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Guest Post: Why We’re Light Years Away From Solving Our Problems

Tyler Durden's picture





 

Submitted by Simon Black from Sovereign Man

Why We’re Light Years Away From Solving Our Problems

It’s been said that the definition of insanity is to do the same thing over and over again but to expect a different result. On that basis, the western world’s economic policymakers are clearly certifiable.

They cut rates. It does nothing. So they cut rates again. And again.

They in debt future generations to ‘stimulate’ the economy. It does nothing. So they stimulate again. And again.

Nothing that central banksters or politicians have done since the 2008 global financial crisis has fundamentally changed economic conditions. Yet they keep applying the same remedies, drawn from the same old Keynesian playbook.

The false premise which guides their decisions is that we can all grow wealthy by borrowing and consuming, instead of by producing and saving. People have been sold this lie for more than a generation. It is embedded in social DNA.

In the current western economic system, you are rewarded for going into debt with all sorts of tax deductions. Save money, on the other hand, and you are punished through taxation and inflation.

The incentives are all wrong; it’s no wonder that people have over-borrowed and overspent given that the system is so blatantly slanted to promote such behavior.

Housing is one of the most interesting examples of bad incentives: tax policy in many countries encourages people to take out debilitating mortgages, and governments end up with a moral imperative to ensure home prices continue rising.

This strikes me as truly bizarre. You’d think people would want housing costs to stay low and affordable, not rise.

Nobody cheers when the price of healthcare goes up, even though they could just as easily profit by investing in any number of insurance companies.

I don’t click my heels when the price of food goes up in the grocery store, even though we’ve been paid handsome sums from the bountiful harvests of our farm in central Chile.

And let’s not forget how much turmoil ensues when gasoline prices get too high. Why should housing be any different?

For the vast majority of people, a house isn’t wealth. It’s an expense. And wishing for this expense to increase is both foolish and destructive.

Yet most politicians and central banksters in the west are frantically fanning the flames of broken housing markets, desperately trying to re-inflate prices.

Here in Portugal, for example, housing prices have fallen dramatically. Housing has become affordable. Cheap, even. This is a good thing.

Yet the bureaucrats keep trying to figure out ways to ‘prop up the housing market’ and distort prices, often through policy that is very unfriendly to homeowners.

In the United States, the Federal Reserve keeps ratcheting down long-term interest rates and scooping up mortgage bonds in an attempt to re-inflate home prices.

With so many Nobel Prize-winning economists backing these kinds of policies, it’s clear that the people in charge haven’t even begun to acknowledge the flaws in their intellectual framework.

And if you can’t even admit that you have a problem, then you are light years away from solving it.

 


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Wed, 07/11/2012 - 12:54 | Link to Comment Mrmojorisin515
Mrmojorisin515's picture

Its not insanity if you realize by allowing deflation you give up all of your power

Wed, 07/11/2012 - 13:03 | Link to Comment dlmaniac
dlmaniac's picture

It's human nature that people don't change until they have exhausted all wrongs. They will do the right thing when it's the only thing left to do. The entire world is so effing addicted to decades of debt driven borrow-to-overconsume instant gratification model it'd take proportional amount of time for a balanced and more rational model to be adopted

Wed, 07/11/2012 - 13:07 | Link to Comment ACP
ACP's picture

And by allowing inflation you give up all of your net worth.

But the solution to the financial problem is not light years away, it's right around the corner thru total collapse.

Wed, 07/11/2012 - 13:12 | Link to Comment The Big Ching-aso
The Big Ching-aso's picture

 

 

And simontaneously the inhabits of Alpha Centauri think resolution of R problems R lite yrs away 2.

Wed, 07/11/2012 - 13:42 | Link to Comment HoofHearted
HoofHearted's picture

The premise is correct, but SoveriegnMan (sounds like a bad attempt at a superhero..) doesn't seem to take it one step further. I have. I have encouraged all my friends, relatives, associates to run up the zero interest credit cards by buying tangible assets, whether a generator or freezer, food staples that last (to be used from now, but at a lower price because of food inflation OR to be kept for a SHTF situation), arable farmland, or PMs. So many people have taken that Dave Ramsey course that they think the most important thing is to get out of debt. I can't convince them that the price of things now will just get higher...unless they are buying useless shit like Apple iJunk, Krugman's book, residential real estate that won't produce good rents, new TVs, etc.

And, yes, I'm eating my own cooking. I went way long on peanut butter last year when there were rumors of a peanut crop failue. Peanut butter up 20% since then at the local grocery stores. The kids keep on eating and loving the stuff...bought another side of beef, more guns and ammo, and lots of shiny things that got lost in a canoe trip, unfortunately.

