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People have been predicting financial doom ever since QE began in 2009. For that matter, people have been predicting financial doom ever since we dropped the last vestige of the gold standard in 1971 (I remember that). It hasn't happened yet. There is a possibility that it will, not a certainty.
As for a reserve currency, what's the alternative? No one trusts Beijing enough to adopt the RMB. The Europeans manipulate their currency even more than we do. The currencies of Japan, the UK, and especially Switzerland are too small to carry the burden.
People have been predicting financial doom ever since QE began in 2009. For that matter, people have been predicting financial doom ever since we dropped the last vestige of the gold standard in 1971 (I remember that). It hasn't happened yet. There is a possibility that it will, not a certainty.
As for a reserve currency, what's the alternative? No one trusts Beijing enough to adopt the RMB. The Europeans manipulate their currency even more than we do. The currencies of Japan, the UK, and especially Switzerland are too small to carry the burden.
Bitcoin? Heaven help us.
I was in my local C-Store paying my weekly "Tax on People who are Bad at Math" to the Education Lottery folks yesterday and.....
The ATM in the corner has a sign on it: "Buy Bitcoin here." We are now beyond the pale...
No not really, using your numbers your loan was going to be for $100,000 but the home was "worth" $250,000 more, so a net of $150,000 in cushion.
If you didn't pay the loan, the bank takes back the property, sells it for what they need to cover their loan, and gives you any remainder leftover.
The problems really started getting bad when the banks were taking posession of all these properties and suddenly instead of being worth +$150,000 more than the outstanding balance of any loans, it was worth less than them and presto large losses.
My in-laws sold their house in FL for $650,000 after buying it for $150,000 about 15 years prior. That home was repo'd and sold at auction for...$150,000(!). That was a $400,000 loss to the bank (assuming little to no money down as was the norm back then).
That makes sense.
If we had used the 100k in HELOC, though, the house would’ve been underwater when the bubble burst in 2007. Especially if we’d used it to buy cars, instead of home improvements (I saw a log of that in 2005!).
People have been predicting financial doom ever since QE began in 2009. For that matter, people have been predicting financial doom ever since we dropped the last vestige of the gold standard in 1971 (I remember that). It hasn't happened yet. There is a possibility that it will, not a certainty.
As for a reserve currency, what's the alternative? No one trusts Beijing enough to adopt the RMB. The Europeans manipulate their currency even more than we do. The currencies of Japan, the UK, and especially Switzerland are too small to carry the burden.
Bitcoin? Heaven help us.
The US uses it's status as a reserve currency holder to fund our military who enforces our status as the world's currency. A large part of the belt and road initiative is to get more countries using the yuan. I agree no one trusts them but they keep funding ever larger and larger projects not just near them but also in our hemisphere as well, namely in Caribbean and South America.
China has a long term plan, we pretty much wing it two to four years at a time.
I was in my local C-Store paying my weekly "Tax on People who are Bad at Math" to the Education Lottery folks yesterday and.....
The ATM in the corner has a sign on it: "Buy Bitcoin here." We are now beyond the pale...
You should call Vlad and let him know he doesn't need to drain his country's electrical grid to mine them from the interwebs using banks and banks of computers.
He just needs to hit up the ATM where Mike J plays the numbers.
The US uses it's status as a reserve currency holder to fund our military who enforces our status as the world's currency. A large part of the belt and road initiative is to get more countries using the yuan. I agree no one trusts them but they keep funding ever larger and larger projects not just near them but also in our hemisphere as well, namely in Caribbean and South America.
China has a long term plan, we pretty much wing it two to four years at a time.
Belt and Road is an impressive pursuit and one the exemplifies the possibilities when a people move in a common direction (whether by force or choice is an irrelevant detail). We aren't anywhere close to having that sort of "societal momentum"...we can't even agree on fairly mundane points as a country.
As for the reserve currency point; I agree with you that it is largely what is keeping us afloat (especially for what it would mean for our national debt if the world moved off the Greenback)...but as long as China is basically a third world country outside of it's cities, I don't see the "world economies that actually matter" making the move. I could be wrong, but world markets and economies like stability. China and the Yuan offer nothing but a veneer of it.
Yes, rising rates will limit current owners’ ability to sell and move. And when people need to move anyway (job loss, divorce...), foreclosures are likely.
Why?
I mean sure, there's always going to be "some" distressed sales. Those are caused by 3 things:
1. Purchase at/near peak, have to sell quickly.
2. Cash out refi near peak, have to sell (which in 2020 was like 1/10 of 2006).
3. Choose to neither pay their debt nor sell before it gets out of hand.
And it's #2 and #3 where it gets really bad. Locally, that # was < 5% of sales....which means it probably wasn't higher than 1/2% of homeowners.
When people have no equity in their house, they begin to view the house as a big problem to get rid of, and taking the credit rating hit is something they'll shrug off. It's also easier to accept when so many other people are also doing it, and no real social stigma exists.
and on the micro level - that's what happened. In wide swaths of the US - especially the Southwest (CA, AZ, NV) there were subdivisions that were in the midst of construction where folks walked away because they had real issues (job loss, perhaps divorce) and when THEY did, others did. As I said and you clarified, once "I quit paying my mortgage and got foreclosed on" lost it's negative impression, the problem exacerbated itself and got exponential.
Heck, I know I was posting on here if the FED/Fed Gov't had required all those banks to refinance the performing but maturing loans at lower rates, it would have had MUCH less affect on the financial system/US Economy.
What % of home owners here do y'all guess will have their properties foreclosed on in the next 6-12 months?
Here? As compared to nationwide *if* a hiccup were to happen will be low. It's why we moved here (personally speaking) in 2008. Raleigh had good jobs, with low cost of living, in a desirable (to us) part of the country. Economically speaking, there are many legs holding the stool up - state government (very stable jobs), tech/bio tech, medical (very stable), and higher education (very stable).
If something happens, Raleigh for sure will be the least affected when viewed through the lens of the nation.
The thing is, all of this stuff happens out of nowhere. We won't see it coming. One week the stock market will be at all time highs, the next it will be dropping 10% per day. Kind of like Covid. Unless you were friends with a Richard Burr.
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