Which Countries' Debts Are Truly the Worst? - The Global Economic Picture Through Dow Chemical's Earnings -- S. Is the US Reaching a Strategic Default Tipping Point? « naked ca. The New York Times writes tonight about strategic defaults on mortgages, and argues that enough mortgages are deeply enough under water to induce solvent borrowers to think about walking away: New research suggests that when a home’s value falls below 75 percent of the amount owed on the mortgage, the owner starts to think hard about walking away, even if he or she has the money to keep paying….by the third quarter of 2009, an estimated 4.5 million homeowners had reached the critical threshold, with their home’s value dropping below 75 percent of the mortgage balance.They are stretched, aggrieved and restless.
With figures released last week showing that the real estate market was stalling again, their numbers are now projected to climb to a peak of 5.1 million by June — about 10 percent of all Americans with mortgages. Although the Times doesn’t say where this “research” comes from, it is presumably survey research of some sort. Yves here. Yves here. The Downgrade Doom Loop. What's The Difference Between AAA And AA+? How the Fed Got Itself Boxed In. Yesterday morning’s comments (Random Thoughts: Recent Trading/Market Activity) began with this bullet point: “This entire crisis traces itself back in large part to then FOMC chair Alan Greenspan not allowing markets and the economy to flush themselves clean after the dot com collapse. It seems that nearly every Fed/Government policy action has been a response to the problems that error led to.”
Quite a few people responded, seeking clarification, and so I wanted to briefly address this issue. The Federal Reserve (unlike most other central banks) has a dual mandate: Maintain full employment and keep inflation at bay. History informs us that these two factors are often opposed to each other: Growth begets price rises, and excessive price elevation retards growth. Hence, for the Fed to do its job well, they have a neat balancing trick to perform. We can trace the origin of the current Fed situation to a drift away from those two mandates. There was no small irony in that Greenspan, Mr.
Our debt time bomb is ready to go ka-boom Paul B. Farrell - Mark. By Paul B. Farrell, MarketWatch ARROYO GRANDE, Calif. (MarketWatch) -- Retire? You can fuggetaboutit if the new Global Debt Time Bomb is detonated by any one of 20 made-in-America trigger mechanisms. Yes, 20. And yes, any one can destroy your retirement because all 20 are inexorably linked, a house-of-cards, a circular firing squad destined to self-destruct, triggering the third great Wall Street meltdown of the 21st century, igniting the Great Depression II that George W. Deficit as national-security threat? WSJ's Jerry Seib previews his column in tomorrow's Journal in which he writes the federal budget deficit has become so large, it's time consider it a natural-security threat.
Wow, what an epic Hollywood blockbuster this will make: You know the drama, can't miss the warnings. Plus, Bloomberg BusinessWeek is adding jet fuel to the ticking time-bomb in: "After the Stimulus Binge, a Debt Hangover: Trillions of dollars have been spent keeping the global economy afloat. Who knows? 1. 2. The Perfect Storm: The Beginning of the End of the Monetary Confidence Game. We are currently going through battles of inflation vs. deflation, fiat money vs. precious metals, government spending vs. austerity, etc.
There are so many hard positions being taken by all of our “experts”, and they are so diametrically opposed – in a similar manner to our politicians – that an ordinary investor feels almost frozen in his tracks. So let’s try and shine a light on these issues and try to come to what the ultimate truth of what is going on in this rather confusing financial world that seems to continually reward the “haves” on the backs of the “have-nots.” Fiat Monetary Systems We have all heard that our monetary system is based upon “fiat”. What does that really mean? Since 1879, the United States’ monetary system had been on the gold standard, wherein its currency was actually backed by gold held by the government. On August 15, 1971, the United States ceased converting US dollars into gold at a fixed value, which effectively ended the entire era of the gold standard.