Wed, 07/11/2012 - 13:16 | Link to Comment Desert Irish
Desert Irish's picture

There will never be total collapse. The Western world in the last 100 years fought two major wars, countless minor wars, suffered a depression and a communist revelution and here we are still stuck with the same ponzi model - just more players. Cockroaches would be easier to wipe out.

Wed, 07/11/2012 - 15:20 | Link to Comment Anusocracy
Anusocracy's picture

Government is a high time preference organism that strives to create a high time preference world to exist in. It slowly undermines the host's viability until there are two choices left: retrenchment, or continuation to the biggest high time preference activity-war.

Wed, 07/11/2012 - 18:57 | Link to Comment Seer
Seer's picture

"There will never be total collapse."

WTF?  ALL EMPIRES COLLAPSE!  And given that the US is the leader in the World Economy its collapse will result in the collapse of all the others (if they don't fall apart first, which they're really trying hard to do).

Read Jarred Diamond's "Collapse" to understand how this happens. (esp how the loss of a key trade partner can wipe out a civilization)

Nothing has changed in the physical world.  And humans, who would like to think they are "evolved," have not changed either.

But, be my guest and continue with following the status quo.  Those who are in the worst positions will lay down the foundation for the future (in the form of compost).  [an early] Thank You for your sacrifice!

Wed, 07/11/2012 - 16:05 | Link to Comment DCFusor
DCFusor's picture

If your net worth is negative, then you want to give it up!

Further, he's missing something really important.  Who says they're trying to fix the economy, other than them?  If you do the old boring "follow the money" it's not us they are attempting to help, it's the banks...one FASB rule change away from having to mark to market and reveal negative actual book value.  Remember, the fed IS private banks...they're saving themselves, not us.

Those talking head clowns speak of banks trading below book value.  Bullshit.  Their actual value is currently a negative number!

Wed, 07/11/2012 - 13:40 | Link to Comment Stuck on Zero
Stuck on Zero's picture

The economic model of the Fed is simply to loot the Treasury and call it "stimulus."  It's no insanity.  It's kleptocracy.

 

Wed, 07/11/2012 - 14:53 | Link to Comment Helix6
Helix6's picture

My sentiments exactly.  The policies we're seeing only look irrational because we do not understand the goal of those policies.

The real knee-slapper to me is the oft-mentioned "dual mandates of the Federal Reserve" -- price stability and full employment.  Jeezus, what a hoot!  Come on, folks, the Federal Reserve is a BANK, and it's one and only mandate is to look after BANKS.  Price stability might be a distant concern, as interest rates are influenced by inflation, but full employment?  Ahahahahahaha!  Maybe at election time!

Otherwise, full employment for bankers maybe.  As for the rest of us, we get lip-service only.

Wed, 07/11/2012 - 13:43 | Link to Comment DosZap
DosZap's picture

For the vast majority of people, a house isn’t wealth. It’s an expense. And wishing for this expense to increase is both foolish and destructive.

I agree, but for the last 75yrs, it has been a store of wealth, because the values always increased.

Wed, 07/11/2012 - 18:59 | Link to Comment Seer
Seer's picture

The "values" have "increased" right along with inflation...  Measuring things in fiat is always a risky proposition.

Wed, 07/11/2012 - 12:59 | Link to Comment falak pema
falak pema's picture

In the old days the surgeons used to led blood every time a patient had a problem. Blood letting then, ZIRP and print today.

What the Oligarchy wants is for the sheeple to pay for the banks. Simple as that. All this is about saving the banks and those who own their assets, all placed in safe havens. 

Wed, 07/11/2012 - 15:03 | Link to Comment Steaming_Wookie_Doo
Steaming_Wookie_Doo's picture

Correct. Of course Mr SovereignMan hasn't touched all of the derivatives, which far exceed all of the total housing costs in the US. I don't think he's really looking at the root cause. Bernanke's loaned out $15T already and we still have a f***ed, bankrupt banking system. And the blame is the % of people who overborrowed on one house? I don't think so.

Wed, 07/11/2012 - 13:00 | Link to Comment Vincent Vega
Vincent Vega's picture

Hi, My name is The Western Economic System and I have a debt and spending addiction. Can I have a hug?

Wed, 07/11/2012 - 13:00 | Link to Comment BeetleBailey
BeetleBailey's picture

"Yet most politicians and central banksters in the west are frantically fanning the flames of broken housing markets, desperately trying to re-inflate prices.

Here in Portugal, for example, housing prices have fallen dramatically. Housing has become affordable. Cheap, even. This is a good thing.

Yet the bureaucrats keep trying to figure out ways to ‘prop up the housing market’ and distort prices, often through policy that is very unfriendly to homeowners.

