US Federal Reserve raises interest rates for second time in a decade

[ilostmypassword]

Here's a link to Paul Krugman's comments of this move by the fed.

http://krugman.blogs.nytimes.com/2016/12/14/notes-on-the-macroeconomic-situation

[lannarebirth]

10 hours ago, ilostmypassword said:

Predictions based on periodicity are ill-founded. There aren't any signs that the economy is becoming overheated or anything else substantive I can see that signals the start of a downturn in the business cycle. Inflation is still very very low.

 

I'm not making a prediction. I was suggesting that you shouldn't. I could easily see home sales slowing this Summer. Too many sales based on payment affordability and not so much on underlying value (not a prediction).

 

 https://ycharts.com/indicators/30_year_mortgage_rate

 

 

Edited December 15, 2016 by lannarebirth

[lannarebirth]

5 hours ago, CaptHaddock said:

 

The Fed Open Market Committee sets the rate of Treasury Bills  by buying and selling T-bills in the market.   The Fed does not similarly set the rates of Treasury Notes and Bonds.

 

One of the poor features of Thai Visa's new software is that you can quote me but the post I was responding to is not included. I understand they want to save page space or bits or bytes or whatever, but context matters.

[ExpatOilWorker]

19 hours ago, lannarebirth said:

 

Bonds trade in an open market and rates are set by the marketplace. Fed Funds are overnight interbank borrowing rates.

 

That would be true in a market with no QE, but sine the Fed is also buying bonds they ave been interfering with interest rate (in the past).

[CaptHaddock]

2 hours ago, ExpatOilWorker said:

 

That would be true in a market with no QE, but sine the Fed is also buying bonds they ave been interfering with interest rate (in the past).

 

There is no QE now, the last purchases having been made in Oct. 2014.

[timendres]

13 hours ago, lannarebirth said:

 

One of the poor features of Thai Visa's new software is that you can quote me but the post I was responding to is not included. I understand they want to save page space or bits or bytes or whatever, but context matters.

 

EXACTLY!!! This is driving me crazy. One should be able to select the prior posts desired to include in a new post.

[elgordo38]

On 12/15/2016 at 1:09 PM, lannarebirth said:

 

Bonds trade in an open market and rates are set by the marketplace. Fed Funds are overnight interbank borrowing rates.

Is there a daisy chain in bonds where governments buy from the Fed etc. similar to the Draghi daisy chain in Europe? Is it just a digital transfer of money like yea ole shell game??

Edited December 16, 2016 by elgordo38

[lannarebirth]

8 hours ago, elgordo38 said:

Is there a daisy chain in bonds where governments buy from the Fed etc. similar to the Draghi daisy chain in Europe? Is it just a digital transfer of money like yea ole shell game??

 

I'm not sure what a daisy chain is, but I imagine it is mostly pixels on one screen changing to pixels on another. Here is the process for new Treasury offerings.

 

https://www.treasurydirect.gov/instit/auctfund/work/work.htm

[williamgeorgeallen]

On 15/12/2559 at 5:00 PM, ilostmypassword said:

Actually your statement about the the growth of personal debt - or, as it's officially called - household debt is wrong. Actually, it's been declining since 2008.

https://fred.stlouisfed.org/series/HDTGPDUSQ163N

And your statement on interest is absolutely nuts.  "America borrows trillions to pay the interest on its 20 trillion debt"  Interest rates have been hovering just slightly above zero. How does that add up to trillions in interest payments yearly? 

Remedial math, anyone?

household debt is 12 trillion. it might have gone down after so many people got booted out of their houses and no longer hold mortgages.

 

[ilostmypassword]

8 hours ago, williamgeorgeallen said:

household debt is 12 trillion. it might have gone down after so many people got booted out of their houses and no longer hold mortgages.

 

It might have if personally bankruptcy laws hadn't been drastically tightened in the Bush Administration.  Give it up and learn to do a little basic research before you post your assertions.

[elgordo38]

On 12/15/2016 at 1:09 PM, lannarebirth said:

 

Bonds trade in an open market and rates are set by the marketplace. Fed Funds are overnight interbank borrowing rates.

Would seem that banks are only lending to each other and no one else. They are jammed up with money lookin for a home but there are just no suitable investments out there. 2017 will be an interesting year maybe a make or break it year. Good thing I just renewed my life insurance for next year. God balked a bit but I convinced him to let me stay. 

