He didn't say it out loud, but he was practically describing symptoms of "liquidity trap." Pay close attention to the 4th paragraph where he mentioned about trust breaking down.
Although I don't agree that all troubled homeowners will embrace the helping hands -- this is what we assume when we talk about bailouts -- I do agree that Fed easying and pumping might not have their usual spark in this situation.
http://www.pimco.com...tember 2007.htm
Gross favors fiscal stimulus /bailout
Started by
SandStorm
, Aug 25 2007 06:32 PM
6 replies to this topic
#2
pdx5
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I want return OF my money more than return ON my money
Posted 25 August 2007 - 11:59 PM
Is Gross talking about outright "gift" to overextended home buyers
or does he mean loans?
If it is gift, I will go out and buy a house immediately with no money
down and then default, waiting for tax payers to bail me out.
If he means "loans", then that is just what we need. More credit added
into the credit bubble.
"Money cannot consistently be made trading every day or every week during the year." ~ Jesse Livermore Trading Rule
#3
SandStorm
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Posted 26 August 2007 - 02:31 AM
But you must get loan approval first and good luck with that. 
Seriously, I dunno, and I don't know to what extent the help offers by Sen. Dodd's 1-800-Hope is, either. I only know that if I am one of those troubled homeowners right now I would just let it go.
I mean what's the big deal anyway. Losing a home isn't the same as losing shelter or being homeless. Instead of forcing myself into an ownership situation that I can't afford, and as a result, sacrificing my present lifestyle, I'll choose lifestyle. I mean, yeah sure, everyone loves a ferrari, but I am very happy driving just a beamer and still have money to spare eating out, thank you. Besides, a home bought at insane, record peak was a bad deal anyway no matter what the financing term was.
Unless the government is stupid enough to subsidize a good part of my ill-timed purchase, I would just go on rental and be much happier as a refult. And who knows, years from now, when my financial health has grown stronger, and if I am lucky, homes would also be more affordable, I would be READY to become a homeowner then.
Seriously, I dunno, and I don't know to what extent the help offers by Sen. Dodd's 1-800-Hope is, either. I only know that if I am one of those troubled homeowners right now I would just let it go.
I mean what's the big deal anyway. Losing a home isn't the same as losing shelter or being homeless. Instead of forcing myself into an ownership situation that I can't afford, and as a result, sacrificing my present lifestyle, I'll choose lifestyle. I mean, yeah sure, everyone loves a ferrari, but I am very happy driving just a beamer and still have money to spare eating out, thank you. Besides, a home bought at insane, record peak was a bad deal anyway no matter what the financing term was.
Unless the government is stupid enough to subsidize a good part of my ill-timed purchase, I would just go on rental and be much happier as a refult. And who knows, years from now, when my financial health has grown stronger, and if I am lucky, homes would also be more affordable, I would be READY to become a homeowner then.
Edited by SandStorm, 26 August 2007 - 02:39 AM.
#5
Mtrader
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Posted 26 August 2007 - 11:43 PM
That is always the bottom line. Looser needs bailed out. And Mr. Gross is certainly one.
You are on your own. This is for demonstration only.
JV
JV
#6
humble1
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Posted 27 August 2007 - 12:25 AM
most of these people can't afford and don't need these bubble homes. the new taxes and insurance and the maintenance and just general responsibilty of owning and keeping up a home is too much for them. even a direct money injection will do nothing. paying their mortgages, or parts of it, for them will just prolong the market clearing.
this will take years and years to finally clear up.
#7
SandStorm
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Posted 27 August 2007 - 09:37 AM
most of these people can't afford and don't need these bubble homes. the new taxes and insurance and the maintenance and just general responsibilty of owning and keeping up a home is too much for them. even a direct money injection will do nothing. paying their mortgages, or parts of it, for them will just prolong the market clearing.
this will take years and years to finally clear up.
Exactly. Tax, insurance, maintenance are all insane right now. ARMs reset is a gift to those troubled homeowners. It forces them to get out of a bad deal they are too stupid to do so voluntarily.
Edited by SandStorm, 27 August 2007 - 09:40 AM.
