Home and Fincance News

As you all must know by now, I read a lot of news. I mean a lot of news. Probably way too much news. It's just that there's so much news online these days, and I'm a fast reader... Anyway, it seems like real-estate is on everybody’s mind these days. I've stopped bringing the subject up because I thought people were sick of it, but I was wrong. Maybe you guys just like I hear me rant (for some reason), so you throw a topic at me so you can watch the fireworks. Are you that desperate for entertainment? Isn't The Office funny enough for you? Good god! Anyway, Jason sent me a home finance link yesterday, with this flippant remark:

Why isn't this on your blog?

As if you don't already have a home?? As if these kinds of problems are in your distant past?? As if my sister isn't already canceling social events in favor of stripping wallpaper and choosing new custom frames for your cool new Irish artwork?? Give me a break! Well, for your information, I have a ton of new home finance links for you to read and ponder: L.A. Times: Middle Class investors are buying property instead of stocks for their retirement N.Y. Times: The real-estate market feels more like the dot-com market in 1999 Wall Street Journal: Institutional investors are selling real-estate holdings as fast as they can MSNBC: Sellers are having a harder time in other (not California) parts of the country L.A. Times: People are finding it hard to move to California Detroit Free Press: More people use stated income loans to buy property USAToday: More people use adjustable rate mortgages AFP: More bubble debate USAToday: People with adjustable-rate loans are going to suffer L.A. Times: People with interest-only loans are going to suffer L.A. Times: Title insurers have been stealing from home buyers So there you have it. Back by popular demand. Two weeks of home-buying-related junk. Maybe I should do another natural disaster entry? This real-estate stuff is way too depressing...

Economic Pessimism

Since my last post, the economic pessimists have become much more shrill. The problem is, I find it hard to disagree. Even the Federal Reserve is admitting that ultra-low interest rates are creating market distortions. The situation is exacerbated by Asia's insatiable appetite for U.S. Treasury Bills. According to the articles below, these low rates have created three kinds of problems for the world economy:
-Inflation of both assets and commodities that lead to greater risk taking and higher debt loads
-Low savings rates in the U.S., and too much saving in Asia
-Huge trade imbalances that lead to overcapacity in Asia and undercapacity in the U.S.
In other words, the cheaper money is, the more people will borrow. The more money they have, the more they will "invest" in ever inflating assets because there's no interest-rate benefit to saving. Problems arise when people overborrow on inflated assets to support short-term spending, or when they carry large debt loads on inflated assets they might need to sell in the near future for whatever reason (retirement, for example.)
Right now, people in the U.S. are spending like there's no tomorrow. In fact, people are increasing their spending 50% faster than their income is growing.!!
It will be interesting to see how this all turns out. In the meantime, I don't feel a pressing need to rush into this inflated housing market. Since I can't compete with those who are willing to spend 50% or more of their monthly income on a house payment anyway, I'll continue to save and hold tight until sanity returns.
Recent Articles of Interest
The percentage of first-time buyers hits a record low in area.
Game Over
Bond bubble, American-style
China's Exports Rise 33%; Trade Gap Widens to Record
Call for Adjustable Mortgages Jumps
Foreclosures grow as refinancing increases
World On Brink Of Ruin
Sites of Interest
Professor Piggington's Econo-Almanac
The Daily Reckoning