# so what does the 1/2 point drop in rates mean?



## Vortex (Sep 18, 2007)

Will that be enough to lower interest rates we use to buy homes?


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## dmc (Sep 18, 2007)

It will definately lower mortgage rates..  Thats what they're doing ... Trying to stop people defaulting on mortgages with adjustable rates..  
This whole thing is rippling into the world economy and pissing people off...


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## tjf67 (Sep 18, 2007)

dmc said:


> It will definately lower mortgage rates..  Thats what they're doing ... Trying to stop people defaulting on mortgages with adjustable rates..
> This whole thing is rippling into the world economy and pissing people off...


CC Rates will Drop
It will definatley drop H.E. Rates.


Probably will effect mortage rates but not for sure.


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## Vortex (Sep 18, 2007)

I know its a rate drop. sometimes the rates banks charge don't trickle down. I was hoping your view would be correct.  Hoping this will help me  sell my condo to be honest.  The finance end is all math to me:razz:.


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## GrilledSteezeSandwich (Sep 18, 2007)

In my area home prices continue to fall..as there are more sellers than buyers...Foreclosures are at an all-time high.  I'm hoping home prices fall a little more so they're less if/when I buy a house.  My plan is to wait longer to buy a house so I can put down a much larger down payment..living in an apartment is so much simpler..my heat, water, and garbage is included..and I don't have to worry about taxes, mowing, maintence, or shoveling.


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## ctenidae (Sep 18, 2007)

10 year treasury is off something liek 0.001%, so that's good for mortgage rates. Not.
Mortgage rates have only been at or above the Fed target twice in the past 6 months, so effectively there's been a stealth .25 cut in place for a while. Now it's official.
Longer term effects, the dollar's going to go down faster than a two buck ho at a kneepad convention. Foreign reserves are probably going to cash in some dollar holdings, putting more pressure on.

There's a whole doomsday scenario, but I don't want to get into it right now. Bernake may have saved homeowners in teh short term by sacrificing them in the long run.

Don't mind me. I'm just pissed he blinked. I thought there was a good chance he'd hold steady until October. I can't believe he wimped out.


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## tjf67 (Sep 18, 2007)

Bob R said:


> I know its a rate drop. sometimes the rates banks charge don't trickle down. I was hoping your view would be correct.  Hoping this will help me  sell my condo to be honest.  The finance end is all math to me:razz:.



Interest rates are lower 09/07 that they were 09/06 even before the cut.


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## Vortex (Sep 18, 2007)

ctenidae said:


> 10 year treasury is off something liek 0.001%, so that's good for mortgage rates. Not.
> Mortgage rates have only been at or above the Fed target twice in the past 6 months, so effectively there's been a stealth .25 cut in place for a while. Now it's official.
> Longer term effects, the dollar's going to go down faster than a two buck ho at a kneepad convention. Foreign reserves are probably going to cash in some dollar holdings, putting more pressure on.
> 
> ...


...

I read your post before on this. You are over my head.  sounds liek its short term good news.  pm sent,


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## GrilledSteezeSandwich (Sep 18, 2007)

ctenidae said:


> Longer term effects, the dollar's going to go down faster than a two buck ho at a kneepad convention..




ahahahahahahaha...snap.. I miss the days when you could get $1.50-$1.60 Canadian for every dollar US..that was around 2000...now it's $1.03 Canadian for every dollar US...:angry: it takes the fun out of paying for hookers and blow with Canadian money.


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## Vortex (Sep 18, 2007)

tjf67 said:


> Interest rates are lower 09/07 that they were 09/06 even before the cut.




They are not low enough to move the market from my point of view. A seller.


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## tjf67 (Sep 18, 2007)

ctenidae said:


> 10 year treasury is off something liek 0.001%, so that's good for mortgage rates. Not.
> Mortgage rates have only been at or above the Fed target twice in the past 6 months, so effectively there's been a stealth .25 cut in place for a while. Now it's official.
> Longer term effects, the dollar's going to go down faster than a two buck ho at a kneepad convention. Foreign reserves are probably going to cash in some dollar holdings, putting more pressure on.
> 
> ...




Gloom and Doom.  We are in pretty decent shape as an overall economy.


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## dmc (Sep 18, 2007)

Bob R said:


> Hoping this will help me  sell my condo to be honest.



Thats less about mortgage rates and more about buyers feeling comfortable and confident enough to invest in a second home.   I guess if their adjustable drops or steadies maybe people will be more inclined to buy...


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## tjf67 (Sep 18, 2007)

Bob R said:


> They are not low enough to move the market from my point of view. A seller.



I don't think it is rates that stopped the market it is the prices.   As long as you have it on the market at a fair price it will move.