[williamgeorgeallen]

2 hours ago, ilostmypassword said:

It might have if personally bankruptcy laws hadn't been drastically tightened in the Bush Administration.  Give it up and learn to do a little basic research before you post your assertions.

its a fact. here is the proof. https://fred.stlouisfed.org/series/RHORUSQ156N

americans can no longer afford to buy homes. it is getting worse as the rich get richer and the poor get poorer.

[craigt3365]

30 minutes ago, williamgeorgeallen said:

its a fact. here is the proof. https://fred.stlouisfed.org/series/RHORUSQ156N

americans can no longer afford to buy homes. it is getting worse as the rich get richer and the poor get poorer.

You are not stating facts properly.  That graph shows 63.5% Americans own homes, down from a RECORD high of 69.2  The average over the years looks to be about 66%.  Minimal changes.

[ilostmypassword]

5 hours ago, williamgeorgeallen said:

its a fact. here is the proof. https://fred.stlouisfed.org/series/RHORUSQ156N

americans can no longer afford to buy homes. it is getting worse as the rich get richer and the poor get poorer.

What ever gave you the idea that not being able to afford buying a home is not the same as being bankrupt.  The population of the US is growing. So if less people are first time homebuyers that will skew the total percentage of home buyers downwards. In other words, if the denominator Itotal population) is growing faster than the numerator (home owners) the percentage will decrease.

[elgordo38]

On 12/15/2016 at 0:11 PM, ilostmypassword said:

Congress approves Trump's tax and spending plans, deficits will skyrocket.  

You make an interesting point. Methinks that the Fed will just paper over any alarming increases in the debt. They seem to have this "make it so" power. If alarm bells are not ringing now and foreign countries are not pulling in their horns on purchasing Tbills what will be the tipping point. Then there is the inverse on Tbills if rates go up the value goes down. Somewhere in all of this there has to be a brutal rebalancing. 

[williamgeorgeallen]

3 hours ago, ilostmypassword said:

What ever gave you the idea that not being able to afford buying a home is not the same as being bankrupt.  The population of the US is growing. So if less people are first time homebuyers that will skew the total percentage of home buyers downwards. In other words, if the denominator Itotal population) is growing faster than the numerator (home owners) the percentage will decrease.

of course you dont have to be bankrupt to have your house foreclosed on, not sure what gave you the idea that i had that idea. 

[ExpatOilWorker]

1 hour ago, elgordo38 said:

You make an interesting point. Methinks that the Fed will just paper over any alarming increases in the debt. They seem to have this "make it so" power. If alarm bells are not ringing now and foreign countries are not pulling in their horns on purchasing Tbills what will be the tipping point. Then there is the inverse on Tbills if rates go up the value goes down. Somewhere in all of this there has to be a brutal rebalancing. 

 

A couple of months ago The Economist had a special report and they actually predicted that there could be a future shortage of US T-bills.

It is still considered a safe heaven for by most investors.

[elgordo38]

2 hours ago, ExpatOilWorker said:

 

A couple of months ago The Economist had a special report and they actually predicted that there could be a future shortage of US T-bills.

It is still considered a safe heaven for by most investors.

They are only paper and unless there is a massive power failure and the presses go on the blink they will be steady as they flow. The Economist wants to sell magazines and thus must they create controversy. I quit listening to economists, analysts, marriage counselors (these guys are real doozies they handed me an Open Marriage book) politicians years ago. Money down the loo. Just sharing opinions you may be right. Only time will tell. P.S. in Jamestown they thought the world was coming to an end. 

[ilostmypassword]

5 hours ago, elgordo38 said:

They are only paper and unless there is a massive power failure and the presses go on the blink they will be steady as they flow. The Economist wants to sell magazines and thus must they create controversy. I quit listening to economists, analysts, marriage counselors (these guys are real doozies they handed me an Open Marriage book) politicians years ago. Money down the loo. Just sharing opinions you may be right. Only time will tell. P.S. in Jamestown they thought the world was coming to an end. 

I often see the dollars or government securities "are only paper" trope cited here and elsewhere and I'm not sure what it's supposed to signify. As opposed to being gold?  I just don't get it.

