On Monday June 27, 2011, Louis Cammarosano, General Manager of HomeGain, was a guest on the Real Estate Radio show on The Big Talker 1580 AM, hosted by Ryan Sloper.
Listen to the show.
Part 1 (23:53)
Louis and Ryan talk about the end QE2. Louis predicts QE2.5 as the Fed will continue to buy US Treasuries to keep interest rates low. Louis notes that they will probably buy another $300 billion of US Treasuries in the coming months. Ryan notes that the Fed is already buying about 60% of US Treasuries. Louis notes that the Fed did not want to announce QE3 at the end of QE2 as it would appear desperate and amateurish. Louis predicts that the Fed will acknowledge in the coming months that the economy is still weak, even though they had predicted the economy would be better as a result of QE1 and QE2. Louis predicts that the Fed will wait until the weak economy appears more or less permanent, or the market crashes or unemployment persists,there is a Greek default or the debt ceiling does not get raised, or there is a terrorist attack or natural disaster and then the Fed will have an excuses to inject more liquidity into the market. It seems that is the only trick the Fed knows as they view deflation rather than inflation as the enemy to the economy. Louis notes that the Fed’s view is that inflation will keep home prices stable and help reduce unemployment. Ryan and Louis characterize excessive money printing as kicking the can down the road and as a result the economy will eventually crash. Louis notes that the Keynesian retort is “in the end we are all dead”. Louis notes that the absence of an alternative currency to the dollar has provided the Fed cover for its actions and has not yet resulted in hyperinflation. Louis notes that gold and silver could be alternatives to the dollar, however there has not been a significant flow into those assets. Louis gives the examples of Zimbabwe and Argentina as countries with hyperinflation as a result of excessive money printing. Louis notes the difference between an investment in real estate (for rental cash flow) and the mere purchase of a home to live in and cites a recent Rasmussen poll that shows that only 47% of those polled think that a home is “the best investment” down from 73% in January 2009. Louis notes that the media focuses on the distressed real estate market from the perspective of the home buyer rather than the from the perspective of the investment. Louis notes that any purchase of a home needs to be analyzed rather than merely relying on the dictum that a home is the best time to buy a home as a justification for purchasing a home. Louis notes that the Fed is the king of the bubble and notes the sky high valuations of Linkedin and Pandora are a result of the easy money policies of the Fed. Louis and Ryan discuss the national debt and the debt ceiling. Ryan predicts that Congress will raise the debt ceiling.Louis notes that there is no political will not to raise the debt ceiling. Louis predicts that the politicians will not propose drastic spending cuts now but rather will propose large cuts as long as they are far into the future. Louis notes that the US released some of its strategic reserves to try to drive the price of gas down. Louis notes that this oil was meant to be used for emergencies only and will have a temporary effect and and that when the U.S. has to go and purchase oil to replace the oil that they released oil prices will rise again. Louis notes that government intervention often is unnecessary and leads to bad results and states that it often derives from a desire to try and fix something and uses the analogy of a doctor-just because you are a doctor doesn’t mean you have to operate on every patient you meet. Louis notes that the Fed has had a poor record in predicting the direction of the economy
Part 2 (14:20)
Ryan notes that the Fed’s view of the economy’s reduced pave of the recovery is “temporary”. Ryan and Louis discuss how the Fed is always willing to blame natural disasters for economic slowdowns. Louis also noted that the Fed definition of rising commodity prices as “transitory” is elusive as it could mean a lifetime. The Fed also notes that high food and energy prices keep the core prices down because as people spend more money on food and energy they can’t bid up the prices of other goods, thus keeping prices low! The Fed concluded that the economy will pick up in the second half of the year. Louis speculates that the Fed made this statement so that when the economy does not recovery in the second half the Fed can claim due to an unexpected lack of economy recovery they will need to do more monetary easing. Ryan and Louis note that the current GDP rates are not high enough to pull the economy out of the recession. Louis notes that when the US emerged from recession in the early 1980′s the GDP was in the upper single digits. Louis and Ryan discuss whether interest rates will rise. Louis and Ryan note that they have been wrong about the direction of interest rates as both have been predicting an increase in interest rates. Louis cites Keynes-”markets are rational but they can stay irrational longer than you can stay solvent”
Part 3 (11:25)
Part 4 (1:59)
Ryan wraps up the show.
Listen to other Real Estate Radio shows with Louis Cammarosano
Listen to the Real Estate Radio show of June 20, 2011
Listen to the Real Estate Radio show of May 23, 2011
Listen to the Real Estate Radio show of May 16, 2011
Listen to the Real Estate Radio show of May 9, 2011
Listen to the Real Estate Radio show of May 2, 2011
Listen to the Real Estate Radio show of April 25, 2011
Listen to the Real Estate Radio show of April 18, 2011
Listen to the Real Estate Radio show of April 11, 2011
Listen to the Real Estate Radio show of March 21, 2011
Listen to the Real Estate Radio show of March 14, 2011
Listen to the Real Estate Radio show of February 28, 2011
Listen to the Real Estate Radio show of January 24, 2011
Listen to the Real Estate Radio show of November 29, 2010
Real estate radio interviews also available on Youtube
About the Real Estate Radio Network
The Real Estate Radio Network® is a nationwide alliance of real estate related professionals with a common objective: delivering the timely truth about local Real Estate Markets over local radio stations.
The Real Estate Radio Network brings hard-working and ethical professionals in a community together. We provide the media and forum necessary for Consumers to learn the truth about important aspects of their financial life, which is mostly centered around their biggest investment, the home they live in. The Real Estate Radio Network® brings each radio program to the audience with a “live and local” show hosted by well-respected members in the local Real Estate and Financial community.
About Ryan Sloper
As a highly motivated mortgage consultant, with more than nine years of mortgage lending experience, Ryan Sloper has acquired a solid understanding of the local and national real estate markets. Ryan has been investing in residential and commercial real estate for the last 5 years, where he has first hand knowledge of what it takes to be a successful real estate investor. Ryan also hosts a weekly radio show, Real Estate Radio, which airs every Monday on 1580 AM in the Washington, DC Metro Area. Real Estate Radio also streams live nationally @ http://whfs.cbslocal.com/shows/real-estate-radio-with-ryan-sloper/