Anyone Else At The Panic Point On The Dollar?

[lehighguy]

TIPS and such would be great if they weren't lying about CPI, which TIPS are based off of.

[DcifrThs]

[ QUOTE ]
TIPS and such would be great if they weren't lying about CPI, which TIPS are based off of.

[/ QUOTE ]

so then you're implying that every government in the world that issues IL bonds lies about its inflation index?

because a global IL bond index would be not dependent on any one country.

Barron

[jws43yale]

I always find it interesting when everyone is short the dollar. I have been short for nearly a year now and I am not looking to build my position or anything. Very seldomly has every bit of the media been clamoring the same thing and it to happen as said. I highly doubt that any "crash" or "recession" will live up to current expectations. Eveyone thinks the sup-prime crisis is such a huge issue, but in reality it is only a small part of the housing market.

Although in the last couple of years over 10% of mortagages were subprice, out of all US mortgages, approximately 2% are subprime. Out of these, only approx. 13% have defaulted. So the total mortgage defaults in the US is well under 0.5%. Yes this does hurt some and the issues the banks are having with CDO's and MBS's hurts more, but this in not some catastrophic financial event.

To be honest, I am not buying back dollars or unwinding my other trades in foreign markets or commodities, but I begin to reevaluate when every market pundit is saying to make these exact trades. I recently saw a Jay-Z video where he throws Euro's in the air instead of dollars. Typically when this type of thing hits mainstream culture (e.g. the Grandma buying tech stocks) it probably is not as attractive as everyone is convinced it is.

[lehighguy]

You just have too look at the fundamentals. When everyone was buying tech there was no fundamental basis for it. The US dollar has huge fundamental problems that aren't going away.

[Zygote]

[ QUOTE ]
I always find it interesting when everyone is short the dollar. I have been short for nearly a year now and I am not looking to build my position or anything. Very seldomly has every bit of the media been clamoring the same thing and it to happen as said. I highly doubt that any "crash" or "recession" will live up to current expectations. Eveyone thinks the sup-prime crisis is such a huge issue, but in reality it is only a small part of the housing market.

Although in the last couple of years over 10% of mortagages were subprice, out of all US mortgages, approximately 2% are subprime. Out of these, only approx. 13% have defaulted. So the total mortgage defaults in the US is well under 0.5%. Yes this does hurt some and the issues the banks are having with CDO's and MBS's hurts more, but this in not some catastrophic financial event.

To be honest, I am not buying back dollars or unwinding my other trades in foreign markets or commodities, but I begin to reevaluate when every market pundit is saying to make these exact trades. I recently saw a Jay-Z video where he throws Euro's in the air instead of dollars. Typically when this type of thing hits mainstream culture (e.g. the Grandma buying tech stocks) it probably is not as attractive as everyone is convinced it is.

[/ QUOTE ]

people are only pricing a small fraction of the problems. to think the problems only exist in sub-prime is part of the problem.

the problem extends through the entire loans market. credit cards, prime mortgages, equity financing, etc.

[lehighguy]

Bingo. Credit in every facet exploded.

Wait till all those junk bonds go belly up.

$480 TRILLION in credit derivatives are out there. So muhc of it issued in the last two years.

[Phone Booth]

[ QUOTE ]
I always find it interesting when everyone is short the dollar. I have been short for nearly a year now and I am not looking to build my position or anything. Very seldomly has every bit of the media been clamoring the same thing and it to happen as said. I highly doubt that any "crash" or "recession" will live up to current expectations. Eveyone thinks the sup-prime crisis is such a huge issue, but in reality it is only a small part of the housing market.

Although in the last couple of years over 10% of mortagages were subprice, out of all US mortgages, approximately 2% are subprime. Out of these, only approx. 13% have defaulted. So the total mortgage defaults in the US is well under 0.5%. Yes this does hurt some and the issues the banks are having with CDO's and MBS's hurts more, but this in not some catastrophic financial event.


[/ QUOTE ]

The real problem is housing itself. You're right that subprime is a small part of the housing market, which just means that it is a small part of the problem. If you think housing as a whole is fine, you should be buying every housing-related stock, since the market certainly doesn't agree with you by a wide margin.

[maxtower]

Subprime is not the only problem, merely the catalyst for declining home prices (along with oversupply) which is the problem.

Take your average Joe with good credit who either recently bought a home, or took out a loan against his equity to buy a car or something. In 2006 his place was worth $300k, so he took out loans for $295k. Now in the current market he can only sell his place for $270k, a 10% decline which is common in a lot of western markets like CA, AZ, and NV. He has a choice since his house is $25,000 under water. He can eat the loss himself and pay off the full amount of the loan or dump his credit rating and his $25k loss on the bank.

Now most people I think are forced to dump their properties on the bank through a job loss or other unforeseen expense. Some however will realize that their credit rating isn't worth $25,000 and just walk away.

Many don't rationalize it all. They just see that they can buy the house they want for less than it was. So they move in. Now they are faced with the reality of having two mortgages since they can't sell the old place for what they thought it should go for, forcing themselves into foreclosure.

In scenarios like this, the housing market is impacted by a much larger group than just subprime.

[Jimbo]

[ QUOTE ]
Take your average Joe with good credit who either recently bought a home, or took out a loan against his equity to buy a car or something. In 2006 his place was worth $300k, so he took out loans for $295k. Now in the current market he can only sell his place for $270k, a 10% decline which is common in a lot of western markets like CA, AZ, and NV. He has a choice since his house is $25,000 under water. He can eat the loss himself and pay off the full amount of the loan or dump his credit rating and his $25k loss on the bank.


[/ QUOTE ]

Cal me crazy but why "must" he sell his home? It is only a paper loss at this point, everyday people don't sit down every evening after dinner and say "WOW, I just read the newspaper and it said we lost $30,000 dollars today honey, no more steak and eggs".

Jimbo

[cwsiggy]

That's the great thing about real estate. It's huuuuuge leverage but with essentially no margin calls and much more stable beta if that's the right term. Imagine buying a stock with 90% margin - lol. yes it hurts when prices drop, but you don't have to sell.
Peter Lynch said that real estate has never, ever, ever dropped in a year in this country as a whole since it's been tracked. Of course, this was said a few years ago. I think this year may be a first for the country as a whole.

Anyone know if there is an overall US housing price index? and if it's down for the year. (I'm not talking pockets like Boston or Orlando.)