[ExpatOilWorker]

8 minutes ago, ilostmypassword said:

I often see the dollars or government securities "are only paper" trope cited here and elsewhere and I'm not sure what it's supposed to signify. As opposed to being gold?  I just don't get it.

 

The Constitution, the law, The Bible and pretty much everything else we tend to respect is also just paper. A T-bill is a paper of IOU trust and probably more trustworthy than anything else.

[ilostmypassword]

8 hours ago, williamgeorgeallen said:

of course you dont have to be bankrupt to have your house foreclosed on, not sure what gave you the idea that i had that idea. 

Because you wrote that the decline in household debt was because people had lost their homes.  Now if the bankruptcy rules allowed them to write down or eliminate that debt, then you would have had a point. But since they essentially don't anymore, that debt just couldn't have disappeared.

[CaptHaddock]

31 minutes ago, ilostmypassword said:

Because you wrote that the decline in household debt was because people had lost their homes.  Now if the bankruptcy rules allowed them to write down or eliminate that debt, then you would have had a point. But since they essentially don't anymore, that debt just couldn't have disappeared.

 

In the US, some states, such as CA, are "non-recourse" states in which the borrower in on the hook only for the house, i.e. if he defaults on the loan the lender can take the house, but not go after his other assets if the foreclosure of the house doesn't satisfy the mortgage.  In practice, however, following the 2008 collapse of the housing market, even in full recourse states few lenders went after other assets of the defaulters, because there weren't likely to be any.  The defaulter did not have to declare bankruptcy to escape the mortgage; he could just walk away.

 

As far as I know, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 targeted credit card debt and did not alter the prevailing practices for mortgages.

 

So, yes, the wave of defaults following the 2008 crash of the housing bubble did reduce American indebtedness: the banks wrote off the failed mortgages eventually.

 

As far as I know it is only in the US that mortgagees can walk away from their housing debt. 

[Skeptic7]

On 12/15/2016 at 2:28 PM, craigt3365 said:

Anybody who can correctly guess what the fed will be doing would be a billionaire.  You can pretty much guarantee there will be at least 1 rate hike in the next 5 years. LOL

 

I remember back in 2008, dozens here were predicting the crash of the US economy and the USD.  They're eating crow now...the US isn't doing great, but not doing bad.  Hanging in there.

And the USA has been...is...and will remain for a LONG time to come...the straw that stirs the world's drink. 

 

#1 Natural Gas producing country

#1 or #2 Oil Producing country

#2 Manufacturing country and projected to overtake China to become #1 by 2020

#1 Pharmaceutical country 

#2 Automobile producing country

#1 Aerospace industry

#1 food exporter and among the top overall agricultural countries 

and on...and on...and on...

 

The USA also dominates the list of best universities in the world...

 https://www.timeshighereducation.com/world-university-rankings/2016/world-ranking#!/page/0/length/25/sort_by/rank/sort_order/asc/cols/stats

 

http://www.thebestschools.org/features/100-best-universities-in-world-today/ 

Edited December 18, 2016 by Skeptic7

[ilostmypassword]

6 minutes ago, CaptHaddock said:

 

In the US, some states, such as CA, are "non-recourse" states in which the borrower in on the hook only for the house, i.e. if he defaults on the loan the lender can take the house, but not go after his other assets if the foreclosure of the house doesn't satisfy the mortgage.  In practice, however, following the 2008 collapse of the housing market, even in full recourse states few lenders went after other assets of the defaulters, because there weren't likely to be any.  The defaulter did not have to declare bankruptcy to escape the mortgage; he could just walk away.

 

As far as I know, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 targeted credit card debt and did not alter the prevailing practices for mortgages.

 

So, yes, the wave of defaults following the 2008 crash of the housing bubble did reduce American indebtedness: the banks wrote off the failed mortgages eventually.

 

As far as I know it is only in the US that mortgagees can walk away from their housing debt. 

Thanks for the correction.

[williamgeorgeallen]

1 hour ago, ilostmypassword said:

Because you wrote that the decline in household debt was because people had lost their homes.  Now if the bankruptcy rules allowed them to write down or eliminate that debt, then you would have had a point. But since they essentially don't anymore, that debt just couldn't have disappeared.

so all those millions of people who lost their houses since 2008 still keep the mortgage?