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## ctenidae (Sep 18, 2007)

tjf67 said:


> Gloom and Doom.  We are in pretty decent shape as an overall economy.



Looks that way, but I wouldn't be so sure.


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## GrilledSteezeSandwich (Sep 18, 2007)

It doesn't matter about the economy of the whole country..it's how you're personally doing..


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## JimG. (Sep 18, 2007)

GrilledSteezeSandwich said:


> In my area home prices continue to fall..as there are more sellers than buyers...Foreclosures are at an all-time high.  I'm hoping home prices fall a little more so they're less if/when I buy a house.  My plan is to wait longer to buy a house so I can put down a much larger down payment..living in an apartment is so much simpler..my heat, water, and garbage is included..and I don't have to worry about taxes, mowing, maintence, or shoveling.



Go for the bigger down payment. 

Simple fact is, the less you borrow the better.


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## JimG. (Sep 18, 2007)

dmc said:


> Thats less about mortgage rates and more about buyers feeling comfortable and confident enough to invest in a second home.   I guess if their adjustable drops or steadies maybe people will be more inclined to buy...



If they don't go into foreclosure first.

Those ARM's have been going up for months...alot of people are spooked. A steadying or minor decline in rates won't help that. Most folks will just feel they dodged a bullet.

Glad for my fixed rate.


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## Vortex (Sep 18, 2007)

I could just drop the price and lose my invesmeent...  I prefer to ride it a bit. Sure my goals are a bit lower, but patience and being prepared are things I looked at on the front side.


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## JimG. (Sep 18, 2007)

Bob R said:


> I could just drop the price and lose my invesmeent...  I prefer to ride it a bit. Sure my goals are a bit lower, but patience and being prepared are things I looked at on the front side.



I think the vacation home market will be less affected than the ARM market. I'm assuming many buyers are in financially sound shape and if they're looking to buy now they probably don't have these worries.

If you get a prospect's serious interest, a well timed but smaller price concession may be the ticket for you.


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## Vortex (Sep 18, 2007)

Good advice Jim.


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## GrilledSteezeSandwich (Sep 18, 2007)

JimG. said:


> Go for the bigger down payment.
> 
> Simple fact is, the less you borrow the better.




For sure..keeping my fixed monthly expenses low give me more money for fun stuff and to save.  That's why I drive a base model Suburu instead of an Audi..


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## ski_resort_observer (Sep 18, 2007)

The .50 drop in the Fed rate won't help your mortgages much but the .50 drop in the discount rate will. This was a two part action by the Fed....that's why it is such big news and such a HUGE surprise. I just hope tomorrow will not bring about big profit-taking.


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## tjf67 (Sep 18, 2007)

JimG. said:


> If they don't go into foreclosure first.
> 
> Those ARM's have been going up for months...alot of people are spooked. A steadying or minor decline in rates won't help that. Most folks will just feel they dodged a bullet.
> 
> Glad for my fixed rate.




That whole ARM thing is kinda a sham.  If you cant shell out the few hundred dollars it went up then you should not have been in it in the first place.


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## Marc (Sep 18, 2007)

ctenidae said:


> 10 year treasury is off something liek 0.001%, so that's good for mortgage rates. Not.
> Mortgage rates have only been at or above the Fed target twice in the past 6 months, so effectively there's been a stealth .25 cut in place for a while. Now it's official.
> Longer term effects, the dollar's going to go down faster than a two buck ho at a kneepad convention. Foreign reserves are probably going to cash in some dollar holdings, putting more pressure on.
> 
> ...



Well certainly he's changed his tune from "the Fed controls inflation only" to "we need to foster healthy economic growth" but from what I understand, Greenspan did the same thing, but it took Greenspan several years to evolve positions.

From my layman's point of view, I certainly didn't think the major indicies warranted a half point drop.  The S&P was still up 9% YTD or thereabouts.  Ironically, market stability was a reason he cited for the cut, and he sends the Dow on a 300+ point roller coster.  Can't wait to see if there's a sell off tomorrow.  It certainly does seem like he buckled under the pressure of media coverage of the borrower's woes.

I don't know, doesn't concern me much.  Most of my market investments are market mimics with a few tweaks.  I'm in it for the long haul.


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## ski_resort_observer (Sep 18, 2007)

Marc said:


> From my layman's point of view, I certainly didn't think the major indicies warranted a half point drop.  The S&P was still up 9% YTD or thereabouts.  Ironically, market stability was a reason he cited for the cut, and he sends the Dow on a 300+ point roller coster.  Can't wait to see if there's a sell off tomorrow.  It certainly does seem like he buckled under the pressure of media coverage of the borrower's woes.



Lots of the experts felt the same way. The vast majority was comfortable  with the predicted .25, which was already baked into much of the stock market, and maybe the .50 cut in the discount rate as a more direct way to help the mortgage mess. 

