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Posted by: Thogan0813@aol.com on Friday, May 9, 2008
With the housing market is the ditch, will the housing market not be subject to a bigger decline, as a result of inflation activities and the Fed's probable actions of significantly raising rates? In other words, such as in the early 80's, doesn't significantly higher interest rates kill the housing market? Will we go from bad to worse?
Posted by: Roswellric on Friday, July 11, 2008
What if the GSE's go BK? Won't some of the bondholders have to dump part of the $5T bonds? Wouldn't that drive interest rates throught the roof? What about all the commercial FNMA loans in the pipeline and not funded? Wouldn't that whack the banks again?
Posted by: Bryce Pitters on Sunday, July 20, 2008
Mike, In M&M and in Safe Money... Martin and you always mention that safe places for keep safe cash are like the Weiss Money Fund, Fidelity US Money Market Fund and a host of others. I know these funds are not FDIC insured (which FDIC insured won't really mean much when many banks fail in the future because they'll probably say we can't afford to pay everyone now because the FDIC is in bad shape too). My question is can you be more specific to why these money funds are better places to keep our money than in bank deposits. I don't trust the banks at all. However, I'm leary about these money funds too. I just want to park my spare cash someplace where I don't have to worry about a default. What exactly do these money funds hold. Is it just gov treasuries and if so what gov treasuries? US or others as well? Lastly, are gov short term treasuries the ultimate saftey for keep safe cash in your opinion? Besides US treasuries how can one buy Swiss, Aussie or Japenese short term treasuries? Perhaps an indepth M&M on this subject would be great. Thanks!
Posted by: Zvi on Monday, July 21, 2008
Mike, You keep posting warnings about single family homes and commercial real estate. Could you please add your views on residential rental buildings? After all, people need to live somewhere. If a rental building is cash-flow positive, would you still recommend selling it?
Posted by: Mike Larson on Thursday, July 24, 2008
Regarding interest rates, they are clearly trending higher as investors start to question the cost of backstopping Fannie Mae and Freddie Mac. The Feds are in a quandary -- bail out Fannie and Freddie, and you might lower the spread between the rates on their mortgage-backed securities and/or corporate bonds and Treasuries. But bond investors will realize that to FUND that bailout, you will likely have to sell boatloads of Treasuries. So underlying Treasury rates will go up. The net benefit for mortgage borrowers: Zero. As for the benefits of Treasury-only funds, we have covered that a number of times in the Safe Money Report. And with regards to residential rental property, there's nothing wrong with holding cash-flow positive property if you're using it to provide income and plan to hold for some time. But you have to recognize that the actual value of the property could very well decline in the next year or two (and perhaps more).