In the United States, the Federal Reserve keeps ratcheting down long-term interest rates and scooping up mortgage bonds in an attempt to re-inflate home prices.

100% Correct. The only reason is "overhead supply"; dupes that bought high, and are trying to re-coup their "investment", or dorks that flip houses like flap-jacks.

Houses are met to be LIVED in. The silly assed notion of owning real estate for a short period of time, then selling it to turn a handsome profit is asinine.

Lastly, FUCK The Fed and their asinine schemes. Every one of them should be shot in the face.

Wed, 07/11/2012 - 13:12 | Link to Comment sickofthepunx
sickofthepunx's picture

same problem exists in all asset classes.

 

investors used to buy assets because they believed in the long-term viabilty of the instrument they were buying.  now you have a bunch of dillholes who think they can out-trade a friggin algorithm that never gets tired, distracted, hungry or thirsty and makes more money in nanoseconds than most of us will see in our lives.

Wed, 07/11/2012 - 13:27 | Link to Comment The Big Ching-aso
The Big Ching-aso's picture

 

 

And then you have someone like this banker guy who drifts off to sea taking the 'problem' with him until ahem, he's found. "Price has said he owns real estate in Venezuela and frequently went there and to Guatemala..."   Maybe he took Simon's advice about everyone needing a safe place to bug out to until things get better?

http://news.yahoo.com/missing-bank-director-sends-confession-disappears-090107668.html

 

 

Wed, 07/11/2012 - 13:00 | Link to Comment same old story
same old story's picture

God this guy is such a pompous ass.

 

The false premise which guides their decisions is that we can all grow wealthy by borrowing and consuming, instead of by producing and saving.

 

The false premise is assuming those in charge do not understand what they are doing is wrong. LOL they know what they are doing it is quite simple: mass transfer of wealth by all means possible from the majority to the few and leaving the majority to hold the bag.  

Wed, 07/11/2012 - 13:14 | Link to Comment Colonel
Colonel's picture

"The false premise is assuming those in charge do not understand what they are doing is wrong. LOL they know what they are doing it is quite simple: mass transfer of wealth by all means possible from the majority to the few and leaving the majority to hold the bag."

 Bingo! They know what they are doing and its not about helping the average Joe. Right now the banksters and their "economic policy maker" enablers ie... politicians are playing a mass game of psyops on the public. There are WMD's in them thar hills I tell ya!

Wed, 07/11/2012 - 13:48 | Link to Comment Diet Coke and F...
Diet Coke and Floozies's picture

And all of this is done now because of peak resources per person IMHO

To the down arrow, pleasee refer to this...

http://www.albartlett.org/articles/graphs_images/art200jan_hubbert_figur...

and

http://www.albartlett.org/articles/art2000jan.html

Wed, 07/11/2012 - 13:58 | Link to Comment Coke and Hookers
Coke and Hookers's picture

Okey, so you think our benevolant leaders are transferring wealth and bankrupting the middle class out of concern for us because they believe the world has hit peak oil? We must (almost) all become poor because the world is running out of resources? So the Government and the financial elite are the good guys after all with our best interests in mind?

Wed, 07/11/2012 - 19:08 | Link to Comment Seer
Seer's picture

Who the fuck knows what they really"think."  What THEY think is immaterial.  It is, shifting ACTION from "us" to "them."  Fuck that!  Take fucking charge of YOUR life, hedge accordingly!

Whether "they" understand the realities of resource shortages or not (but, really, ALL AWARS are fought over resources; some more "pleasant" story lines, such as "fighting terrorism" or "spreading 'democracy'" might be given, but it's ALWAYS about resources [only difference would be if you're defending your own turf, in which case it's likely the invaders who are trying to do a resource grab]) does NOT change the facts on the ground (that this is a finite planet and we've been VERY efficient at extracting resources).

Here's a test for you...  If YOU KNEW the real future, you KNEW the facts and they ALL clearly showed massive resource shortages, how would YOU communicate it?  You'd be treated (just like those here that try to get this point across) as a crackpot; those who control everything are NOT wanting you to scare the sheep and cause a panic.

Perhaps some "elite" types actually know, but there's no way they're going to hang their dicks out to save idiots (bad programming by the marketing machine).

Thu, 07/12/2012 - 13:02 | Link to Comment Diet Coke and F...
Diet Coke and Floozies's picture

If you know an endgame dieoff is near (oil = food), wouldn't it make sense to transfer as many physical assets to yourself and ignore the laws if your TPTB?