Watching an interview right after the decision with two former Fed Presidents(Bernanke is the Chaiman but the discussion is between 12 regional Presidents and Bernanke) they advised that the Fed is worried that they might be behind the curve as far a keeping the recession wolf away from the front door. The rate cuts will put more money into the financial world so the economy keeps growing. 

The big brokers were the biggest winners today as they provided the money for all those crazy mortgage companies borrow from, the foundational funding of all those ARM's and especially the sub-prime loans with their infamous teaser rates. They had taken a big hit in the last few months.

They do still worry about inflation. Check out the price of a barrel of crude. 

Yesterday, folks with a decent credit rating and jobs were getting shut out.of mortgages. Tomorrow they can go back to the bank or mortgage company and get the loan. Lots of company CEO's are running around the room today singing "Happy days are here again..." but tomorrow's another day. 

Like you said IF there is alot of profit taking much of the gains made today will, for the moment,  be given back.


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## ctenidae (Sep 18, 2007)

Market indices matter little, if any at all. The important thing, and it's buried way back in the things that affect stock prices, is the ability of companies to get financing. Starting in June it has been tough, because all the sources that people have been using pulled completely (and suddenly) out of the market (hedge funds, mostly, that is). So financing became tough- and it trickles down to the mortgage market pretty quick. The Fed's 1/4 point cut in the overnight rate helped some, and was Bernake saying "I'm not going to let everyone hang in the breeze, but watch it." Then, getting several big banks to hit the window was Bernake telling liquidity providers (now banks, not hedge funds) "Fix it. Here's some help. Do it now."

They didn't fix it, and they can't, because the yield chasers that have fueled the past 4-5 years have left the market. It doesn't really matter what the Fed Funds Rate is, really. The fact is, there is less liquidity in the market than there was even 4 months ago, and it's not just in corporate debt, it's in consumer debt, too. Cutting rates makes the US less attractive to foreign capital, and may actually tell lenders it's okay to make shitty loans, be they no document mortgages or covenant light corporate debt. This is bad.

Scott Anderson at Wells Fargo is the only bank economist I have any respect for anymore, mostly because he agrees with me (even though he doesn't know it)- Bernake should have left rates alone. Let the equity market twist in the wind for a bit. Doesn't matter- the more pain that goes through now, the sooner things will right themselves. Let (hell, even encourage) a mortgage company and/or an investment bank go belly up. Countrywide is so far gone, it's going to take a hell of a lot more than BoA throwing cash at it to help, and my gut tells me Lehman's way, way over extended on its bond underwriting. Neither one of them is "too big to fail" because there's no such thing. While I hate to see any institution fail, the good of the many, and all that. Just so long as Bernake knocks some heads togeter and makes sure that homeowners and intelligent bond issuing companies don't get left exposed.

Come to think of it, this cut may be Bernake giving everyone a little breathing room before he drops the hammer. Sort of giving half a point now in exchange for a pound of flesh later. There's still a lot of ugliness poised out there, folks, and don't you forget it. The US economy's growth has been built, to a large extent, on a house of cards, and there are a whole lot of factors out there just waiting to knock it down.  My advice is to take this breather and make sure your ducks are in a row. Lock in whatever interest rates you can at comfortable levels, make sure your personal budgets are tight, sock away whatever cash you can (2 month's expenses, at least), and prepare to hunker down a bit. If the shit doesn't hit the fan, sorry, you've only lost a little time-value-of-money wise. That's nothing compared to what could happen if the sky really does fall.


/ramblings of 4 beers  in a Chicago hotel room. Take from it what you will. I make no promises as to the accuracy, completeness, or intelligence of anything I write. Past performance is not indicative of future results. Consult your investment professional before making any decisions.


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## JimG. (Sep 19, 2007)

tjf67 said:


> That whole ARM thing is kinda a sham.  If you cant shell out the few hundred dollars it went up then you should not have been in it in the first place.



Oh I totally agree with you...some of these loans are really out there.

There are "super" loans out there for $650,000 or more that are ARM's. People need the extra 1000 sq ft and granite countertops that badly?


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## hammer (Sep 19, 2007)

I locked in a 30 yr fixed rate mortgage at 5.25% a few years back...think I did OK?

Also, I live near a lot of those 3000 - 4000+ sq ft homes...I wonder how many families in them are nervous now.


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## JimG. (Sep 19, 2007)

hammer said:


> I locked in a 30 yr fixed rate mortgage at 5.25% a few years back...think I did OK?
> 
> Also, I live near a lot of those 3000 - 4000+ sq ft homes...I wonder how many families in them are nervous now.



30 yr 5.375% fixed here.

