On Monday October 31, 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 (13:47)
Ryan notes that in spite of the institution of Operation Twist, interest rates have increased. Louis notes that the Fed can’t totally control interest rates. Louis notes that rates want to and need to go higher. Louis notes that the dollar should be a weaker currency, but the Swiss and Japanese central banks purchased dollars to weaken their own currencies. Louis notes that there is a false concept if there is inflation, employment will increase. Louis notes that in this weak environment, all that happens is that unemployed people pay more for goods and services. Louis notes that the government uses hedonics to supress the actual impact of inflation. Louis notes that long term financing is a gift at low rates. Ryan notes the difference between the federal fund rate and the mortgage backed securities market. Louis notes that the Fed’s pronouncement that they intend to keep interest rates low is sending a false signal to the market as people think that mortgage interest rates WILL remain low until early 2013. The Fed may purchase mortgage back securities. Ryan notes that Obama focused on health care in the first years of his administration and now is only focusing on the housing market. Louis notes that characterization is not entirely fair as the stimulus was passed prior to health care under the idea that the stimulus would solve the housing woes and unemployment. Louis notes that the government programs can not solve economic problems. Louis notes that all the government programs are merely a misguided attempt to re heat a souffle. Louis notes that politicians can not run on the platform that they are not going to do anything about the economy other than let the market sort itself out, even though that may be the best solution.