Wed, 07/11/2012 - 13:23 | Link to Comment Coke and Hookers
Coke and Hookers's picture

Absolutely correct. This policy (and keynesianism in general) is just a tool to move all wealth over to the banks/elite and destroy the middle class. This crisis is both the result of this policy and the point of this policy to begin with. It's wildly successful.

Wed, 07/11/2012 - 13:26 | Link to Comment Colonel
Wed, 07/11/2012 - 14:57 | Link to Comment SWRichmond
SWRichmond's picture

The false premise is assuming those in charge do not understand what they are doing is wrong. LOL they know what they are doing it is quite simple: mass transfer of wealth by all means possible from the majority to the few and leaving the majority to hold the bag.

Yes you are of course correct but remember there are two battles to be fought; the real one, and the one for public opinion.  The public are not ready to digest the fact you state, but they ARE more ready to understand the simpler point made by Simon.

Have you ever read Mein Kampfe?  The chapter on proaganda is the best explanation of propaganda and reaching the masses ever.  Hitler took a very dim view of the intellectual power of the masses, and his proaganda programs suceeded.

Wed, 07/11/2012 - 13:01 | Link to Comment lamont cranston
lamont cranston's picture

To alter Mr Carville's rant from 1992, "It's the BANKS, stupid".

If Bank A has a house loan valued in 2007 at $500K and can only liquidate it at $250K, with $450K on the books in 2012, that is not only a capital loss of $200K but also shrinks its capital base by $450K. Shrinking the base (reserves) reduces leverage and the gross amount of derivative speculation. And bonuses. 

"That Catch-22, that's some catch." 

Wed, 07/11/2012 - 13:03 | Link to Comment BLOTTO
BLOTTO's picture

Might as well measure the DEBT in AU-Astronomical Units.

 

The $ numbers are so LARGE - its like distances between celestial bodies...

 

Yea, so, the debt is 4.5 AU...the distance from Earth to the Milky Way...

Wed, 07/11/2012 - 14:15 | Link to Comment Flakmeister
Flakmeister's picture

You are on to something, but me thinks you have no idea what you are talking about...

4.5 AU is closer to the sun-jupiter distance (5.2 AU)

Wed, 07/11/2012 - 16:09 | Link to Comment DCFusor
DCFusor's picture

And oh shit, we are IN the milky way already.

Wed, 07/11/2012 - 13:05 | Link to Comment yrad
yrad's picture

The looks you get when you buy $50 worth of Raman noodles and $50 worth of Bottled Water (I just did) from Target is priceless. A lady in front of me at checkout with a baby in arms looked worried for me, I looked worried for her.

Wed, 07/11/2012 - 13:21 | Link to Comment Mikehy
Mikehy's picture

carbs are bad.

Wed, 07/11/2012 - 13:42 | Link to Comment slackrabbit
slackrabbit's picture

Perhaps, but starvation is worse...

Wed, 07/11/2012 - 13:10 | Link to Comment FL_Conservative
FL_Conservative's picture

Its called Keynesian Monetary Masterbation.

Wed, 07/11/2012 - 13:14 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

"And if you can’t even admit that you have a problem, then you are light years away from solving it."

While the above sentence perfectly illustrates the behavior of a hard core addict, one who is deep in denial, there is much more going on here than first meets the eye. Much more.

Something malicious is operating behind the scenes. It is not "just" self interest run riot. Meaning that while the addicts are most certainly addicted, and there is pressure for the drug dealer to keep dealing, there are more sinister hands behind the dealers of the fiat debt drug than "just" the feeding and caring of our addiction.

This is about slavery, about control of our minds and bodies.

Wed, 07/11/2012 - 13:16 | Link to Comment same old story
same old story's picture

Not sure it is any more sinister now than before.  It is all about power and control, although the methods they might use this time will be on a scale never seen before.  

Wed, 07/11/2012 - 13:28 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

The control mechanism is ratcheting up as more and more minds open to the possibility that everything is not as it seems. For many the idea that there are sinister hands working behind the scene flies in the face of their default belief that it all is just human nature at work.

Wed, 07/11/2012 - 19:16 | Link to Comment Seer
Seer's picture

"the possibility that everything is not as it seems."

Need to back up farther, go farther back to the REAL troublesome premise: perpetual growth.

If everything is predicated on such a view, that this is the un-challenged premise as I believe it is, then people are trying to solve the WRONG problem, which can only lead to insanity.

As I noted above, it's quite possible that _some_ of the upper-echelon KNOW that the world's resource base can't provide for this "perpetual growth" premise.  When TPTB maintain power only through this false premise then how could anyone possibly combat such forces (propaganda)? These folks are going to fight with everything they have.