[ilostmypassword]

Just now, williamgeorgeallen said:

so all those millions of people who lost their houses since 2008 still keep the mortgage?

Well, as Capt. Haddock has just pointed out the owners who were mostly foreclosed won't owe anything because the banks write it off.  But that still doesn't explain the continuing decline in household debt. It does partially explain why the recovery was so sluggish for so long. Consumers were paying off their debts rather than buying new stuff and services.

[williamgeorgeallen]

7 minutes ago, ilostmypassword said:

Well, as Capt. Haddock has just pointed out the owners who were mostly foreclosed won't owe anything because the banks write it off.  But that still doesn't explain the continuing decline in household debt. It does partially explain why the recovery was so sluggish for so long. Consumers were paying off their debts rather than buying new stuff and services.

if many americans can no longer buy houses the household debt has to be far less. that whole situation is disgusting. watch the big short, great movie but made me angry. not one banker went to jail.

[craigt3365]

26 minutes ago, williamgeorgeallen said:

if many americans can no longer buy houses the household debt has to be far less. that whole situation is disgusting. watch the big short, great movie but made me angry. not one banker went to jail.

Right, only 64% can afford to buy houses.  Down from an all time high of 69%.  So yes, Americans can afford to buy houses.

 

Right on about that movie.  But to say nobody got in trouble is not right.

 

https://en.wikipedia.org/wiki/Subprime_mortgage_crisis#Bank_fines_and_penalties

Quote

 

U.S. banks have paid considerable fines from legal settlements due to mortgage-related activities. The Economist estimated that from 2008 through October 2013, U.S. banks had agreed to $95 billion in mortgage-related penalties. Settlement amounts included Bank of America ($47.2B), JP Morgan Chase ($22.3B), Wells Fargo ($9.8B), Citigroup ($6.2B) and Goldman-Sachs ($0.9B).^[420] Bloomberg reported that from the end of 2010 to October 2013, the six largest Wall St. banks had agreed to pay $67 billion.^[421] CNBC reported in April 2015 that banking fines and penalties totaled $150 billion between 2007 and 2014, versus $700 billion in profits over that time.^[422]

 

Many of these fines were obtained via the efforts of President Obama's Financial Fraud Enforcement Task Force (FFETF), which was created in November 2009 to investigate and prosecute financial crimes. The FFETF involves over 20 federal agencies, 94 U.S. Attorney's offices, and state and local partners. One of its eight working groups, the Residential Mortgage Backed Securities (RMBS) Working Group, was created in 2012 and is involved in investigating and negotiating many of the fines and penalties described above.^[423]

 

 

https://www.justice.gov/opa/pr/residential-mortgage-backed-securities-working-group-members-announce-first-legal-action

 

[midas]

On 12/15/2016 at 2:28 PM, craigt3365 said:

Anybody who can correctly guess what the fed will be doing would be a billionaire.  You can pretty much guarantee there will be at least 1 rate hike in the next 5 years. LOL

 

I remember back in 2008, dozens here were predicting the crash of the US economy and the USD.  They're eating crow now...the US isn't doing great, but not doing bad.  Hanging in there.

 

 

 

Do you honestly believe so?

I don't know I'm not American but did live and work there in the 1980s and I can't recall that they lived on such a thin margin back then ? I mean I wouldn't be able to sleep at night if I knew I had such paltry savings?

 

More Than Half of Americans Reportedly Have Less Than $1,000 to Their Name

 

http://www.esquire.com/news-politics/news/a41147/half-of-americans-less-than-1000/

 

[craigt3365]

6 minutes ago, midas said:

 

 

 

Do you honestly believe so?

I don't know I'm not American but did live and work there in the 1980s and I can't recall that they lived on such a thin margin back then ? I mean I wouldn't be able to sleep at night if I knew I had such paltry savings?

 

More Than Half of Americans Reportedly Have Less Than $1,000 to Their Name

 

http://www.esquire.com/news-politics/news/a41147/half-of-americans-less-than-1000/

 

Be careful with what you read on the internet.  It's true some don't save much, but overall, the economy is doing OK.  And the unemployment rate is down.  Life's pretty good unless you read misleading articles like that.

 

http://www.forbes.com/sites/timworstall/2016/01/14/its-simply-not-true-that-most-americans-dont-have-1000-in-emergency-savings/#747816882db4