news and random thoughts...

News from Realtytrac. This article has the following gem:

But the best foreclosure bargains for most of 2006 were not found in Los Angeles, Las Vegas, Miami or other previously hot markets, according to
RealtyTrac’s survey of foreclosure sales in 2006. The survey shows foreclosure buyers in Las Vegas, Miami and Los Angeles on average saved less than 15 percent off full market value in 2006, while foreclosure buyers nationwide saved nearly 25 percent on average. Foreclosures discounts were biggest in several Midwestern states such as Ohio, where foreclosure buyers saved an average of nearly 40 percent, and Indiana, where foreclosure buyers saved more than 35 percent.

This gives us a good idea about what a foreclosure rate of 2% plus local economic weakness (manufacturing) means in terms of prices. They are 25-40% too high.

The next article predicts 2 million foreclosures by the end of the year.

I came up with these thoughts about banks and the banking industry. Part of this comes from reading Keynes, which makes almost no sense to me. Banks make money by borrowing short and lending long. In order to keep longer rates higher, they need expectations of inflation. For inflation, they need to collude with government. The argument could be that banks lose just as much to inflation as they make. That is true. But they always make money on their deals NOW. This is the insidious and devious nature of banking and all usury. However, they want inflation to be stable. That's where the problem comes in.
Another thought about CB's. The reason that CB's should print money in a crisis is to punish hoarders of cash by devaluing their hoards. This will encourage consumption and spending in the face of deflation.