On Monday May 7, 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 (14:54)
Ryan discusses the issues in Europe relating to the Euro and austerity plans. Louis notes that austerity is always difficult and notes the Austrian economists make the analogy that liquidating debt is painful and is like withdrawal from heroin but it needs to be done.
Politicians and populations given the choice will avoid the pain of austerity and kick the can down the road. Louis notes that the US is in a similar situation with politicians not advocating spending cuts but rather just a slow down in the rate of growth of spending. Louis notes that Ron Paul is the exception and has proposed $1 trillion worth of cuts in the first year of his administration.
Louis notes that Ron Paul is only promising freedom and liberty and is not promising benefits or increased government support which get politicians votes. Louis notes that a majority of the population is a recipient of government spending. Louis notes that Ron Paul will be holding hearings to End The Fed this week.
Louis notes that the bulk of US spending doesn’t come from tax receipts but from the issuance of debt that the Fed buys. Ending the fed would not be popular with big government types because it would mean that money would not be available to fund government programs. Ryan notes when there is trouble in Europe there is a “flight to safety” in US securities which drives interest rates down.
Louis doesn’t think there will be any discussion in the US to cut spending, unless Ron Paul ends up in the limelight challenging Romney. Louis does not think QE3 will happen prior to the election. Louis and Ryan discuss how the unemployment rate is calculated.
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.
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.
On Monday March 12, 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 (14:46)
Ryan discusses the upcoming Fed meeting and the potential for more quantitative easing to keep interest rates low. Ryan notes that James Grant refers to the Fed actions as market manipulation. Louis notes that when interest rates are low for items that require borrowing, prices rise (housing, college tuition). Louis agrees that Fed and government policies contribute to this.
Louis notes that when there are low interest rates and an increase in the money supply and credit, not only do prices of goods that require borrowing rise, but prices of commodities like oil and gold and silver also rise. Low interest rates also create a speculative environment.
Ryan and Louis notes that the rise in the cost of oil also impacts the cost of finished goods. Louis notes that if there is QE3, the price of oil would rise which would not be good for the President’s reelection chances. Ryan notes that interest rates will need to rise if the dollar continues to be devalued. Louis notes we have been side tracked by the Arab Spring and Occupy Wall Street and that has taken public’s attention away from the US debt crisis.
Ryan notes that only Ron Paul is talking about the unsustainability of the US debt. Louis notes that Ron Paul and his message has been marginalized by the main stream media. Louis notes that a target inflation rate is not a good idea as it is a pre-calculated method of taking the value of people’s money away. Louis also notes that low interest rates force savers into the riskier equities market as they can’t get a positive rate of return in CDs. Continue reading this post
On Monday February 27, 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 (14:27)
Louis and Ryan discuss the $5 billion suit against the banks for wrongfully foreclosing on homeowners. Louis notes a moral hazzard is created when companies and individuals are bailed out. Louis notes that when you keep interest rates artificially low borrowers have no incentive to pay off debt earlier and no incentive to save. Low interest rates urge consumption and borrowing. Louis notes that rising gas prices have little to do with speculators or problems in the Middle East but rather the decline in the value of the dollar.
Louis notes that in 1964 a gallon of gas cost $.30. In 1964 a US quarter was 90% silver. Today a 1964 quarter is worth $6.43 (MORE than the price of a gallon of gas-at today’s price of about $4.25 a gallon) a 1964 US dime is worth $2.50, so the price of gas has gone up less vs the dollar than silver. Ryan notes that Warren Buffet is a stock expert but not necessarily an expert in real estate.
Louis notes that its probable that the local Realtor knows far more about real estate than Warren Buffet. Louis notes that many people believe that Warren Buffet’s views on taxes are somehow more valid because he has made a lot of money in stocks. Louis notes that sadly, the people equate wealth with intelligence.
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