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re: Inverted yield curves predicting a recession
Posted on 8/6/19 at 1:07 pm to LSURussian
Posted on 8/6/19 at 1:07 pm to LSURussian
quote:Know how I know you nearly always refuse to address what as actually said and instead resort to childish ad hom?
Know how I know I'm right and it struck a nerve?
Like I said - you make people wEARy.
1
Posted on 8/6/19 at 1:09 pm to Big Scrub TX
Posted on 8/6/19 at 1:10 pm to LSURussian
quote:
Know how I know I'm right and it struck a nerve?
You are assuredly wrong. And you think you struck a nerve? This was a civil discussion until you jumped in with "frick off". That was all the proof anyone needs to know you don't know what you're talking about.
Posted on 8/6/19 at 1:15 pm to ProjectP2294
quote:Not really, although if the debt and interest were relative, then that's what the result would be. But they're not.
Does this mean we are reducing our debt? Serious question. It kind of sounds like the same thing so I'm wondering if it actually is the same thing.
Think of it this way...
Obama borrowed around $4.2 Trillion from the Federal Reserve (Quantitative Easing). The Fed is charging us interest on that "loan".
Obama handed out that money to around 900 companies and banks, and so far about $1.9 Trillion has been paid back. So we have a net balance still of around $2.3 Trillion.
The interest on this is a Liability that we pay every year.
When we do Quantitative Tightening, we are essentially paying down what is owed, and as a result the amount we pay in interest decreases accordingly.
Except when the Fed raises interest rates, Treasuries of course go up.
This is one of the reasons Trump is so pissed off at the Fed. It's bullshite to raise interest rates while we're doing QT.
We're paying down principle we owe, but the interest amount we pay doesn't change because Treasuries are going up.
Kind of hard to reduce our deficit when we pay down $300 Billion in QT but our interest payment to the Fed goes up $300 Billion.
Obama's QE was the biggest wealth heist to the Globalist Rich in history. And they're still using it to frick us while they take more and more.
Posted on 8/6/19 at 1:22 pm to LSURussian
This demonstrates the difference between average and median.
Average household savings - $175k
Median household savings - $11k
LINK
Homeownership is not home affordability. Banks are moving to 3% down loans for a home because people can’t save. This just increases the interest paid both early in the loan and for the life of the loan.
Average household savings - $175k
Median household savings - $11k
LINK
Homeownership is not home affordability. Banks are moving to 3% down loans for a home because people can’t save. This just increases the interest paid both early in the loan and for the life of the loan.
Posted on 8/6/19 at 1:26 pm to BeefDawg
quote:
When we do Quantitative Tightening, we are essentially paying down what is owed, and as a result the amount we pay in interest decreases accordingly.
ETA: Quantitative tightening has not paid down any U.S. outstanding debt. If the Fed removes liquidity (reduces money supply) from the economy by selling treasury securities it owns, which is what is done in quantitative tightening, the amount of outstanding government debt remains the same. It only means that debt security is now owned by a different entity, i.e., a bank or an insurance company or a pension fund or a brokerage house, rather than owned by the Federal Reserve.
This post was edited on 8/6/19 at 1:38 pm
Posted on 8/6/19 at 1:49 pm to Big Scrub TX
quote:I don't know if this is really correct.
You're the one who can't fricking read. I said the housing bubble BURST in 2005-2007 - or do you not understand the simple fact that the next reporting period after the peak is the time the burst is registered? EXACTLY like I said, in some markets, this peak was Novemberish 2005. In others, it was as late as July 2007. In any event, the burst was YEARS in swing when "2008/2009" hit
I get that 20%-25% of the market was essentially subprime mortgages in 2005-2006, but those were still policy initiatives being praised by Democrats every day.
The Republicans were complaining every other week in committees about these crazy numbers of defaults and bringing in people to testify, but Democrats on these committees were all acting like everything was just fine and dandy all the way up to Black Monday, Sept. 29th 2008.
Ratings companies were falsifying mortgage tranches all the way through 07 and 08, Fannie and Freddie were buying them up without hesitation, and the money was flowing all the way up until the last day.
So I'm not sure how you can suggest the "bubble burst" was a 3 or 4 year time frame. That's just nonsensical. The bubble expansion, sure. But the "burst" was literally the weekend of Sept. 29th, 2008 when news got out that 4-5 banks were under water completely and a half-dozen more banks were high double-digits under.
