Posts Tagged ‘ US treasuries ’

Real Estate 360 Live With Louis Cammarosano 11/26/12

On Monday November 26, 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 (14:35)

Ryan and Louis discuss the fiscal cliff. Louis predicts that Congress will come up with a solution and that we have already gone off the fiscal cliff, they just don’t want to pull the parachute. Louis notes that the deficit is $16 Trillion and unfunded liabilities are $86 trillion and no amount of taxes or growth will be able to pay off that amount of debt.

Louis notes that Congress is worried about avoiding the automatic spending cuts and taxes increases scheduled to prevent a recession. Louis notes that there would be a recession, but that the recession is the cure to the poor economy, but that Congress will have no interest in really cutting spending. Louis notes that if Congress avoids the “fiscal cliff’ the markets will rally.

Louis notes that most of the revenues don’t come from taxes but from borrowing from foreign sovereigns and from the Federal Reserve buying US Treasuries with money they print out of thin air. Louis notes that on top of printing money to fund deficits, the Fed also attempts to stimulate the economy with QE1, 2 & 3 which involves printing money out of thin air to buy US treasuries and mortgage securities.

Louis notes that all the printing and spending will end badly but there is no appetite to stop it because government always needs money and its citizens are always willing to take the money that government redistributes.

Louis predicts that taxing the “rich” will also be part of the solution to the fiscal cliff. Louis notes that this will not solve the deficit problem and only gives expression to envy. Louis notes that people are always in favor of higher taxes -on somebody else. Louis notes that taxing the rich is a slippery slope as 90 percent of the population can vote to raise taxes on the top 10% , then 80% to raise taxes on the top 20% and eventually 51% to raise taxes on the top 49% which Louis views as mobocracy.

Louis notes that as part of the fiscal cliff solution there won’t be spending cuts, just cuts in the growth in the rate of spending.

Ryan describes this type of solution as just kicking the can down the road. Ryan notes that taxing the rich will back fire as they will cut their workforces. Ryan notes that politicians don’t understand economics 101. Louis notes that politicians may or may not understand economics 101, but they do understand politics 101. Louis notes that people don’t understand that you can take ALL of the wealth from the wealthy and that would run the government for just a few hundred days.

Louis notes that the problem is spending and that people want things from government and they want someone else to pay for it.

Louis notes that the Fed is Congress’ best friend as it enables them to continue spending without having to go back to the tax payers to ask for more money.

Louis notes the market will eventually the Fed, once borrowers realizes that the Fed will continue to devalue the currency that its bonds are denominated in and when that happens interest rates will rise and the dollar drops and the spending won’t be able to continue. At that point there will be inflation and you will be lucky to own commodities and real estate.

Louis predicts that if Congress avoids the fiscal cliff, the rating agencies may down grade the US debt rating and that may cause the dollar to drop and interest rates to rise.

Louis notes that taxing the rich can not pay off the deficit and that taxing the rich is a populist concept, not an economic one

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Posted by: Louis Cammarosano on December 7th, 2012 under Louis Cammarosano on Real Estate Radio

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Real Estate 360 Live With Louis Cammarosano 7/9/12

On Monday July 2, 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 (15:51)

Ryan reviews the unemployment numbers. Louis notes that people are looking to central planing and stimulus QE1 and QE2 to solve economic problems rather than the free market. Louis notes that printing money just adds to the money supply and causes inflation. Louis notes that because interest rates are lower people put their money in the stock market causing the stock market to go higher and making people believe that the economy is better. Companies also buy back their shares instead of investing their cash which also raises stock values. Louis notes that an economy grows from investing savings not from borrowing money to buy things. Ryan notes John Williams San Francisco Fed President’s remarks that predict a stronger dollar low inflation and high unemployment. Louis notes that increasing taxes will harm the economy as it will not go towards deficit reduction but towards more spending. Louis notes that if government spending were cut, the private sector would get that capital and allocate it more efficiently than the government. Louis notes a recent survey where a majority of people said they would take reduced government for a reduction in taxes. Ryan and Louis discuss the recent government food stamp commercials. Louis and Ryan discuss the student debt issue and how it an high unemployment rates among young people will prevent them from buying homes.
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Posted by: Louis Cammarosano on July 17th, 2012 under HomeGain on Real Estate Radio, Louis Cammarosano on Real Estate Radio

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Real Estate 360 Live With Louis Cammarosano 6/4/12

On Monday June 4, 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 (14:31)


Louis notes that the “flight to safety” still involves buying US Treasuries even though the US owes over $14 trillion and notes that the Fed will continue to do quantitative easing and keep interest rates low. Louis notes that even though this methodology can be viewed as “kicking the can down the road” and that road is a dead end, the markets seem to buy it.

