Bernanke comments and the consumer

[Cache Landing]

Quote from kashirin:

OK who should I blame that 1 Euro costs almost twice more than 6 years ago?

Who should I blame for a budget deficit is a half of trillion?

And I don't want to mention Iraq as a major financial blackhole

Adminstration and Bush responsible for what happens in this country

If you blame that on the Bush Administration you must also blame them for things like;

1)Retirement accounts making record gains

2)Low unemployment

Good and bad things happen under any administration. Both parties overspend. Democrats prefer tax financed spending while repubs prefer debt financed spending. Which is better? That is debatable and depends on what the end goal is.

Both parties vote for war if it will be the popular thing to do, and then both oppose war when it becomes unpopular. You are right, the war costs a ton of money and lives. But then you have to consider that wars provide for huge economic expansion. Is econ expansion worth lives? Personally I don't think so, but that is a moral decision. Fact still remains that the fastest way to reduce unemployment and overcome a recession is to go to war.

I'm not a Bush supporter, but I'm also not a blind hater. You can't complain about the bad without acknowledging the good. Katrina resulted in mass loss of money and property, but it provided jobs for a ton of other people who were getting paid a premium for their skills. There is always more than one side to everything. Don't you get tired of hating the government everyday? That would wear me out.

 

[daddyeaux]

the big picture is the world is dumping US Dollars at the same time that US assets are beginning to deflate and there is a looming train crash in the debt markets

no one in DC wants to even utter the letters: CDO

 

[myminitrading]

Quote from Cache Landing:

Not trying to agrue with you, but I think you give Bush too much credit. They don't think on such a large scale. They bring attention to the numbers that are good and downplay the numbers that are bad just like every other administration. The markets are certainly manipulated to an extent, but you guys (Bush haters) always make it sound like manipulation is the easiest thing in the world to do.

Banks are businesses that are out to make a profit. They will leverage and lend as much as possible within the guidelines of their business strategy. Consumers are making this market what it is. The president doesn't really have that much influence. And contrary to popular belief, the Fed doesn't have that much short-term influence either. Politics don't really affect short-term stock prices. Speculation regarding the effects of politics greatly affects short-term movement.

I don't agree with Bush most of the time, but he isn't to blame for the mortgage crisis any more than he is to blame for the stock market making new highs and unemployment dropping so low.

Politicians do influence markets, its foolish to think other wise. I voted for Bush BTW.

Fed doesn't have that much short term influence either....... Just one word from Bernanke such as rate cut, would send the markets reeling. IMO thats a short term influence.

 

[Trader5287]

IMO, when the history of the unraveling of the phony Bush Ownership Society is written, at the root of it will be his administration's hostility to the GSEs and the traditional Republican privatization/no regulation mantra.

It will turn out that the Fannie, Freddie, & traditional bank real estate finance structure, in a regulated environment, was far safer than throwing the whole lending infrastructure onto IBs, HFs, mortgage brokers, internet non-banks and the plethora of jive ass wild west money from nothing risk "financial innovation" instruments sold to the public and investors.

They see this too. My bet is the political pressure on Bernanke to lower rates and stop this financing meltdown is enormous. The other angle that would unravel Republicans, as it has in the past - a broad market crash - looks to be covered by Paulson and the dealer banks with their unlimited credit.

 

[Enfinity]

How have we melted down yet? Or maybe you just need to define meltdown because maybe we do not share the same understanding of that word.

I have not heard a single individual complain about the interest rate on his mortgage as a result of the generous mortgage lending era offered borrowers. I have not heard an average person complain about the affects of hedge funds holding sub-prime debt.

Please clarify, would you?

Quote from Trader5287:

IMO, when the history of the unraveling of the phony Bush Ownership Society is written, at the root of it will be his administration's hostility to the GSEs and the traditional Republican privatization/no regulation mantra.

It will turn out that the Fannie, Freddie, & traditional bank real estate finance structure, in a regulated environment, was far safer than throwing the whole lending infrastructure onto IBs, HFs, mortgage brokers, internet non-banks and the plethora of jive ass wild west money from nothing risk "financial innovation" instruments sold to the public and investors.

They see this too. My bet is the political pressure on Bernanke to lower rates and stop this financing meltdown is enormous. The other angle that would unravel Republicans, as it has in the past - a broad market crash - looks to be covered by Paulson and the dealer banks with their unlimited credit.

 

[Matt24SPFL]

Quote from Enfinity:

How have we melted down yet? Or maybe you just need to define meltdown because maybe we do not share the same understanding of that word.