Wed, 07/11/2012 - 13:40 | Link to Comment DosZap
DosZap's picture

Not sure it is any more sinister now than before.  It is all about power and control, although the methods they might use this time will be on a scale never seen before.  

This is the perfect set up for the appearance of the Antichrist............I believe we are living in the time of the last 7yrs,or the couple of years prior to.

The entire world ,running to and fro, saying woe is me, and no one has any answers. Until HE appears,and has the answers and they all worship,and adore him for a time.For their supposed return to peace,and  miraculous prosperity for the entire world.

 

Wed, 07/11/2012 - 19:42 | Link to Comment Seer
Seer's picture

Ha ha... funny!

This is human fucking nature!  It's all about overshoot.

Seems no one is capable of taking responsibility: expecting there to be some "god" only means that you are powerless- so, why not party and let "god" work it out, eh?

The Apocalypse is about a "great unveiling," no more.  When people are finally faced with reality, with the REAL facts, THEN, and only THEN, will there be this big introspective and willingness to shed the past meme.

I'm sure that the story-tellers will cook up a new "improved" "god."  Nothing new.  Time to serve up yet another "immaculate conception" story...

BOTTOM LINE: the ONLY answer/truth is how humans can live sustainably. (the story of The Garden of Eden was about meddling in "God's" works, which, if one were to translate this to the REAL world one would read it as living with that which is available on a sustainable basis, from Nature)

If "God" wanted us to live more lavishly (and taking into consideration the mandate of "go forth and multiply" then perhaps we'd have been given more than one planet? [but then there'd be the issue of "on Earth as it is in Heaven" - would "Earth" then be "Earths?"]).

Wed, 07/11/2012 - 15:03 | Link to Comment Helix6
Helix6's picture

This is about slavery, about control of our minds and bodies.

Maybe for some of the government types.  For the financial types, though, I can't agree.  The have no more interest in us than how they can syphon off as much of our wealth as possible -- preferably by rigging the system so it happens automatically.

Other than that, the have no more interest in us than they have in a cockroach.

Wed, 07/11/2012 - 19:47 | Link to Comment Seer
Seer's picture

They're humans too, though perhaps a bit more sociopathic, but humans nonetheless.

I see things as pure desperation to keep a system going that can not keep going (bad premise = FAIL).  These folks have been programmed to believe they have the answers, and they've paraded as they have (false belief), so now that things are really starting to come un-glued they're running around like rats in a cage trying to figure out why their magic powers don't work (and they have to spend more energy to keep from sinking into the masses' pit).

Wed, 07/11/2012 - 13:21 | Link to Comment Ratscam
Ratscam's picture

A good article by SB. I deducted 1 point though because there is no Nobel price on economics nor on mathematics. Research yourself. Again there is bankster industry behind it. The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel.

Wed, 07/11/2012 - 13:14 | Link to Comment DrGrumpy
DrGrumpy's picture

Spot on. We have got too used to the idea that our own house is an investment. This is a nonesense. It generates no income and it can't be realized without having nowhere to live. As you say its an expense. The young should stop complaining about not being able to get a mortgage, and tell the central banks and politians to stop proping up house prices. As a baby boomer the price of my house is of no benefit to me because I am not going to sell it. I DON'T CARE HOW MUCH IT FALLS IN VALUE.

Wed, 07/11/2012 - 13:43 | Link to Comment Azannoth
Azannoth's picture

True, nobody who bought their house for the right reasons ie. to live in it, cares much about it's current price, as long as they bought it for an amount they thought was reasonable and they could repay.

Another piece of the puzzle ofc is that most (socialist) countries tax the value of your residence so obviously they don't want it to ever go lower and preferably much higher

For me who does not yet own a home and want to buy 1(in near future) I do hope for the prices to remain reasonable and LOW

But as usual the young generation is always expected to pay for the sins on the old 1

Wed, 07/11/2012 - 13:49 | Link to Comment DosZap
DosZap's picture

For me who does not yet own a home and want to buy 1(in near future) I do hope for the prices to remain reasonable and LOW

 

Trust me, the LAST thing you want, or need is to be buying a house at this time.

Be glad you are free of a money pit.I have owned mine for a long time and wish I had never paid it off.

Believe me,just because you own a home outright doesn't come with a damned steep price.

Wed, 07/11/2012 - 20:02 | Link to Comment Seer
Seer's picture

"I have owned mine for a long time and wish I had never paid it off."

"Trust me, the LAST thing you want, or need is to be buying a house at this time."

Hm... are you sure you've gotten things right?

What should people do with a stash of fiat?  Swap it for PMs and then walk the streets (homeless)?

Food, Shelter and Water.  "Shelter" IS a key ingredient.