Ryan notes that ten year treasury is at an all time low. Louis notes that rates in Germany are negative. Louis notes that Europe is considering an even stronger central bank bailout of Europe. Louis notes that in a debt driven economy, more and more debt needs to be layered on to keep the economy going. Louis notes ironically that investors take comfort that the Federal Reserve will continue to buy US debt based on money created out of thin air. Louis notes that once hyperinflation inflation hit, the printing press needs to go into overdrive and the game is over.

Louis notes that the Federal reserve has been able to maintain confidence in their ability to sustain confidence and to pay down the debt with more debt. Louis notes that once confidence is lost it is lost quickly. Louis notes that a 30 year low interest mortgage is a good bargain. Louis notes that rates are artificially low and therefore the low rates are a bargain. Louis notes that all currencies are tied to the US dollar so the US dollar acts as an anchor even though the US dollar is not backed by anything. Louis notes that the US went of the gold standard in 1971. Louis notes that people take comfort in the dollar just because.
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Posted by: Louis Cammarosano on June 16th, 2012 under HomeGain Radio, HomeGain on Real Estate Radio, Louis Cammarosano on Real Estate Radio

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Real Estate 360 Live With Louis Cammarosano 4/23/12

On Monday April 23, 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 (14:40)

Ryan notes that the Fed is going to meet again next week and that many experts expect another round of quantitative easing. Louis thinks that the Fed won’t announce QE3 and that a lot of capital is flowing into the US as a result of the problems in Europe and that indeed many economists expect the US dollar to appreciate in value. Louis is not certain that is a well founded belief, but one that is prevalent.

Louis notes that an announcement of QE3 might cause a bit of a panic because it would be an admission that the recovery is not taking hold and oil prices would rise. Louis thinks that although the Fed may want to do QE3 they will probably hold off until after the election in November.  Louis notes that the average investor is either short on cash or can not save as interest rates are low so they put their money in the stock market which drives valuations higher.

Louis notes that if you really wanted a strong dollar you would want higher interest rates so people would save money and invest in treasuries, rather than the Fed printing money out of thin air to buy them and thereby devaluing the dollar. Ryan notes that the dollar is appreciating vs the Euro. Louis notes that the dollar is not however strengthening against gold silver and oil. Louis notes that the amount of gold being mined is not as great as the amount of money being printed.

Louis and Ryan note the rising rental market. Louis notes that college grads will also put pressure on the rental market as most won’t be in a position to buy homes as they have student loans to pay and poor job prospects and will more often than not be renting.  Louis notes that the American Dream of home ownership is in jeopardy for young people.

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Posted by: Louis Cammarosano on May 1st, 2012 under HomeGain Radio, HomeGain on Real Estate Radio, Louis Cammarosano on Real Estate Radio

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Real Estate Radio With Louis Cammarosano 10/10/11

On Monday October 10, 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 (14:28)

Ryan notes the disconnect between where the media thinks interest rates are headed and where they actually are. Louis discusses investors attitudes towards Europe and notes that because the situation in Europe is uncertain that they rush to US dollar denominated assets which pushes interest rates lower. Louis notes that at some point the market will figure out that US treasuries are not really a good investment and that interest rates will head higher. Louis notes that because of the Fed policies and the perceived quality of US treasuries that US interest rates are artificially low. Louis notes that all things considered equal, interest rates are attractive now, especially long term mortgage rates. Louis and Ryan discuss the cost of home ownership vs renting.  Louis notes that everything is going up (consumer goods and rents) except interest rates and home prices. Louis notes that rents will rise in the coming years but that a low fixed rate mortgage will stay low over the next few year. Louis notes that you can lock in your lowest cost-shelter-by taking out a long term interest rate mortgage rate. Ryan notes that rate of home ownership is declining and notes that its not necessary to have a 70% home ownership rate.  Louis notes that a lot of people have lost their homes and that a new generation of potential homebuyers are not there because the younger generation is facing a high employment rate. Louis notes that the decision to buy a home should not be based on what the home ownership rate is but rather what your personal situation is.

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Posted by: Louis Cammarosano on October 23rd, 2011 under HomeGain, HomeGain on Real Estate Radio, Louis Cammarosano on Real Estate Radio

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