Would never consider an ARM.


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## Vortex (Sep 19, 2007)

Exact same on deal for me.


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## ski_resort_observer (Sep 19, 2007)

hammer said:


> I locked in a 30 yr fixed rate mortgage at 5.25% a few years back...think I did OK?
> 
> Also, I live near a lot of those 3000 - 4000+ sq ft homes...I wonder how many families in them are nervous now.



You did great!


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## tjf67 (Sep 19, 2007)

JimG. said:


> 30 yr 5.375% fixed here.
> 
> Would never consider an ARM.





I have an arm on one of my houses.  Have had it since 1994.   I looked in to refinancing.  Probably should have but I have never been seen the cost of it go up by more than 100 bucks in any given year.  As a matter of fact it resets in November and I got a letter in the mail from the bank that it is going down .09.  

WHo cares what the market is doing today.  If you need the money today  it should not have been there.  Same thing for people with real estate investments.  If you planned on flipping a house in a couple of years you should have known the risk.


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## ski_resort_observer (Sep 19, 2007)

ctenidae said:


> Market indices matter little, if any at all. The important thing, and it's buried way back in the things that affect stock prices, is the ability of companies to get financing. Starting in June it has been tough, because all the sources that people have been using pulled completely (and suddenly) out of the market (hedge funds, mostly, that is). So financing became tough- and it trickles down to the mortgage market pretty quick. The Fed's 1/4 point cut in the overnight rate helped some, and was Bernake saying "I'm not going to let everyone hang in the breeze, but watch it." Then, getting several big banks to hit the window was Bernake telling liquidity providers (now banks, not hedge funds) "Fix it. Here's some help. Do it now."
> 
> They didn't fix it, and they can't, because the yield chasers that have fueled the past 4-5 years have left the market. It doesn't really matter what the Fed Funds Rate is, really. The fact is, there is less liquidity in the market than there was even 4 months ago, and it's not just in corporate debt, it's in consumer debt, too. Cutting rates makes the US less attractive to foreign capital, and may actually tell lenders it's okay to make shitty loans, be they no document mortgages or covenant light corporate debt. This is bad.
> 
> ...



:lol:  wow, lots of stuff in your post. I agree with some some of your points but not with most. I too would have been happy with no cut but as Marc pointed out if he didn't the market would have tanked.



> Come to think of it, this cut may be Bernake giving everyone a little breathing room before he drops the hammer.



He has no hammer...he will most likely drop the rate again depending on what happens before the next time the Fed meets.Looking down the road 6-12 months recession is a possibility, the rate cut was to reduce that risk. That's one the Fed's most important jobs.

They do also focus on inflation but it has been in the Fed's comfort range albeit the high end of the range for a long time. The last rate cute was way back in 2003 so it's not like the Fed has been pandering to the equity markets(stocks) at all, at least in my mind.

Lastly the real estate sector is only 5% of our GDP but they were worried it would spread which it has actually started to do. Yesterday the rally started out of the gate as a result of Lehman's very strong reporting numbers, announced right before the market opened.

Your major point I do agree with 100%.....the rate cut does not change the fundementals in regard to the foundational cause of the mortgage mess. I can imagine the few  Countrywide guys who survived the recent cut of 12,000 jobs are thinking " the game is back on" but I hope the past year has been a good lesson and that hidden little rock on the trail in April won't appear again. Even with the rate cuts it's going take awhile before the real estate/mortgage mess settles out.


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## tjf67 (Sep 19, 2007)

ski_resort_observer said:


> :lol:  wow, lots of stuff in your post. I agree with some some of your points but not with most. I too would have been happy with no cut but as Marc pointed out if he didn't the market would have tanked.
> 
> 
> 
> ...




We are going to get a year down the road and they are going to call the summer of 07 a recession.


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## ski_resort_observer (Sep 19, 2007)

tjf67 said:


> We are going to get a year down the road and they are going to call the summer of 07 a recession.



A few of the experts already believe that but IMHO  the motivation for those folks was mostly self interest, a subtle way to get the Fed to cute rates. Growth has been very slow for sure but certainly not in resession in my view.

It depends on your perspective. I have been watching these same guys all morning on CNBC advise more cuts, more cuts. The CEO of Countrywide with his nice deep tan(probably from hanging out on his boat all summer) was particulalry pathetic.


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## wa-loaf (Sep 19, 2007)

I found this graph that charts the upcoming wave of ARM resets. 

I'm fixed at 5.87% and although we kinda want to sell and move we're going sit it out for a couple years.


