368254229927808998noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-43515450355722285252010-10-06T17:34:17.967-07:002010-10-06T17:34:17.967-07:00Scott, I had the same question as Bill, and I appr...Scott, I had the same question as Bill, and I appreciate your answer. However, after reading "Fed Official Issues Call for Aggressive Action" by Jon Hilsenrath in the WSJ yesterday, I am convinced there is no chance the Fed will change course. Jude's old shop put it bluntly: "This inflationist, monetarism is terrible, dangerous witchcraft." <br />These fools have no idea piefarmerhttps://www.blogger.com/profile/04596576632760958227noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-35663258193647419722010-10-06T17:32:07.568-07:002010-10-06T17:32:07.568-07:00This comment has been removed by the author.piefarmerhttps://www.blogger.com/profile/04596576632760958227noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-16492743144233514982010-10-06T16:27:50.751-07:002010-10-06T16:27:50.751-07:00"Rates – the price of money – shouldn’t be co..."Rates – the price of money – shouldn’t be controlled by the state, up or down, any more than the state should control the price of oil, or bread, or toothpaste. <br /><br />One of the major reasons the USSR collapsed was an inability to make correct economic calculations, and much of that was due to their arbitrarily fixed interest rates. <br /><br />One reason why Japan has been fading Public Libraryhttps://www.blogger.com/profile/00017383928897945054noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-27573241964901896472010-10-06T14:46:35.053-07:002010-10-06T14:46:35.053-07:00Scott, you are absolutely right. There is nowhere ...Scott, you are absolutely right. There is nowhere to hide which is actually my concern.<br /><br />I do not actually believe we will see hyper-inflation. In my opinion, the system would collapse before the hyper-inflation scenario ever took off.<br /><br />My concern is when the next instrument collapses (and it will), the shear scale of the fiscal and monetary involvement will drag down many Public Libraryhttps://www.blogger.com/profile/00017383928897945054noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-90785135677885234822010-10-06T14:15:39.717-07:002010-10-06T14:15:39.717-07:00Public Library-
Japan went to QE in 200-2006, and ...Public Library-<br />Japan went to QE in 200-2006, and it helped their economy. They went back to a delfationary polocy afer that.<br />They never suffered fom hyper-inflation.<br /><br />The risks of QE are way overblown. IOdeed, the risk may be we don't do enough QE, or that it doesn't work.<br /><br />If QE doesn't work, and fiscal stimulus doesn't work, we may have a long slowBenjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-69795170890492061532010-10-06T14:11:14.270-07:002010-10-06T14:11:14.270-07:00Public: you make some very good points. As I said ...Public: you make some very good points. As I said in the post, the only question now is how high inflation rises. You're assuming it's going to rise by an awful lot. I'm not sure yet. Gold has not yet broken new high ground in real terms, and the dollar has not yet set a new all-time low in real terms. So maybe things won't be catastrophic. The Fed certainly doesn't want a Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-67379810636574992522010-10-06T14:01:52.040-07:002010-10-06T14:01:52.040-07:00Scott,
You seem to nail the recap of what is happ...Scott,<br /><br />You seem to nail the recap of what is happening perfectly, but I do not sense any angst in your writing about the consequences of such unprecedented money printing/intervention. <br /><br />Clearly the market is telling us there is something deadly wrong going on.<br /><br />It reminds me of tech stocks in '99, housing and oil 2003-2008. We now have skyrocketing easy money Public Libraryhttps://www.blogger.com/profile/00017383928897945054noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-55601378253776082882010-10-06T11:52:54.550-07:002010-10-06T11:52:54.550-07:00Ben Bernanke strikes me as extremely circumspect a...Ben Bernanke strikes me as extremely circumspect and knowledgable. His speeches and articles are very learned. <br /><br />If anything, he is too cautious. <br /><br />If even Bernanke goes to QE2, there is probably is a surfeit of reasons. Bernanke is not one to do anything without lots of solid ground to stand on. <br /><br />Remember--Milton Friedman called for tight money when we were Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-71789448572796533292010-10-06T11:48:38.387-07:002010-10-06T11:48:38.387-07:00Incredible...Bank of America's
10 year was tra...Incredible...Bank of America's<br />10 year was trading at 4.86% on September 30th and today it is trading at 4.58%broderohttps://www.blogger.com/profile/12296214283216386700noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-80265598911837996352010-10-06T11:10:33.002-07:002010-10-06T11:10:33.002-07:00I don't think so. If the Fed told the world th...I don't think so. If the Fed told the world that it had decided QE2 was not necessary given increasing signs of economic health, I would think the world would cheer. <br /><br />It's common to see people argue that higher yields would snuff out growth, but in reality, higher yields are the natural result of stronger growth. In this environment especially, higher yields would be a direct Scott Grannishttps://www.blogger.com/profile/14028519647946868684noreply@blogger.comtag:blogger.com,1999:blog-6616959642391988608.post-12405614357984034072010-10-06T11:04:19.818-07:002010-10-06T11:04:19.818-07:00So, if the Fed wakes up November 3 and reads your ...So, if the Fed wakes up November 3 and reads your blogs on this subject and decides that QE2 is not necessary, does the market crash?Billhttps://www.blogger.com/profile/06910619601367464068noreply@blogger.com