Up until that day, the bubble was expanding.
Posted on 8/6/19 at 1:55 pm to LSURussian
quote:I didn't say US outstanding debt.
ETA: Quantitative tightening has not paid down any U.S. outstanding debt. If the Fed removes liquidity (reduces money supply) from the economy by selling treasury securities it owns, which is what is done in quantitative tightening, the amount of outstanding government debt remains the same. It only means that debt security is now owned by a different entity, i.e., a bank or an insurance company or a pension fund or a brokerage house, rather than owned by the Federal Reserve.
QT is essentially us reducing our interest liability to the Fed.
That interest is a capital expenditure for us. And currently, that expenditure contributes to our debt because we are deficit spending.
QT doesn't reduce debt, it reduces how much of that interest is contributing to our deficit.
Read better.
Posted on 8/6/19 at 2:04 pm to BeefDawg
quote:You literally said...
I didn't say US outstanding debt.
quote:Is the 'we' in your statement not the United States government?
we are essentially paying down what is owed,
quote:The "interest liability" is only reduced to the Fed because the Fed has sold securities to someone else. The interest is still due to be paid, just not to the Fed.
QT is essentially us reducing our interest liability to the Fed.
quote:No, it doesn't. The interest still must be paid to whoever buys the treasury securities from the Fed.
QT doesn't reduce debt, it reduces how much of that interest is contributing to our deficit.
If the Fed's treasury security matured rather than being sold by the Fed (both of which will reduce money supply) the Treasury Department will then have to issue new debt to replace it as long as the Federal government continues to operate at a deficit.
quote:Is this where I suggest to you to write better?
Read better.
Posted on 8/6/19 at 2:18 pm to trinidadtiger
10 and 2's still haven't inverted. This time it is unlike any other time because interest rates have been so low for so long and not just in the U.S but globally. Fed seems to be focused a lot on equity markets these days, too.
it is hurting savers. old people should be pissed.
it is hurting savers. old people should be pissed.
Posted on 8/6/19 at 2:27 pm to yatesdog38
another fun fact. Low rates are hurting the longevity of the Social Security Trust fund.
Posted on 8/6/19 at 2:32 pm to Big Scrub TX
quote:
In fact, Trump is now the author of the 2 biggest non-recession deficit years of all time.
and ryan.
But i saved $2,000 in taxes in one tax year.
This post was edited on 8/6/19 at 2:34 pm
Posted on 8/6/19 at 2:42 pm to LSURussian
quote:
K, I never took you to be a doom and gloomer type.
I am not but as you know I have been in RE for 20 years now in all aspects of it. As a Realtor, investor, contractor and for the past 8 years managing foreclosure inventory for the major banks. I operate in 15 states currently so I see a lot of different markets.
The data I am seeing now is similar to what I was seeing in late 2006 and 2007. It won't be direct subprime that kills us as I said, but the overall debt of the average household.
FWIW, the MBA is saying the same thing and this was a huge topic at their annual meeting earlier this year.
I will be going to NAMFS Conference in Dallas soon and it is a major topic there for the service providers like myself.
Posted on 8/6/19 at 3:16 pm to stout
quote:I remember you posting that on the Money Talk Board, I believe.
and for the past 8 years managing foreclosure inventory for the major banks.
Is it fair to say it's better for your pocketbook whenever there are more housing foreclosures?
This post was edited on 8/6/19 at 3:18 pm
Posted on 8/6/19 at 3:31 pm to LSURussian
quote:Look, I was talking to someone who doesn't understand how things work. I didn't feel like explaining how bonds/treasuries/mbs's mature, so I simplified it in a way a layman could understand.
You literally said...
quote:
we are essentially paying down what is owed,
Is the 'we' in your statement not the United States government?
quote:Do you not know what Quantitative Tightening even is?
The "interest liability" is only reduced to the Fed because the Fed has sold securities to someone else. The interest is still due to be paid, just not to the Fed.
No, it doesn't. The interest still must be paid to whoever buys the treasury securities from the Fed.
If the Fed's treasury security matured rather than being sold by the Fed (both of which will reduce money supply) the Treasury Department will then have to issue new debt to replace it as long as the Federal government continues to operate at a deficit.
