Forget Housing, Says Bill Gross

BIGBOI · 10-19-2009, 07:50 PM

http://www.forbes.com/2009/09/08/bil...ets-bonds.html

For those who don't know who BILL Gross is. He is the warren buffett of bonds.

He is very very intelligent. Trust what he says.

**Josh** · 10-19-2009, 11:23 PM

Quote:

Gross argues that homeownership is on the wane because Americans are developing a habit of saving and will no longer trust their houses to play piggy-bank.

duh....

Quote:

This is Gross’s “new normal,” and it makes the U.S. look much less exciting than the past 50 years. Companies will see lower profit growth, unemployment will remain stubbornly high and people, fearing for their jobs, won’t spend as much.

The investors at Pimco say the new environment favors a handful of conclusions. Interest rates will remain low. Government action will determine investment returns, so investors should be ready to use government backing to their benefit. Asian economies as well as Australia and Brazil will lead global growth. Expect to see the dollar fall.

let's see....exactly what i've been saying....

bill gross is a sharp guy, but i can't imagine him suggesting bonds as a good investment during a time where he suggests the dollar will fall being anything other than a plug for his own interests. because what's worse than owning a dollar today? having the promise to be paid a dollar in 5 years, or 10 years. with inflationary times such as these, who knows what the dollar's going to be worth in the next decade. stocks are the only place to be, you have to own real stuff, not paper.

**BAMF** · 10-19-2009, 11:30 PM

Home ownership is on the wane because people are fucking broke and can't afford to live in and own a house.

**Josh** · 10-20-2009, 12:18 AM

true, but that's not the only reason. lenders are also being more cautious. there's not any more of these no documentation, negative amortization, teaser-rate, interest only, adjustable rate mortgages. so that cuts down on that number a lot. there's also a lot of talk, albeit still skeptical, about inflation....or rather the effects of inflation.

bill gross also notes the dollar is going to fall, but that's not the source of the inflation. the dollar is falling BECAUSE if the inflation we are creating now, and it's the fears of inflation's effects that expose the risk of holding savings in dollars or holding liabilities in dollars, people in turn recognize this risk and offload their dollars for less riskier assets like Japanese Yen, Auzzie Dollars, or Canadian Dollars. this risk in the dollar will become even more apparent, especially in the next year as we really dive into some serious spending of this stimulus bomb. as a result, the dollar could come under some serious pressure real real soon, but we'll see.

add to this housing prices still have a way to go if only because lenders are going to be requiring a more substantial down payment as people finally start to pay attention to all the inflation that the federal reserve is creating in attempts to get nominal home prices to rise. if we didn't have the federal reserve 'easing', we would see this decline in dollars, but since they are 'easing', which is a nice way of saying inflating, we will not see this dissipation in dollars, but we will see it through the prism of commodity prices, consumer prices, gold, silver, etc.

we can already see what the easing since 2001 has done to the dollar.....it's tumbled precipitously from 120 to 75 and change - that's huge in such a period of time! and we can see the result, gold at $1,000/oz., oil back on the move, and foreign currencies making weekly 52-week highs! this is all the result of debasing the dollar. granted we're not the only ones who are guilty, the whole world is creating inflation, but we're really taking the cake on how fast the printing presses are going and ultimately, i think we'll beat everyone.

so what's it matter if you live an a million dollar condo if you got a fridge with $10,000 of groceries? home prices measured in anything else besides dollars will collapse - not that you would use anything else as a medium of exchange, but it's a strong indication of the purchasing power that's being dissipated just so we can see our assets appraise at a higher nominal price in dollars.

BIGBOI · 10-20-2009, 10:53 AM

I personal think the dollar is reaching more of a fair value. It was over valued had a run of like 45% some years back..

Our trade balance is out of whack and if the dollar slowly declines it will be alright.

Now if a collaspe of the dollar happens that would mean different effects.

10-19-2009, 07:50 PM	#1 (permalink)
BIGBOI Registered User	Forget Housing, Says Bill Gross http://www.forbes.com/2009/09/08/bil...ets-bonds.html For those who don't know who BILL Gross is. He is the warren buffett of bonds. He is very very intelligent. Trust what he says.

10-19-2009, 11:30 PM	#3 (permalink)
BAMF Thread TERRORIST	Home ownership is on the wane because people are fucking broke and can't afford to live in and own a house.

10-20-2009, 12:18 AM	#4 (permalink)
Josh When I read your post	true, but that's not the only reason. lenders are also being more cautious. there's not any more of these no documentation, negative amortization, teaser-rate, interest only, adjustable rate mortgages. so that cuts down on that number a lot. there's also a lot of talk, albeit still skeptical, about inflation....or rather the effects of inflation. bill gross also notes the dollar is going to fall, but that's not the source of the inflation. the dollar is falling BECAUSE if the inflation we are creating now, and it's the fears of inflation's effects that expose the risk of holding savings in dollars or holding liabilities in dollars, people in turn recognize this risk and offload their dollars for less riskier assets like Japanese Yen, Auzzie Dollars, or Canadian Dollars. this risk in the dollar will become even more apparent, especially in the next year as we really dive into some serious spending of this stimulus bomb. as a result, the dollar could come under some serious pressure real real soon, but we'll see. add to this housing prices still have a way to go if only because lenders are going to be requiring a more substantial down payment as people finally start to pay attention to all the inflation that the federal reserve is creating in attempts to get nominal home prices to rise. if we didn't have the federal reserve 'easing', we would see this decline in dollars, but since they are 'easing', which is a nice way of saying inflating, we will not see this dissipation in dollars, but we will see it through the prism of commodity prices, consumer prices, gold, silver, etc. we can already see what the easing since 2001 has done to the dollar.....it's tumbled precipitously from 120 to 75 and change - that's huge in such a period of time! and we can see the result, gold at $1,000/oz., oil back on the move, and foreign currencies making weekly 52-week highs! this is all the result of debasing the dollar. granted we're not the only ones who are guilty, the whole world is creating inflation, but we're really taking the cake on how fast the printing presses are going and ultimately, i think we'll beat everyone. so what's it matter if you live an a million dollar condo if you got a fridge with $10,000 of groceries? home prices measured in anything else besides dollars will collapse - not that you would use anything else as a medium of exchange, but it's a strong indication of the purchasing power that's being dissipated just so we can see our assets appraise at a higher nominal price in dollars.

10-20-2009, 10:53 AM	#5 (permalink)
BIGBOI Registered User	I personal think the dollar is reaching more of a fair value. It was over valued had a run of like 45% some years back.. Our trade balance is out of whack and if the dollar slowly declines it will be alright. Now if a collaspe of the dollar happens that would mean different effects.