I once had a "shelter" that I realized wouldn't be what was needed for the future, so I sold it (near the top of the market).  I rented for several years, and then bought PROPERTY.  My "new" shelter is in a northern latitude and faces toward the equator (passive solar): no obstructions during the heating season.  The property has ample wood (hardwood) for home heating (and my wife will occasionally cook using wood).

I burned up a fair amount of fiat in this latest property acquisition.  Not cashing out totally means that I still have a hedge open for the possible case that the mortgage collector may not appear one day.

Maintenance is, I'll agree, an issue.  But, this is ALWAYS the case.  Best advice, however, is to look for "simple."  Property taxes... I sought to keep mine low by going with Ag land (which I'm actually, SLOWLY, putting in to production).

One never really "owns" land/property.  Nature does; and, sooner or later Nature will reclaim it.

I think that the LAST thing the poster needs is to hear absolutist statements.  Broad brushing isn't good.  Lots more to expose before coming to any conclusion.  As I always say when asked about anything: "It depends."

Wed, 07/11/2012 - 13:42 | Link to Comment The Big Ching-aso
The Big Ching-aso's picture

 

 

OTOH, you don't necessarily have to live in it either.   You can rent it out.   Thus a house has the potential to be an investment, an income stream, so you so choose.    Not so much with a car for example.    Ironically said car can be lived in however.

Wed, 07/11/2012 - 13:45 | Link to Comment Azannoth
Azannoth's picture

Buying up property for the sole purpose of renting it is a form of usury, rich old farts trying to live off the backs of the young, however under the free market should be allowed but it's still morally wrong

Wed, 07/11/2012 - 13:51 | Link to Comment The Big Ching-aso
The Big Ching-aso's picture

Then I suppose it would contrarily be morally more correct that thus no rental units existed and the out of the house youngsters can live in phucking wilderness/urban tents in the meantime. WTF.

Wed, 07/11/2012 - 14:15 | Link to Comment dmger14
dmger14's picture

Exactly. Sounds like a socialist who can't think one step beyond his statement to realize how idiotic it is.  Come to think of it, Obama might pick up on what he wrote and use it in one of his speeches!

Wed, 07/11/2012 - 16:44 | Link to Comment Coke and Hookers
Coke and Hookers's picture

... or take a mortgage and live in a bank owned 'home' while paying every month for the rest of his life without ever owning any equity in the bank collateral I mean real estate. I suppose that would be better.

Wed, 07/11/2012 - 13:54 | Link to Comment DosZap
DosZap's picture

however under the free market should be allowed but it's still morally wrong

 

 

Morally wrong,how so?,what is your basis for that judgement call.

Absolutely nothing wrong with charging interest,unless its way out of line.

Without profits the world ceases to function( as we see right now)

Wed, 07/11/2012 - 13:56 | Link to Comment The Big Ching-aso
The Big Ching-aso's picture

 

 

Careful.   We may be dealing with a highly sophisticated idiot.

Wed, 07/11/2012 - 14:16 | Link to Comment harleyjohn45
harleyjohn45's picture

Aznnoth probably thinks anyone who makes a profit is involved in usery.  I wonder how he puts food on the table.  I have never in all my life seen a post indicating rental property as usery.  Its damn hard work.

Wed, 07/11/2012 - 14:06 | Link to Comment harleyjohn45
harleyjohn45's picture

I totally disagree with you.  I am not a rich old fart, but I do buy, sell and rent.  Its a job.  No more no less.  If you had your way there would be no motels for travelers to stay in.    

Wed, 07/11/2012 - 20:06 | Link to Comment Seer
Seer's picture

You're right.  But... most people don't have a clue about really turning a profit on a rental property. 

Big difference between "income stream" and "investment."  One can make a fair amount of income off of something but then find as an investment that one has lost value (housing bubble made this clear).

I have Ag land.  With land I have the ability to generate income from it; and, since I have to live somewhere, it also happens to be my HOME.

Wed, 07/11/2012 - 14:21 | Link to Comment harleyjohn45
harleyjohn45's picture

Houses bought in the late 80's are still worth more than the buyer paid for them, Its the fools who used the house for an ATM card , refinanced and sucked lots of cash out is now underwater.  I have no time to listen to them and certainly no sympathy for them.

Wed, 07/11/2012 - 20:14 | Link to Comment Seer
Seer's picture

Some, not all, might have had no option other than to pull equity.  Think emergencies, medical etc..  BUT, I agree, the majority of folks pulled money and spent it on a bunch of toys (I'm glad that I did not do that- I refinanced, but only to take advantage of lowered rates, and always taking down the term as I did).

