There’s always something to howl about.
Add This 1934 Cartoon To The “There’s Nothing New Under The Sun” List:
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If you think the housing market is bad now – just wait until these economic policies drive interest rates up… and don’t kid yourself – they’re heading up NOW.
George Santayana knew what he was talking about.
It’s a good time to buy real estate – while you can afford it.
Yeah, I know it’s only Wednesday, but when I looked at my schedule for the rest of the week, I realized that I wasn’t going to be in one place long enough or have the time to sit down and write this update, so I decided that I better do it today. In addition to that, we’ve had plenty of news in the last couple of days. So, here are some thoughts about the markets, the housing market, perception and reality.
The markets – I think that it’s safe to say that none of us have seen this type of stock market declines in our lives. I wanted to bring up a couple of points about the markets:
1. It’s very important, when looking at long term investing, to keep a rational view of things. If you aren’t going to need the money for 25 years, don’t make decisions based on fear and panic that is currently swirling around in the markets. Look at the long term and make decisions for the long term.
2. Stop listening to the main stream media. There are many things where they don’t know what they are talking about and they love to paint a darker and more scary picture because it helps ratings. I was listening to a local AM radio talk show yesterday while driving between appointments and was struck by a couple of things:
a. Morning talk show hosts shouldn’t be giving out advice about FDIC insurance. The facts as they were stating them were just plain wrong.
b. Someone who is 44 years old (they said so) called in and said that on Monday (one of the lowest points in the market in the last 5 years) he sold everything in his 401K plan and moved it to cash. If I had the time, I would have called in and told them a thing or two. I was shocked at how much fear is taking over for rational long term planning.
3. I’m 43 (yeah I know, I’m over the hill) and I want to answer the question a lot of people are Read more
I just finished writing a comment regarding the mortgage meltdown which led to the credit crisis which has caused a real estate recession (don’t you just love our fondness for allegorical alliteration!) We were playing the blame game over on a post I wrote regarding The Gang of Three and how Wachovia’s current misfortunes may signal the bottom.
While many lenders and originators and agents and appraisers and so on can shoulder some of the blame, we should look to two primary sources for our stone throwing activities: the first is borrowers. Borrowers, however, get a pass because it is politically, if not financially, incorrect to blame the customer. That leaves us with number two: the rating agencies. Yes, the rating agencies: Moodys, Fitch and Standard & Poor’s. Have you heard much in the press or by the politicians with regard to the rating agencies? Neither have I, yet I argue that they are the proximate cause and primary culprit in this mess. Lenders make money by lending money. Investors make money by investing. Borrowers can borrow because lenders can lend because investors will purchase on the secondary market. The secondary market prices and purchases based on the rating given by the neutral, third party rating agency.
But, it turns out that the rating agencies were being shopped and whoever gave the best rating got the job. So instead of giving investors accurate warnings, which in turn would have made the loans much more expensive, which in turn would have cut way down on the volume of high-risk loans – we instead have rating agencies trying to make money. There’s that pesky “invisible hand” at work again.
Thankfully we can all relax. As you can see by reading this article in Business Weekly, New York Attorney General Andrew Cuomo has brought these criminals to justice and hit them with the severest of all punishments: he made them say “sorry.” They have also agreed to set up some new guidelines (may I suggest: “Keep your hand out of the cookie jar” be first and foremost?) Wow, nothing like a good strong talking to when you have caused or at least been heavily involved in Read more