I have not heard a single individual complain about the interest rate on his mortgage as a result of the generous mortgage lending era offered borrowers. I have not heard an average person complain about the affects of hedge funds holding sub-prime debt.

Please clarify, would you?

They'll be bitching when their LIBOR ARM's reset and their mtg payment doubles! When their pensions, social security, or any other retirement income just isn't there (or the dollar is practically worthless) they'll care. Ignorance is bliss for the average person. The average person doesn't care about the process of loss of money or how inflation works, they just bitch about it when they get slapped in the face with it. Well, here comes a Mike Tyson uppercut, protect yourself before you wreck yourself.

 

[Trader5287]

Quote from Enfinity:

How have we melted down yet? Or maybe you just need to define meltdown because maybe we do not share the same understanding of that word.

I have not heard a single individual complain about the interest rate on his mortgage as a result of the generous mortgage lending era offered borrowers. I have not heard an average person complain about the affects of hedge funds holding sub-prime debt.

Please clarify, would you?

A meltdown is people who lose money and want it back, or fear they may. When they are investors in the United States, they often ask for their money back and hire lawyers.

May want to bring in something other than whether associates around you are complaining about their mortgage rates to judge strength or weakness of current real estate finance conditions.



Anyway, those are my calls. This will go for years so we'll see how it plays out.

 

[Enfinity]

That is a pretty gloomy outlook you have. What positions have you opened to benefit when all of that happens?

Quote from Matt24SPFL:

They'll be bitching when their LIBOR ARM's reset and their mtg payment doubles! When their pensions, social security, or any other retirement income just isn't there (or the dollar is practically worthless) they'll care. Ignorance is bliss for the average person. The average person doesn't care about the process of loss of money or how inflation works, they just bitch about it when they get slapped in the face with it. Well, here comes a Mike Tyson uppercut, protect yourself before you wreck yourself.

 

[Algorithm]

As I have stated before....

WHO CARES IF PEOPLE ARE LOSING THEIR HOUSES WITH THOSE MINIMAL DOWNPAYMENTS?

The environment got overheated and many people that should never have been buying houses in the first place did so. They got into those houses with minimal downpayments due to the fact that lenders chose to raise their risk exposure in order to lend more money. The people on the hook are not those that got into the "cheap money" mortgages, it's the lenders.

The unemployment rate is below 5%. Those that are getting foreclosed upon were overextended and didn't buy within their means due to the fact that they were able to overextend cheaply. They will simply lose their homes and go back to renting. Hey, it was their decision to buy a 250K home versus a 175K one. They aren't really out anything due to the fact they would never have been in a house in the first place unless the exotic moorages were around.

Many on these boards simply don't get it. The risk isn't on the homebuyer, it's on the lenders. Those lenders in turn distributed that risk amongst pension funds, large individual investors and hedge funds.

Look I'm not going to shed a tear for a family that got into a house that they never could have afforded in the first place and lost it due to some stupid exotic loan. That is a much different scenario than a family losing their house because they can't make the note because the bread winners lost their jobs. Those are two separate situations. The job market is stable, no recession and those that are losing their houses ARE NOT BEING TOSSED TO THE CURB. They are going back to renting.

Many here at ET simply don't understand risk pricing and distribution (hence most here are not running hedge funds, THANK GOD).

Now I will wait for all those that are going to tell me that the national unemployment numbers are bogus.

BTW, Bush has little to nothing to due with the housing market and monetary policy. Greenspan cut rates deeply due to the compounded effects of the stock market bubble bursting and 911. The housing bubble was simply an overheating of monetary policy that was engineered to decrease the effects of recession. People don't tend to go out and spend money when buildings are literally falling down around them. Oh, and the BRIC countries would never have expanded to the extent that they have thus far with a strong US dollar.

Federal pork spending and the Iraq war, that's a whole 'nother kettle of fish. The current housing market situation was created by the lenders and extenders of credit. It too shall pass just as the bubble bursting in 2000-2001. As long as we don't bail any lenders out through government regulations and policy, this will make those that deserve to survive stronger and those that improperly managed risk perish.

Place your bets and...

Good Luck!

 

[Cache Landing]

Quote from myminitrading:

Politicians do influence markets, its foolish to think other wise. I voted for Bush BTW.

Fed doesn't have that much short term influence either....... Just one word from Bernanke such as rate cut, would send the markets reeling. IMO thats a short term influence.

Politicians influence the market long term but not short. People give politicians way too much credit. Their policies take time to have an effect.

Bernanke statements only affect the market because of speculation. These statements do not change underlying fundamentals and are therefore meaningless. Again it takes years to see the effects of monetary policy change.