The "value" of a house is really quite subjective, especially given the recent bubble burst and the on-going devaluation.  It's what the market will bear, and clearly, the pool of potential buyers are becoming less and less as people's economic positions tip upside down.  One reason why I went for a lower-value home in a fairly decent neighborhood- when it was time to sell I would have a lot more potential buyers: house sold (near the top of the bubble) in a matter of a day (which made me think I under-priced it; but, looking back, I could have went for more and not gotten it and have been stuck there); allowed me to sell twice for what I paid (over a course of about 10 years), which then allowed me to (with some additional saving) buy my current property.

Wed, 07/11/2012 - 13:17 | Link to Comment doc_in_the_house
doc_in_the_house's picture

On 5-1-12 spx @ 1412 the shoe shine boy marc hulbert is BULLISH = SHORT signal !!

 

http://www.marketwatch.com/story/may-doesnt-have-to-be-bad-for-stocks-2012-05-02?link=home_carousel

 

on 6-1-12 Fri AFTER the bell, he is BEARISH = short cover signal !!

I patiently waited all weekend to panic short cover on Monday @ spx 1270 before going long!! And taking massive short profit$$$$$.

 

http://blogs.marketwatch.com/thetell/2012/06/01/watch-for-avalanche-of-sell-orders-monday/

 

 

Few days ago, shoe shine boys is once AGAIN looking at his crystal ball…he’s bullish = you bearish !! @ spx 1360 = add to shorts !!

 

http://www.marketwatch.com/story/should-you-sell-a-dull-market-short-2012-07-10?dist=beforebell

 

I went to his history column, it looks like he has selectively deleted ALL columns more than 1 month old…and selectively kept the ones that are younger than a month…that’s ok, I kept the links on a word doc…LOL !!!!! I have more links with evidence…can’t post them all now…in the future I will. 

 

Stupid LIEberal….destroying evidence….ROFLMAO !!!

 

I wonder if he or the stupid cbs-mw libturded censors are going to zero hedge and telling him that I posted days ago that the shoe shine boy is bullish again…..sorry stupid cbs-mw…you deleted my account bc I offended you when I said that the dog ate odummernomics birth certificate….its your loss freaking idiots !!!! I’m staying at zero hedge.

 

Hulbert has now written that:

http://www.marketwatch.com/story/insiders-betting-on-a-correction-2012-07-11

 

it doesn’t matter I’m sticking with his stupid bullish call at spx 1360 = short signal !!

http://www.marketwatch.com/story/should-you-sell-a-dull-market-short-2012-07-10?dist=beforebell

 

Wed, 07/11/2012 - 13:20 | Link to Comment Hype Alert
Hype Alert's picture

The only people running for office or speaking the truth that points the finger at the source of the problems are promptly shunned, ridiculed and/or completely ignored by the two parties and their lapdog media.

Wed, 07/11/2012 - 14:12 | Link to Comment dmger14
dmger14's picture

The reason they are trying to prop up housing prices are so banks remain solvent and less likely the system will crash, at least in the short-term.  Also, if house prices rise or even stabilize, Bernanke thinks people will feel wealthier and spend more, bringing down unemployment and growing the economy.  I don't agree with any of this, as I think any institution that fails should go under and not be bailed out, and I realize that only savings and investment grows and economy and not borrowing and spending, but that's the reason central banks want to prop up housing prices.

Wed, 07/11/2012 - 14:13 | Link to Comment sessinpo
sessinpo's picture

Things will resolve itself in a forceful way. Not light years away. That is just he opposite thinking when things seem great and most people thought it would never end.

Wed, 07/11/2012 - 20:23 | Link to Comment Seer
Seer's picture

EXACTLY!

Whatever happened to "buy low, sell high?"  I bought a house "low" and sold "high" when everyone was saying that things would never end.  I had a nice car that I'd sold when it was in the best looking and performing state that I'd ever had it in.  Get out before you're trapped!

 

"When you find that you are on the side of the majority, it's time to pause and reflect."

- Mark Twain

Wed, 07/11/2012 - 15:26 | Link to Comment el Gallinazo
el Gallinazo's picture

I don't think that the Central Bankers and their owners are crazy at all.  If one tries something, and it works well, is it crazy to do it again? You simply assume, Mr Black, that because you are, for the moment,  among the privileged, that their agenda is your agenda.  Well, you will soon realize that they regard you as krill.

Wed, 07/11/2012 - 15:38 | Link to Comment adr
adr's picture

Housing prices were relatively stable and affordable until the creation of the NAR in the 1960s. Since then homes have been sent on an upward trajectory of insanity, when banks and realtors colluded to cause home prices, and therefore the value of mortgages to skyrocket.

