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Yeah Bruce !!!!
BruceB wrote:
> > Greenspan is VERY much a responsible party to the position this country is
> > in. In the early 1990s, the Fed, in an effort to reliquify a
> > balance-sheet-troubled banking system (due to shoddy lending practices),
> cut
> > interest rates drastically, engineering the steepest yield curve in
> decades.
> > Banks were able to borrow short-term and pocket up to 5 percent in profit
> > from loaning to the bond market at the higher long-term rate.
>
> Yes, and the strategy worked perfectly.
>
> > The Fed also inflated the monetary supply.
>
> The money supply was increased in direct proportion to the growth in real
> GDP. Had the Fed "inflated" the money supply, the rate of inflation would
> have increased. Since it decreased, your statement is simply wrong by
> definition.
>
> > Here we are today with: Bankruptcies at record levels,
>
> Bankruptcy laws are much more liberal than they used to be, plus the social
> stigma attached to bankruptcy filiers has clearly diminished. The average
> person filing for bankruptcy today is in much better financial shape than in
> previous decades.
>
> > savings rate at record lows,
>
> Totally untrue. The way the US government measures savings is so
> pathetically flawed that the figures they release are meaningless. The only
> reason no one challenges them on it is simply because it is "politically
> correct" to tell people to save more.
>
> > corporate/personal/government debt at astonomical levels,
>
> Government debt as a percentage of GDP is the lowest it has been in decades,
> and is falling. Both corporate debt and personal debt are high, but as a
> percentage of assets held are historically average. In addition, lower
> interest rates mean the payments on this debt are lower.
>
> > real wages below 1970s levels,
>
> Totally untrue.
>
> > trade deficit at astonomical levels.
>
> Totally untrue. US trade statistics are also heavily flawed, but even more
> important is the fact that all this number shows is how horrible the
> investment environment overseas is relative to the US. It is a sign of
> strength, not weakness. Some of the biggest trade surpluses the US ever had
> came in times of a terrible domestic economy.
>
> > Consumers (which make up 2/3rds of the economy) are BROKE; studies show
> that > 25% of Americans have less than $1,000 to their names, another 25%
> have less than
> > $5,000. HALF of the US population are a few paychecks from the street.
>
> Another bogus number. Very few people are willing to honestly state the
> true value of their assets (and income), especially people at the lower end
> of the economic scale. Many of them receive financial assistance from
> various federal and local programs which are means-tested. If they revealed
> their true fiscal situation, they would lose their benefits.
>
> > Real estate prices are at astronomical levels (especially on the East &
> West
> > Coasts). In Silicon Valley, prices have vaulted over 70% over the last two
> years.
>
> In an economy as large as ours, the real estate prices in one small
> community are completely meaningless to the overall picture. Real estate
> prices in several coal mining regions in West Virginia are down 30% over the
> last few years. Would you make any financial decisions based on this info?
>
> >
> > Banks leveraged to the hilt, for example: Freddie Mac and Fannie Mae now
> > have issued bonds totalling over $7 TRILLION, backed by mortgage debt.
> > Remember the S&L crisis which blew up 1.5 Trillion in questionable real
> > estate loans. When (NOT IF) this economy goes south, tens of millions
> will
> > lose their jobs and default on these mortgages, making the taxpayer likely
> > to be given the big screw in the way of bailing out Fannie and Freddie.
> >
>
> Comparing Fannie Mae and Freddie Mac to the S&L industry is ludicrous. They
> are two different animals competing with two entirely different sets of
> competitors.
>
> > Real estate prices are so out of touch with reality in California, loans
> are
> > no longer based on appraisals, just the 'ability' of the applicant to pay
> > his/her monthly payment. The debt/income levels have been relaxed to 50%,
> > up from 26%.
>
> The value of anything is what someone else is willing to pay for it. What
> someone is willing to pay for anything that they want is very dependent on
> their income. If real estate loans were only made on pure appraisals
> (comparable sales), then the value of residential real estate would NEVER go
> up in real terms. Does that make any sense?
>
> Having said that, acceptable debt to income ratios in the lending industry
> have been going up, and that aspect is disturbing.
>
> >
> > Bank lending standards have been deteriorating for years, this year alone,
> > we had the largest ever series of bank failures take a large chunk out of
> > the FDIC fund.
>
> Somehow I missed this, and my gut instinct tells it's not true. Please let
> me know where you read or heard this so it can be checked to see if it's
> accurate.
>
> > I give my clients the real deal, (let the empty suits on CNBC candy-coat
> and
> > lie to the lemmings) give them access to reading materials so they can
> > prepare themselves when the veneer of this so called 'new' economy wears
> > off, as it already is, as the dot-coms fail, and hapless (hopeless,
> > clueless) 'investors' lose their retirement money and life savings. If
> you
> > manage money for clients, do them, and yourself a favor, and do some
> reading
> > on the economic history and familiarize yourself with the hard numbers,
> > before it is too late.
>
> James, I think you could use a little brushing up on your economic history
> and the :hard numbers" yourself...
>
> Bruce
>
>
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