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## bill2ski (Sep 19, 2007)

The weak dollar is the most disturbing part, especially as the Loonie gains strength.
 Those darn northerners are going the be all over the slopes here in Maine, sitting outside the lodge smoking butts that smell like a brush fire and drinking labatts instead of shipyard.
THE END IS NEAR


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## riverc0il (Sep 19, 2007)

JimG. said:


> 30 yr 5.375% fixed here.
> 
> Would never consider an ARM.


ARMs are not all that bad if you are buying with a purpose. We considered a 5 or 7 year ARM on the condo we just bought because the condo is not a long term home but something to get us started, building equity, and into a nicer place than we could have afforded buying a house straight out. Problem is that 5 to 7 year ARMs right now are not much better than 30 year fixed so it isn't worth the risk of not selling within the fixed time frame. 5 to 7 have their time and place for the right buyers but is certainly not a good long term option.


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## riverc0il (Sep 19, 2007)

Damned if you do, damned if you don't situation regarding the rate cut. Businesses and people made bad decisions. If you bail them out then they won't learn. But when it is this bad... something needs to happen to stabilize things, right? Will that 1/2 really trickle down to individual interest rates on mortgages and the like or is that more of a business win? I think in the bigger picture, there are a lot bigger problems than a few rough years economically due to some hurt from the sub-prime bust. So many people are yelling about the sub-prime headlines but where is the US dollar and still no one wants to talk about Social Security and Medicare and the beginning baby boom retirement and US debt? Short economic down turn due to bad lender/borrower decisions is acceptable and the 1/2 minimized some hurt that should have been felt. But this isn't a good beginning to a tough road regardless of what the 1/2 point means. If it stabilizes things in the market for a while so things calm down and everyone can get a grip, that is cool IMO.


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## ctenidae (Sep 20, 2007)

riverc0il said:


> If it stabilizes things in the market for a while so things calm down and everyone can get a grip, that is cool IMO.



That's the toruble- market turmoil has nothing to do with the Fed rate. Not directly, anyway.


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## Marc (Sep 20, 2007)

ctenidae said:


> That's the *toruble-* market turmoil has nothing to do with the Fed rate. Not directly, anyway.



Drinking in the AM again?


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## ctenidae (Sep 20, 2007)

Marc said:


> Drinking in the AM again?



You got a porbelm with that?


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## GrilledSteezeSandwich (Sep 20, 2007)

ctenidae said:


> You got a porbelm with that?



I'm a big fan of morning drinking...but unfortunately I'm not allowed to drink or smoke pot during work hours so I have to drown my sorrows with McDonalds..:beer:


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## jack97 (Sep 20, 2007)

Hmm, still not awake yet, prob need another cup of something.

Not sure the .5 point will do, but in the town i live in we have lots of houses for sale, I hear that anything over 3/4 million has been on the market for months. People flipping houses are sweating it if they are leveraged deep. 

I have no problem with people spending money and living the life they want. I have a problem when they expect other people to bail them out given they can't control their spending habits.


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## hammer (Sep 20, 2007)

Here goes the value of the dollar...

http://www.boston.com/business/arti...and_to_1_to_1_parity_with_the_canadian_dollar


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## riverc0il (Sep 20, 2007)

hammer said:


> Here goes the value of the dollar...
> 
> http://www.boston.com/business/arti...and_to_1_to_1_parity_with_the_canadian_dollar



Here it goes further at least... value of a dollar has been in trouble for a while now.


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## bigbog (Sep 20, 2007)

*......*

The sooner Wall Street is flattened the better....  In my $.01...distance between the haves & have-nots in the _Great Society_ is far too great.
*Bet JimG thought he'd have a monopoly on _stirring the pot_...;-)

:flag:


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## ccskier (Sep 20, 2007)

All this point dropping did was surge the stock market.  It has done basically nothing to the mortgage market.  The mortgage rates are based on bonds.  Right now as you can see everyone is stock market crazy and not looking at the bonds.  For the mortgage rates to drop, people need to work on the bond market.  Yeah, a few days ago the market went bananas because of the fed's decision, but that has already started to dwindle, people threw money into the market and they are now backing off again.  It is just a way for the government to divert peoples attention.  It will be back in the shatter in a few days.


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## tjf67 (Sep 20, 2007)

A rate drop will not work it way into the economy for six months.  I have heard though that a 1/2 point rate drop in Sept sets up Nove for a big snow month


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## ccskier (Sep 20, 2007)

tjf67 said:


> A rate drop will not work it way into the economy for six months.  I have heard though that a 1/2 point rate drop in Sept sets up Nove for a big snow month




That sounds better!!!


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## snoseek (Sep 20, 2007)

my head kinda hurts.


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## hammer (Sep 20, 2007)

riverc0il said:


> Here it goes further at least... value of a dollar has been in trouble for a while now.


True...it's just that I never thought we'd have parity with a Canadian dollar...