One can even say part of the abolishment of the gold standard was to finance the expansion of home values as the great society programs paid for low income housing.

In 1986 a 4500sq ft home near the lake in Rocky River, OH could be bought for $145k. By 1999 the home had increased in value to $350k and in 2006 hit $650k, it is now on the market for $425k

In 1986 a person earning $50k could have afforded that monster of a home. Today you need to make at least $150k a year to afford that home, along with the $8500 a year in property tax.

Inflation alone can't explain the massive price increase in 20 years. However, realtor and banker greed sure can.

Wed, 07/11/2012 - 20:33 | Link to Comment Seer
Seer's picture

Land, they ain't making more of it...

As there becomes more people the struggle for land increases.  Scarcity has a bit to do with the increase.

Disposable income also has some to do with it.  Back in the 60s most households were single-income.  In the 70s (bigger inroads happened in the 80s and then 90s?) multiple income households started appearing (I think that this was done by TPTB via "womens 'movement'" - TPTB got more labor at a cheaper rate), "creating" disposable income (which could be directed toward the purchase of more expensive homes).

1971 also was the year US oil extraction peaked.  That was the Rubicon, slowly building into a massive trade deficit for same (oil/energy).  Mark this impact up as "resource scarcity" (energy costs increased, making materials more costly).

Of course, this is fairly simple, as it doesn't include things like cheap Mexican labor (for food and construction), but, could we really account for everything?  I think it would be pretty difficult.  But, as you say, the banksters clearly have taken a big chunk as well.

Wed, 07/11/2012 - 16:15 | Link to Comment tony bonn
tony bonn's picture

the idea that falling prices demand a response other than so what is evil....falling prices are a sign that the market is trying to clear bad inventory and investment....the sooner it happens the sooner recovery begins....

the screeching from the banksters about falling prices is because they want to shove onto the taxpayers their foolish low-iq decisions....they are criminal thugs... and americans accept their public prattlings and temper tantrums as gospel but who in his righ mind believes an irresponsible and psychopathic fart who take bubble baths  in bollinger blanc de noirs????

Wed, 07/11/2012 - 20:37 | Link to Comment Seer
Seer's picture

Falling prices result in a lot of calls.  What looks like a simple "loose end" is actually a fuse.  No, these folks aren't stupid, they know they've woven a web that's going to catch not only the masses, but Them as well.

Playing for time tends to allow for more obfuscation, such that when the fuse hits the keg most won't understand what happened (and therefore won't be looking for tar and feathers).

Wed, 07/11/2012 - 16:27 | Link to Comment PulpCutter
PulpCutter's picture

How many times do we have to debunk this anti-Keynes bullshit, here, at ZH.  ZH just keeps posting the same "Ya can't fix debt with more debt" bullshit, again and again.  It's like a goldfish endlessly swimming around a small bowl.

Wed, 07/11/2012 - 17:20 | Link to Comment doc_in_the_house
doc_in_the_house's picture

stupid LIEberals need to be CONSTANTLY REMIMDED,

to just say NO to drugs....but they are sooooo STUPID.   They need to see cardiac arrest b4 they learn their lesson....and then they will predictably cry "HINDSIGHT IS 20-20!!!!"

they need to see $110 oil.....$200 oil....$300? --> --> RIOTS ! = bankruptcy...10yr to 20% (after first visiting 0.5%)

but odummernomics (aka QEorganizer) has a "well deserved nobel prize" he will just tell bQE to PRINT BABY PRINT !!! LOL !!!

Wed, 07/11/2012 - 20:45 | Link to Comment Seer
Seer's picture

Yeah, it's fun to whip out the fangs, but let's see whether you have anything to back them up...

What's your ideological position?  And, does EVERYONE with your position think and act the same?

You lash out, but I'm not seeing you state WHY something is wrong.

If you REALLY wish to be LESS STUPID than those who you claim are stupid then you better do a bit more brushing up on your debate and logic skills.  To get things started let's literally GROUND this to something tangible- let's see if we can agree on a basic fundamental; answer this question: what is the mass of the earth?

I'm being serious.  If you want to teach people how to NOT be stupid like "LIEberals" then you need to be prepared to do so (and name calling isn't an advanced form of teaching).

Wed, 07/11/2012 - 20:39 | Link to Comment Seer
Seer's picture

As Carlin said, it's ALL BULLSHIT.  It's all based on a BULLSHIT premise, one in which Austrian economics is not free of- the premise that the economy must be based on perpetual growth on this here finite planet.

Wed, 07/11/2012 - 21:02 | Link to Comment pismo10
pismo10's picture

Perfect, now if the dim-wit liberals like Obama would only open their little eyes and see this...

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