Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
"Gross, who runs the world’s largest mutual fund at Pacific Investment Management Co. in Newport Beach, California, said in his June outlook report that “the debt super cycle trend” suggests U.S. economic growth won’t be enough to support the borrowings “if real interest rates were ever to go up instead of down.”"
"“The downgrade reflects the state’s reduced financial flexibility, illustrated by its reliance on sizable debt issuances during the current biennium to close operating gaps in the context of already high liabilities,” Fitch said."
The whole financial status of the US is a lie. Obama passed a law that allows banks to carry foreclosed properties on their books at the sale price and not the current appraised value. If it was not for that, US banks would be insolvent.
Last edited by pommysmommy; 06-06-2010 at 06:48 PM..
Reason: typo
Why do you think the banks are holding these properties and not listing them on the market?
But I'll take a stab at it. If all the banks were to flood the market with their forclosed homes the prices would be depressed due to increased inventories, that isn't in anybody's interest. Not the banks and not other sellers.
But I'll take a stab at it. If all the banks were to flood the market with their forclosed homes the prices would be depressed due to increased inventories, that isn't in anybody's interest. Not the banks and not other sellers.
The banks don't care about market prices, buyers or sellers.
The banks care about their balance sheets and how this effects their bottom line.
If they hold onto the properties they can value them at whatever they want.
The Fed changed the rules to allow that...it's called "mark to magic".
They don't have to mark to market unless the home is actually on the market. If the home sells for a loss, they have to list the loss.
By holding the homes in their inventory they are actually buffering up their balance sheets with these high value assets.
"Gross, who runs the world’s largest mutual fund at Pacific Investment Management Co. in Newport Beach, California, said in his June outlook report that “the debt super cycle trend” suggests U.S. economic growth won’t be enough to support the borrowings “if real interest rates were ever to go up instead of down.”"
"“The downgrade reflects the state’s reduced financial flexibility, illustrated by its reliance on sizable debt issuances during the current biennium to close operating gaps in the context of already high liabilities,” Fitch said."
Your thread title is quite misleading. Nobody ever said the stimulus was a "get out of jail free" card. Everybody is well aware of the problems associated with excessive debt, most of all Obama. The stimulus was meant to keep capital flowing through the economy at a time when there was none. Millions have been kept employed and state/local governments, who can't go into debt, have been able to operate without slashing services to the point that anarchy breaks out. Every developed nation in the world enacted stimulus to get through the crisis.
Now, if the global economic recovery continues to teeter (having nothing to do with Obama, btw) and slows recovery, then there could be problems down the line. But, according to the article, seems like the easy solution until the economy is fully recovered is to simply not raise interest rates for a while.
Hopefully next month's jobs report will be better than this one. That will be a telling sign.
The banks don't care about market prices, buyers or sellers.
The banks care about their balance sheets and how this effects their bottom line.
If they hold onto the properties they can value them at whatever they want.
The Fed changed the rules to allow that...it's called "mark to magic".
They don't have to mark to market unless the home is actually on the market. If the home sells for a loss, they have to list the loss.
By holding the homes in their inventory they are actually buffering up their balance sheets with these high value assets.
Well of course they care about market prices. Banks prefer to buy low and sell high. Why would they take a loss by putting a house on the market. That's right too much supply, too little demand. If they hold onto their inventory until market conditions turn around their asset prices go up.
Your thread title is quite misleading. Nobody ever said the stimulus was a "get out of jail free" card. Everybody is well aware of the problems associated with excessive debt, most of all Obama. The stimulus was meant to keep capital flowing through the economy at a time when there was none. Millions have been kept employed and state/local governments, who can't go into debt, have been able to operate without slashing services to the point that anarchy breaks out. Every developed nation in the world enacted stimulus to get through the crisis.
Now, if the global economic recovery continues to teeter (having nothing to do with Obama, btw) and slows recovery, then there could be problems down the line. But, according to the article, seems like the easy solution until the economy is fully recovered is to simply not raise interest rates for a while.
Hopefully next month's jobs report will be better than this one. That will be a telling sign.
Yeah easy not to raise interest rates until inflation starts running rampant.
The stimulus traded one set of problems for another. The stimulus created very few jobs, and estimates of how many jobs were saved is unrealiable at best.
Look at Greece, we are headed in that direction. At some point you have to pay the piper. Services will eventually have to be cut.
The whole financial status of the US is a lie. Obama passed a law that allows banks to carry foreclosed properties on their books at the sale price and not the current appraised value. If it was not for that, US banks would be insolvent.
The problem is that those homes loans are in big bundles and no one knows their true worth. that was waht Geithners paivate/governamnt plan was about over a year ago. the feds have neither the people or the expertise to value these bundles. once the Chrysler bankrupsy terms force by the administrtion was annouced ;no one wanted the governamnt as a partner really.The naks could wait to give back the loans and even the auto companies are wanting to pay them off as fast as possible.So rally they have no choice and its going to be years before they are slowly unbundled.Many in them are good loans with the bad loans.The government has a real mess on thier own hands with freddie and fannie anyway.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