Would the rate drop help auto loans?  I'm looking at having to get a new vehicle in the not too distant future...


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## ctenidae (Sep 21, 2007)

hammer said:


> Would the rate drop help auto loans?  I'm looking at having to get a new vehicle in the not too distant future...



Theoretically, yes. Rate cuts generally take a couple of months to filter through everything, but I don't think this one will go as far as they ahve in the past. As I've said, the underlying problems haven't gone away. There's still a massive amount of low-grade debt out there, and banks are still looking at the potential of large amounts of non-performing loans in the near future. Credit rules have tightened in a knee-jerk way, with a lot of lenders flat stopping, but they can't keep that up- they need the revenues. One indicator of tighter credit is higher interest rates (supply and demand- as the supply of cash decreases, the cost increases). As uncertainty increases, teh cost increases as well. It's going to take another full point or so to have any meaningful impact on interest rates (stable ones, anyway. There will be some fluctuation, so if you can grab an artificially low rate, do), and with the recent cut, the Fed has practically forced themselves to make futher cuts down the road.

Which puts us right back to ridiculously easy credit that got us here in the first place.


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## Paul (Sep 21, 2007)




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## Marc (Sep 21, 2007)

bigbog said:


> The sooner Wall Street is flattened the better....  In my $.01...distance between the haves & have-nots in the _Great Society_ is far too great.
> *Bet JimG thought he'd have a monopoly on _stirring the pot_...;-)
> 
> :flag:



So give some of yours to the have nots.  You could try being a little more proactive, you know.


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## jack97 (Sep 21, 2007)

ctenidae said:


> There's still a massive amount of low-grade debt out there, and banks are still looking at the potential of large amounts of non-performing loans in the near future. Credit rules have tightened in a knee-jerk way, with a lot of lenders flat stopping, but they can't keep that up- they need the revenues.



Isn't this the main reason we have not had a recession? Thus the feds are preventing one by not increasing the rates.


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## ctenidae (Sep 21, 2007)

jack97 said:


> Isn't this the main reason we have not had a recession? Thus the feds are preventing one by not increasing the rates.



Kind of like cracking open another bottle of bourbon so you don't get a hangover.

Yet.


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## Moe Ghoul (Oct 2, 2008)

tjf67 said:


> Gloom and Doom.  We are in pretty decent shape as an overall economy.



Things sure change in a year. Wanna rephrase that?


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## tjf67 (Oct 2, 2008)

Moe Ghoul said:


> Things sure change in a year. Wanna rephrase that?



We were then.  Now not so much.  
It will be back.  
What your point?


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## Moe Ghoul (Oct 2, 2008)

tjf67 said:


> We were then.  Now not so much.
> It will be back.
> What your point?



We were? Ok. Any more predictions?


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## tjf67 (Oct 2, 2008)

Moe Ghoul said:


> We were? Ok. Any more predictions?




Yes we will get through it and people like you will cling on to our bellies and skim off as much as possile.


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## Moe Ghoul (Oct 2, 2008)

tjf67 said:


> Yes we will get through it and people like you will cling on to our bellies and skim off as much as possile.



ROFLMAO! you are a petty and bitter little man. Always making it personal.


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## Moe Ghoul (Oct 2, 2008)

“We do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system.”
- Fed Chairman Ben Bernanke…May 17, 2007

Another classic quote for the history books. So, he lied or he's incompetent. Take your pick.


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## tjf67 (Oct 2, 2008)

Moe Ghoul said:


> ROFLMAO! you are a petty and bitter little man. Always making it personal.


not sure what you are talking about


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## Moe Ghoul (Oct 2, 2008)

tjf67 said:


> not sure what you are talking about



Exactly.


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## tjf67 (Oct 2, 2008)

Moe Ghoul said:


> Exactly.


right


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## roark (Oct 2, 2008)

ctenidae said:


> Market indices matter little, if any at all. *The important thing*, and it's buried way back in the things that affect stock prices, *is the ability of companies to get financing*.


^^^
quoted from Sept 07


And that's why they pay ct the big bucks.


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## ctenidae (Oct 3, 2008)

roark said:


> ^^^
> quoted from Sept 07
> 
> 
> And that's why they pay ct the big bucks.



Heh. I even mention a house of cards way back then.


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## GrilledSteezeSandwich (Oct 4, 2008)

OJ Simpson is guilty..I would buy stock in Orange Juice futures..


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## ctenidae (Oct 6, 2008)

GrilledSteezeSandwich said:


> OJ Simpson is guilty..I would buy stock in Orange Juice futures..









Agree.


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## drjeff (Oct 6, 2008)

In my eyes, boy have 1 point something percent treasury notes never looked as appealing as they do right now.