They are not selling anything. They are letting bonds, Treasuries, and MBS's mature and then not renewing them.
They are not issuing new debt from these maturities.
If they were, they wouldn't call it Quantitative Tightening.
Now are we issuing new debt for other things? Yes, of course. We seemingly always are. But not to the Federal Reserve.
We are, in fact, reducing our interest liabilities to the Fed. And NO, it is NOT because the Fed is selling securities to someone else.
QT = debt maturing and not being renewed.
Posted on 8/6/19 at 3:42 pm to LSURussian
quote:
Is it fair to say it's better for your pocketbook whenever there are more housing foreclosures?
Sure but even as we are at a 10 year low for foreclosure inventory I am still having a very good year due to others dropping out of the industry and me picking up their subs and volume. I will not increase my overall revenue this year for the first time since I started, but I am not losing anything, either. That's a positive considering the circumstances.
Also, people lose houses whether the economy is good or bad and FYI there are still a lot of zombies houses left over from the subprime mess that require a lot of work before they can convey. There are also still some bubble loans out there from the subprime days. A lot of them can/will sell or refi due to the economy but there are still some passing the 90-day late mark.
There is also a huge uptick in reverse mortgage foreclosures as baby boomers are dying off. There are 4 coming up for sheriff sale in Lake Charles over the next 6 weeks. I have never seen that many at once. Second in this area to only Wells Fargo for the next 6 weeks actually. It's usually someone like Nationstar or someone that has a huge FHA portfolio.
So if you are trying to say I am cheering for the crash, that wouldn't be accurate. If you are saying I will benefit then yes no doubt, but I don't need it.
Posted on 8/6/19 at 3:47 pm to BeefDawg
you are confused sir well kinda. Your grammar/verbage/nounage isn't clear
QT= debt maturing and the fed not buying new debt which would creates a larger money supply if they did.
Also any interested earned is returned to the treasury by the federal reserve. It isn't required to do so but it has done this for years. it could also be considered QT if they didn't return the interest to the treasury chest.
QT= debt maturing and the fed not buying new debt which would creates a larger money supply if they did.
Also any interested earned is returned to the treasury by the federal reserve. It isn't required to do so but it has done this for years. it could also be considered QT if they didn't return the interest to the treasury chest.
Posted on 8/6/19 at 3:53 pm to BeefDawg
quote:No. Letting their bond holdings mature is only part of the process. They DO sell bonds as part of their quantitative tightening. The Fed is not going to wait two decades or more for their 30 year bonds to mature if the decide they need to push down longer term rates. They sell them.
They are not selling anything. They are letting bonds, Treasuries, and MBS's mature and then not renewing them.
QT = debt maturing and not being renewed.
And bonds are not "renewed." They aren't like Certificates of Deposit. The Fed simply doesn't buy securities to replace the matured securities when it is in a tightening mode.
quote:I've seen you make a similar comment before and it's just as incorrect this time as it was the previous time.
They are not issuing new debt from these maturities.
The Fed doesn't issue debt. Only the Treasury Department can issue U.S. government debt. The Treasury Department relies upon the Fed's securities accounting system to track who owns the debt that has been issued and to execute and settle government security trades.
The Fed BUYS or SELLS treasury securities from/to primary dealers in order to implement decisions made by the FOMC.
quote:Yes. I'm very familiar with it. I've worked for the Fed as an independent consultant evaluating their member banks risk management processes. I sat in meetings conducted by Ben Bernanke.
Do you not know what Quantitative Tightening even is?
I realize now that you're not well versed in Fed operations. You don't even know the correct terms to use when discussing the Fed's actions which is amusing in light of your comment "I was talking to someone who doesn't understand how things work."
Posted on 8/6/19 at 3:56 pm to stout
Auto loans are at an all time high, too. Not sure how much that matters but if the damn roads don't start getting fixed all over the country there is gonna be a lot more broke axles, tires, and suspension.
Posted on 8/6/19 at 3:57 pm to LSURussian
You are russian. I don't believe your work history, unless you are a spy.
you are well versed on Federal Reserve operations though.
you are well versed on Federal Reserve operations though.
This post was edited on 8/6/19 at 3:58 pm
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