Posts Tagged ‘ paul krugman ’

Real Estate 360 Live With Louis Cammarosano 4/30/12

On Monday April 30, 2012, Louis Cammarosano, General Manager of HomeGain, was a guest on the Real Estate 360 Live radio show on The Big Talker 1580 WHFS AM, hosted by Ryan Sloper.

Listen to the show.

Part 1 (15:27)

Louis and Ryan discuss Ben Bernanke’s recent comments relating to keeping interest rates low for an extended period of time.  Ryan notes that interest rates are kept low out of necessity to keep the US interest payment obligations from being too expensive. Louis  adds that low interest rates also help keep the banks solvent. Louis notes that the policy statements don’t refer to these two points but rather state that low interest rates are in place to help the economy and consumers.

Louis notes that low interest rates are not good for consumers as they create an environment that does not encourage savings, so people are almost forced to put their savings into the stock market. Low interest rates also encourage consumers to take on more debt which is good for banks and not necessarily good for consumers. Ryan notes that loans are not available to small businesses that want to take advantage of the low interest rates.

Louis notes that the Fed policy of keeping interest rates low is market manipulation as interest rates are not driven by the market. Louis notes that if one can take advantage of these artificially low interest rate and lock in a long term mortgage you can hedge your future shelter costs against future increases. Louis notes that food and energy are stripped out of the official inflation rate.

Louis notes that the only reason the Federal Government can continue to run up deficits is because the Federal Reserve purchases the debt and that the Federal Reserve purchases 61% of all US Treasury issuance. Louis notes the Fed buys the debt with money that they print out of thin air which devalues the dollar.

Louis notes that Paul Krugman believes  that the government should be borrowing more money, and the Fed should be printing more money to pay for the borrowing to help the economy, rather than encouraging savings and production. Louis notes that if printing money was the solution to economic woes, all countries would just print more and all economic problems would be solved.

Louis notes that wealth is not created from the production and spending of money but rather from the savings and investing of money and production. Ryan notes Ron Paul’s views on monetary policy. Louis notes that gold and silver hold their value.  Louis notes that Congress ceded their authority on money to the Federal Reserve, a private bank and also notes Congress has also ceded to the President certain war powers.

Louis notes that Ron Paul’s position is not to run the economy or regulate people’s lives but rather to let people and the economy sort themselves out. Louis notes that most politicians make promises to get elected and that its difficult to get elected without a scheme.

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Posted by: HG Blog Admin on May 11th, 2012 under HomeGain, HomeGain on Real Estate Radio

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Real Estate 360 Live With Louis Cammarosano 4/9/12

On Monday April 9, 2012, Louis Cammarosano, General Manager of HomeGain, was a guest on the Real Estate 360 Live radio show on The Big Talker 1580 WNEW AM, hosted by Ryan Sloper.

Listen to the show.

Part 1 (14:46)

Ryan and Louis discuss the jobs report. Ryan notes that the unemployment rate actually dipped even though more people are unemployed as the participation rate in the labor force has dropped. Louis notes that once a worker is classified as no longer in the labor force, they are no longer considered “unemployed”.

Louis notes the disconnect between companies doing well and consumers doing well. Louis notes that the stock market is up in part because companies with a lot of cash are purchasing their own stock. Louis also notes that companies are in a different position than consumers as many companies are not in debt and have huge cash balances while many consumers have little cash and large debt balances.

Louis notes that Apple’s over performance makes the overall market appear to be doing better than it is. Louis notes that perhaps Apple is overvalued. Ryan notes that many companies have their cash overseas. Louis notes that companies also hold US treasuries and that when they decide to free up their cash, they will have to sell their US Treasuries which will put downward pressure on those securities. Louis notes that 61% of US Treasuries last year were bought by the Federal Reserve.

Louis notes that the US government engages in deficit spending and relies upon the Federal Reserve to print money to purchase the US Treasuries to fund the spending. Louis notes that up to 20-30 years ago most of the US Treasuries were bought domestically by US companies and individuals.

More recently China and Japan bought large percentages of US Treasury issuances, however in the past two or three years they have cut their purchases of US Treasuries. Louis notes that the US government has increased spending each year which means it relies more heavily on debt issuances to fund its spending-debt issuances that are increasingly purchased by the Federal Reserve Bank. Louis notes that if the Federal Reserve was not buying the debt, interest rates would be much higher.

Ryan notes that the Federal Reserve can’t continue to be the purchaser of last resort forever. Louis notes that the Atlantic is calling Ben Bernanke a hero and that Paul Krugman is arguing that inflation is too low! Louis notes that Krugman thinks that because money is cheap that we should be spending more of it. Louis argues that is akin to telling someone the morning after who is hungover to have more beers because they are cheaper in the morning than they were last night. Louis notes that the less money you make the greater percentage food and energy are as part of your budget.

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Posted by: Louis Cammarosano on April 21st, 2012 under Louis Cammarosano on Real Estate Radio

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Real Estate Radio With Louis Cammarosano 8/15/11

On Monday August 15, 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 (14:27)

Ryan notes the stock market volatility of the prior week. Ryan notes that mortgage interest rates are at record lows. Ryan talks about the cost of home ownership as being the primary determinate in home affordability and matching mortgage payments against rental payments. Ryan and Louis discuss the sales of US Treasuries in the prior week and note that demand for US Treasuries needs to remain high to keep interest rates low. Louis notes that demand for Treasuries  needs to be created by the Fed and to be coordinated by the Fed with foreign sovereigns who finance their US debt purchases by taking out debt of their own. Louis notes that interest rates are being kept low artificially. Ryan notes that China is continuing to purchase US Treasuries while Russia is scaling back. Louis notes that China is sort of forced to buy US Treasuries so that the US can pay their interest payments. Louis notes that China and Russia are also purchasing hard assets, including silver and gold. Louis notes that Alan Greenspan recently commented that the US will never default on its obligations because it can always print money. Louis notes that Greenspan’s comments do not reflect encroaching senility but rather his position of no longer being the Fed chairman and notes that Bernanke holds the same view. Louis notes that the US will pay its debt even if they have to print the difference and notes that such a manner of payment is default by inflation rather than default by non payment as the currency so printed up is worth less. Louis notes that getting a low interest rate mortgage now is a benefit in that the dollars used in the future to pay off the mortgage will be worth less. Ryan notes that when markets are volatile, they rush to purchase US Treasuries. Louis notes that the reason there is volatility is because people are concerned about the US economy and the dollar and that ironically their investment decision is to purchase US Treasuries. Ryan notes that he would buy gold or silver as a safe haven rather than US Treasuries. Louis notes that the rate on US Treasuries is lower that the rate of inflation. Louis notes that while we can’t predict the direction of interest rates, we know that rates can only fall from 4% towards zero but they can rise many points higher. Ryan notes that the Fed thinks there is no inflation. Louis notes that there is inflation in the money supply and that it has already found its way into higher prices of commodities but not necessarily in the price of all finished goods. Louis notes that this stance gives the Fed cover to do QE3 and QE4. Louis notes that we are already seeing QE3 as the Fed is reinvesting the interest in the bonds they purchased during QE1 and QE2 back into US Treasuries

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Posted by: Louis Cammarosano on August 24th, 2011 under HomeGain, HomeGain on Real Estate Radio, Louis Cammarosano on Real Estate Radio

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