Dow now below 10K   Off over 4K since it's peak, hopefully it's more than 1/2 way down to where it finally hits rock bottom, although there's a decent chance that we still haven't even reached the 1/2 way point yet   

Don't look for a heck of alot of ski area improvements for the '09-'10 season if this credit market/economy doesn't start to turn soon.


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## Moe Ghoul (Oct 6, 2008)

Benny and the feds will feed the fire with a rate cut. LIBOR is a red flag, forced auctions of CDO's for LEH has spilled over to Europe. Ultra shorts are rockin. China is pumping 200 billion into the system, sounds like 700 billion to try and stem the tide was the quid pro quo for the 200 billion. Meanwhile the fed is pumping money out the discount window by the truckloads.


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## ctenidae (Oct 6, 2008)

Moe Ghoul said:


> Benny and the feds will feed the fire with a rate cut. LIBOR is a red flag, forced auctions of CDO's for LEH has spilled over to Europe. Ultra shorts are rockin. China is pumping 200 billion into the system, sounds like 700 billion to stry and stem the tide was the quid pro quo for the 200 billion. Meanwhile the fed is pumping money out the discount window by the truckloads.



And now the Fed's talking about paying interest on reserves. What good that'll do, or how it'll work, I can't even begin to imagine.


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## Moe Ghoul (Oct 6, 2008)

ctenidae said:


> And now the Fed's talking about paying interest on reserves. What good that'll do, or how it'll work, I can't even begin to imagine.



Credit Default Swaps settlement dates for Fannie and Freddie (Oct. 6), Lehman Brothers (Oct. 10) and Lehman Brothers (Oct 23).


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## drjeff (Oct 6, 2008)

Hollywood won't need to release and horror spoofs this halloween.  All we need to do is just sit back and watch the Fed and the financial markets for all the comdey and horror we need these days.

Real estate wise, while I'm somewhat insulated in my relatively safe envirnoments of where I own in CT and in VT, it really was eye opening the few days I was in the Orlando area last week.  Where I was staying was in a Sheraton owned timeshare development about 2 miles South of Sea World on International Drive.  The number of new, large timeshare/townhouse/condo developments and even proposed developments that we had to drive by in the few miles from where we were staying to the main gates of Disney were scary!  

Then when I got to my parents house down along the gulf coast about 20 miles North of Fort Meyers, it didn't let up either.  There community which is being developed by Centex Corp, opened up a LARGE new subdivision about 2 years ago.  This time last year when I was down there were 40 to 50 houses under construction and this past week there were 6, all of which were close to completion and no signs of any new foundation work going on.  Suprising to me was that the number of homes for sale in the community wasn't any greater than at anytime that I've seen in the almost 6 years that my parents have owned there.


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## Moe Ghoul (Oct 6, 2008)

drjeff said:


> Hollywood won't need to release and horror spoofs this halloween.  All we need to do is just sit back and watch the Fed and the financial markets for all the comdey and horror we need these days.
> 
> Real estate wise, while I'm somewhat insulated in my relatively safe envirnoments of where I own in CT and in VT, it really was eye opening the few days I was in the Orlando area last week.  Where I was staying was in a Sheraton owned timeshare development about 2 miles South of Sea World on International Drive.  The number of new, large timeshare/townhouse/condo developments and even proposed developments that we had to drive by in the few miles from where we were staying to the main gates of Disney were scary!
> 
> Then when I got to my parents house down along the gulf coast about 20 miles North of Fort Meyers, it didn't let up either.  There community which is being developed by Centex Corp, opened up a LARGE new subdivision about 2 years ago.  This time last year when I was down there were 40 to 50 houses under construction and this past week there were 6, all of which were close to completion and no signs of any new foundation work going on.  Suprising to me was that the number of homes for sale in the community wasn't any greater than at anytime that I've seen in the almost 6 years that my parents have owned there.



Why sell if you don't have too, especially if someone bought in the past 5 years and in FLA.


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## GrilledSteezeSandwich (Oct 6, 2008)

Dr. Jeff you mention the real estate market in Florida...The mother of the office manager here at work is buying a new home in the Orlando area after living in Connecticut..she got over $500k for her house in Connecticut and in the Orlando area..there are 3,000 square foot homes going for under $180k..crazy..


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## drjeff (Oct 6, 2008)

GrilledSteezeSandwich said:


> Dr. Jeff you mention the real estate market in Florida...The mother of the office manager here at work is buying a new home in the Orlando area after living in Connecticut..she got over $500k for her house in Connecticut and in the Orlando area..there are 3,000 square foot homes going for under $180k..crazy..



Just down the street from where I was staying in Orlando, they had a sign up on the outer gate of a brand new townhome community, where you could buy a brand new 1,500 sq. ft townhome for $129,900, and this was in a decent area of Orlando, not very far at all from the parks, I-4, shopping, golf, etc.

