Borrowers Turn Their Backs on Adjustable Rate Mortgages (plus much more…)
The infamous adjustable rate mortgage, made particularly infamous by village idiot Alan Greenspan advocating for them at the long-term nadir in interest rates, helped spawn the housing boom. By securing a low initial interest rate, buyers could afford to jack up their overall borrowing as initial monthly payments would be very low in relation to the loan. However, after a certain period, the rates were often due to reset much higher, significantly increasing the monthly payment needed to service the new rate. If ever there was a tangible product exemplifying the buy now, worry about paying later mindset, this was it. As these products are now helping to destroy the housing bubble that they initially assisted in fueling, consumers are turning their backs on the products. This is a fortunate thing for the long-term stability of the economy.
In related economic news, a massive S&P options bet was made this last week that has some very interesting potential implications and has spawned a multitude of theories across the net. This linked article is the best analysis I have seen relating to the enormous option bet.
Additionally, I would like to draw your attention to a recent congressional speech made by Dr. Ron Paul. In it, Dr. Paul advocates for significantly curtailing Federal Agencies (a part of the Executive Branch of our limited republic) and their ability to create laws via federal regulations. The founding fathers would have been aghast at the scope of the Executive Branch’s de facto ability to legislate and generally rule the roost. Hopefully Congress wakes up, stops trying to legislate more worthless income redistribution schemes, and does their job, while reining in the unwieldy Executive Branch. The text of the speech can be found by clicking here.
In a very related vein, please check out this article highlighting the insanity of federal zoning, farming and other nut job regulations on the people. We the People need to get this ridiculous bureaucracy to chill out. It is our responsibility as reasonable citizens.
Filed under: Politics, Social Mood, Economics
Could the SPY-option play be somehow related to the Eurostoxx 60 play (see link below)?
http://www.davemanuel.com/2007/08/27/mystery-trader-makes-huge-bet-on-dj-eurostoxx-50-september-puts/
I am definitely very wary about the markets over the upcoming month. Be prepared for some potential fireworks.
[…] The Ponder This Blog is your premier source of news and commentary pertaining to asset preservation, investments, monetary policy, surviving the housing bubble burst and more. The infamous adjustable rate mortgage, made particularly infamous by village idiot Alan Greenspan advocating for them at the long-term nadir in interest rates, helped spawn the housing boom. By securing a low initial interest rate, buyers could afford to jack up their overall borrowing as initial monthly payments would be very low in relation to the loan. In related economic news, a massive S&P options bet was made this last week that has some very interesting potential implications and has spawned a multitude of theories across the net. Paul advocates for significantly curtailing Federal Agencies (a part of the Executive Branch of our limited republic) and their ability to create laws via federal regulations. read more […]