Fortunately, from now on it’s just metaphorical whirlwinds blowing the windows out of bank towers as it were; instead of the Real McCoy suffered by our friends in Houston over the weekend.
"We are at the inflection point. Failures keep getting bigger and bigger." – Louisiana State University finance professor Joseph Mason
As the Twist family continues to help other families displaced around Austin, the Castle may be a bit quiet for a few days. We will be following this historic month as we can.
The last words spoken will be, “Take her up to warp speed Scottie.” “She won’t stand much more captain, she’s shakin’ apart.”
And shake apart we are. I often write that the U.S. is out of balance. Our physical/energy system is out of balance with our monetary system; a situation that cannot coexist long term.
I coined description some time back for our current condition of “the point of maximum credit.” There were physical impenetrable boundaries to our debt capitalism system. We have arrived at that barrier.
Thanks to John for keeping the sidebar going. I’m on my way to Houston to help family with some repairs. I expect to be back to work tomorrow.
Best of luck to everyone on your investments today.
Igor’s word for me this morning “implode”
well DianaK and Agnostic, maybe you believe now?
Mortgage rates are 5.375 30 year fixed, getting very close to breaking 5%.
Reality, absolute rates going up but with deflation going to negative 5% even a 2% mortgage is steep!!!!
FF will be lowered by .500% with in 5 days!
Twist, John, et al: Love the change in the title you’ve made (now, it’s just “doom”).
Y’know, over the last couple of years many a person I recommended this site to would not give it a chance, based on it name. Typically they’d say something like, “Oh, RIGHT, like a site called Housing DOOM can give unbiased information!!!!… and laugh off my recommendation”. It’s a shame, really.
Well, it has been their loss, hasn’t it? What these people didn’t realize…is that just because you say that something is in a really, really, bad state of affairs…DOOMED… doesn’t necessarily mean you are being subjective about it. Why can’t people make objective observations and conclude that something is doomed?
Anyway, y’all need to take a really big bow for this site for the last couple of years… for being such a wealth of information, for keeping on with your beliefs through all the naysaying, etc. Long live this web site!
John: Congrats on Scott publishing that work for Google Chrome. I realized the instant I started reading it that the art style was his handywork.
Deflation is a contraction of the money supply.
The money supply is created through debt that is treated as cash, a marketable security. Demand deposits.
Banks need to keep a fraction of capital in cash. So it is important to look at the FF, fed funds rate. FF is 24 hour lending between banks, excess is lent to banks that are short of the capital required. The Federal reserve is the lender of last resort, so the name Fed Funds.
Capital is measured at the end of each day. Rates were at 6% while the treasury has a target of 2%!!!!
“If the fed funds rate closes high today, I would be really worried as it would mean that there really is no money out there to be lent,” said Stan Jonas, who trades interest- rate derivatives at Axiom Management Partners
http://www.bloomberg.com/apps/news?pid=20601087&sid=avWG5Qugrp2M&refer=home
coffee,
you understand nothing about the basics of mortgage lending. it doesn’t matter if the FFR does get lowered to -25% rates.
Leonard Bernstein, Leonid Brezhnev, Lenny Bruce & Lester Bangs.
agnostic -
My favorite bit of absurdity so far in a day not lacking in absurdity was this:
“You keep using that word. I do not think it means what you think it means.” – Inigo Montoya
Mike C
Ditto ditto. This site has been absolutely remarkable for insight. And right on. Wish more smart people would have noticed.
DianaK,
“rates on a 30yr fixed never dropped below 5% without a buy down.”
Wrong DianaK, as recent as 2003, a 30 year fixed rate Mtg. did drop below 5%. (4.625% at par). That is surely to be broken on its way to the 3’s.
In the 1940.s they also average in the 4.s %.
Sorry to burst your bubble.
coffee,
please cite your references. (& don’t use bankrate.com as that is known in mortgage circles as a bait&switch)
when in 2003 was it 4.625% par?
http://www.hsh.com/natmo2003.html
National Monthly Averages, 2003
Date 15-Year FRM 30-Year FRM 1-Year ARM
Jan-03 5.48% 6.05% 4.26%
Feb-03 5.36% 5.94% 4.15%
Mar-03 5.25% 5.88% 4.04%
Apr-03 5.28% 5.92% 4.02%
May-03 5.24% 5.65% 3.89%
Jun-03 4.84% 5.43% 3.75%
Jul-03 5.14% 5.80% 3.80%
Aug-03 5.77% 6.47% 4.08%
Sep-03 5.58% 6.29% 4.10%
Oct-03 5.41% 6.12% 3.98%
Nov-03 5.40% 6.07% 3.99%
Dec-03 5.35% 6.03% 3.97%
Source: HSH Associates http://www.hsh.com
coffee,
I didn’t want to place 2 links & get eaten up by Igor.
http://www.mortgagenewsdaily.com/mortgage_rates/charts.asp
it goes back 36 years. the blue line never gets very low 6%
coffee,
here’s another website, & it provides basic info on current rate that even professional brokers use.
http://www.mortgagenewsdaily.com/mortgage_rates/charts.asp
Set the time frame to 36 yrs (as far back as it goes).
nowhere is it close to 4%
Well probably change the masthead back later this week. The credit for the change goes to our Sys Admin who was watching the stock market this morning.
the summer soltice on June 15-22 2003.
What you are looking at is a monthly average. Remember that 10 year note rates jumped 125 basis points that month. 5.23 was the 30 day average in June 2003. (high – low / 30 = 5.23)
http://www.freddiemac.com/pmms/pmms30.htm
I remember that period well as Capitol Commerce filed for bankruptcy and left 9 of my loans unfunded. It was cheaper to close their door than to fund loans 100 points below the market.
FYI: Capitol Commerce closed their doors because of this rate move, but re opened 6 months later with a new name ABC, American Brokers Conduit.
Google Capitol Commerce…
I will try to look up some prices but daily rates are not easy to find.
FYI: Freddie funds loans about 25 basis points below fannie…so your hsh link looks about right for a monthly average.
that’s right. that average was above 5% & had .6 points attached to it. it has never been below 5% without points. your own link proves my point.
& forgive me for not just believing your “memories”
I’m sorry, but I love it when there’s a tiff I’m not involved in.