Single digit temperatures. I am using the big battery that ended up being “free” from the defective hooded heated pancho that “Maggie” had to fight for a refund.
It seems that I have become hypersensitive to the cold. Part of this is due to caloric restriction. The heat offsets the hunger and urge to binge on food to stay warm. The heated vest counters the winter triggers that help ensure survival.
In me the cold triggers fatigue. Part of this is my Cold Agglutinin Disease. When my red blood cells Hemolize (die off) they produce a sedative like M-zine that induces sleepiness and fatigue. This happens every winter and is natural for me.
So today about half of 30 year mortgages are under 3.75%. This pretty much created the “locked-in” effect where low mortgage interest rates inhibit churn and turnover rates. Effectively the housing shortage is made worse by making the housing market tighter.
Use to be that every 6-7 years home owners sold their present home and canceled their mortgages. New homes would then be purchased with equity gained, but now that cycle has been broken. People are “locked-in.” Some say the average 30 year mortgage cancellation is now 8 years, but I see that number growing, and the clear trend will be less and less mortgage cancellations.
More and more 30-year mortgages I think will likely go full term…
The forecast is that mortgage interest rates will remain high in the 6 1/2%- 7% range.
Historically, looking over decades, the long-term average 30 year mortgage rate is actually 7.49% believe it or not. Also my dad’s VA mortgage was a low around 4% mortgage. The problem today is that there is a serious housing shortage due to under-building since the 2007-2008 economic collapse, credit crisis, and housing crisis.
Pretty much about a 15 year “overhang” that would require at least 15 years of serious and sustained “over-building” just to balance the supply and demand. Of course this would require a stable 15 years of prosperity. I don’t see AI doing that like the electronics and communications revolution that basically led to a balanced budget and economic surplus here in the U.S.
I dug into the Quantitative easing to gain understanding. During QE usually/generally distressed assets are bought by the FED, but for the past 15 years the FED has been buying bonds that have less risks. The idea is that the distressed assets usually recover value and eventually can be unloaded and sold at a profit. An example of distressed assets would be Mortgage Backed Securities.
Pretty much the FED bought U.S. Bonds in vast amounts to bid them up. The takeaway is that the effect was to create a supply/demand offset that kept/caused U.S. bonds to maintain value: a kinda artificial subsidy or offset of course; or in Calzone speak a market manipulation to create demand by manipulating scarcity.
So with the FED sitting on a portfolio of bonds during an inflationary time, makes these old bonds worth less, than the newer bonds that offer higher interest rates. This also gets compounded because rolling over the lower yielding old bonds into newer debt is more costly. This old debt becomes a liability and presents real losses.
I repeated and outlined above the real reason why the FED can’t really kill inflation, and can only temper or moderate it, but also know that inflation or debasing or devaluing a currency is a solution to eliminate debt.
An understanding of this can be explained by our under 3% 30 year mortgage. I can see the real inflation rate being north of the interest rates we have locked in. Remember that over the years of the Pandemic food prices have increased over 25%. The FED does not count this…
So pretty much the value of the future dollars goes down as inflation erodes purchasing power. There is no sense to pay off our mortgage early. Same with my student loan at the historical low 2.125% secured in 2006 in the era of “Free-Money.”
So ideally the FED can usually offset loses with gains to diminish a bloated portfolio that basically stabilized things, but because our FED pumped up the bond market too much, and didn’t buy distressed assets at bargain prices, and in fact bought safe assets during a time of crisis that are now deemed were costly the FED is now sitting on losses (dead-money).
So the opposite of quantitative easing is quantitative tightening. Pretty much reducing the size of the massive portfolio the FED built up over 15 years of quantitative easing. Not easy to do, especially now because those safe bonds now represent losses.
Know that our interest payments on these bonds is a problem and is substantial. The reality is that the FED can’t afford to fight the war on inflation because it lacks dry ammo.
The situation is/was like a consumer using a credit card to pay off another credit card. Pretty much not so different than a Ponzi scheme that is unsustainable.
So why are mortgage rates kinda hovering and going sideways? Pretty much there is too much “credit-risk.” Someone buying a home at 7% basically might not be able to meet the 30 year obligation of timely payments.
Clearly the FED is in a bind sitting on a portfolio of losses. Who will buy our debt? Not China anymore, they can’t afford to subsidize our insane consumption anymore, and they are experiencing a serious economic collapse.
China used their dollar reserve to purchase physical gold as a store of wealth. Central Banks followed suit buying gold bullion after China. Gold as a commodity BTW is priced in dollars.
Again, “Who will buy our debt?”
Central Banks are hoarding gold already instead of building up dollar reserves… The real message here is that the Central Banks already don’t see enduring value in the U.S. Dollar. Easy to see the trend if you look into the long-term, basically there is “Credit-Risk” of not getting paid back and increasing chances of default.
Of course this situation with the value of the dollar extends to consumer credit and the housing market.
Don’t think Europe will bail us out. There are serious problems in Europe as in China.
So when you follow the money things become more grounded in the long-term outlook of a very muddled future that is devolving and not looking so grand. Meanwhile the stock markets are imbalanced and are insane.
AI is the reason why I got mistaken for a man who had a bad day at work and beat the crap out of his boss. AI again is the reason why I again was mistaken for this Colorado man for a workman’s comp claim. Pretty much two AI errors and mistakes. Point here is that this AI is not adding productivity, and in fact is a further indicator of dysfunction. BTW I still get the AI generated notices for a monthly meeting with a Probation Officer.
Also have you noticed the level of intrusion, spam, marketing, profiling, ID fishing, targeting, and scamming going on?
I highly suggest freezing your credit. Also there have been real data breaches, and there are scams that use the pretense of a data breach to gather personal information to steal your identity and promote theft and fraud.
Don’t fall into being a victim, and protect yourself. Heed my “NetSpend” alert.
Cal