Crazy stuff to say the least.

What's real scary is to think about potentially where things might be housing price wise 6 to 12 months from now in areas of the country that have been hit hard by the sub-prime crisis.  If anyone has any cash left by then, the long term bargains that will be available will be unreal!

The biggest issue though now is that what's needed to spur some type of economic recovery, credit,  just isn't available. And until it is in one form or another relatively easily available, this economy is just plain and simply ugly.  And while news and information distribution is important,  I really feel that it's also playing a significant role in this crisis too by scaring people more than they rationally need to be scared.


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## deadheadskier (Oct 6, 2008)

My folks live in Nokomis/Sarasota, built a 2300sqft home in 2000 for $340K, 2 years ago it was valued at $650K, today $425K.  My god parents started building a place in 2006 in Bradenton for $550K, buy the time they finished construction in 2007 it was worth $425K, today, $350K.

there certainly will be deals to be had, but it will take a long, long, time for values to return.  That said, I think real estate in Florida is a better buy than most places right now.  It is after all God's waiting room and the number of boomers looking to retire there in the next ten years will be high.


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## ctenidae (Oct 6, 2008)

We bought our place in Boston a year ago, and, at elast accoring to zwillo (sp?) it's gone up about 15%. Our saving grace is that we bought right- you can make up for a lot of mistakes, but paying too much isn't one of them.


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## Glenn (Oct 6, 2008)

I'm wondering how this will shake out in the ski home/condo area. My wife and I would love to get a place in VT...I'm wondering if we'll see prices sag a bit more. With things being dicey now, you don't want to pull the trigger. But on the other hand, you'd hate to look back 3-4 year from now and say: "Man, we could have saved $xthousand if we pulled the trigger back then..."


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## drjeff (Oct 6, 2008)

Glenn said:


> I'm wondering how this will shake out in the ski home/condo area. My wife and I would love to get a place in VT...I'm wondering if we'll see prices sag a bit more. With things being dicey now, you don't want to pull the trigger. But on the other hand, you'd hate to look back 3-4 year from now and say: "Man, we could have saved $xthousand if we pulled the trigger back then..."



Since I bought my latest VT place at Mount Snow almost 18 months ago now, based on what I paid for it, and what I figure I could REALISTICALLY sell it for now (assuming of course that a buyer could actually find a bank willing to loan someone some $$ for a 2nd home right now ), I'm down about 10%.  And what I paid for my place was down about 10% from the peak values.

Unfortunately the way things are looking,  it wouldn't suprise me to see things down another 10%+ this time next year. One thing though with 2nd home area real estate values is that they tend not to see as much of a decline as those in more "primary" residence areas just simply because many folks buying a second home aren't seeing themselves maxed out $$ wise as some primary home owners are.  

I will though be very curious to hear this weekend at the annual association meeting for where my place is by Mount Snow, what the rentals/leasing/pseudo sales manager for our complex says about the market not just where my place is, but in general in and around Mount Snow and the Deerfield Valley.


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## Glenn (Oct 6, 2008)

I've seen a few condo's at Snowtree going for about $119k. I did a little quick research and found the recent sales are about 5% under asking. So a one bedroom loft would be about $112k....in theory of course. 

Where did you end up getting a place?


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## drjeff (Oct 6, 2008)

Glenn said:


> I've seen a few condo's at Snowtree going for about $119k. I did a little quick research and found the recent sales are about 5% under asking. So a one bedroom loft would be about $112k....in theory of course.
> 
> Where did you end up getting a place?



I'm up almost at the top of Timbercreek.

The other thing I can personally say about 1 bedroom loft's in snowtree (my wife and I had a seasonal rental in the Maples building of Snowtree back in the 2000-01 winter) is that that theoretical 7k you could save, you'd quickly spend in heating costs there   We could practically fly a kite from the loft in the unit we had that winter.  I made ALOT of trips to the woodshed outside of each building that winter!


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## GrilledSteezeSandwich (Oct 6, 2008)

Glenn said:


> I've seen a few condo's at Snowtree going for about $119k. I did a little quick research and found the recent sales are about 5% under asking. So a one bedroom loft would be about $112k....in theory of course.
> 
> Where did you end up getting a place?



For $112k you could stay at a steezy hotel 500 nights..


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## Glenn (Oct 7, 2008)

drjeff said:


> I'm up almost at the top of Timbercreek.
> 
> The other thing I can personally say about 1 bedroom loft's in snowtree (my wife and I had a seasonal rental in the Maples building of Snowtree back in the 2000-01 winter) is that that theoretical 7k you could save, you'd quickly spend in heating costs there   We could practically fly a kite from the loft in the unit we had that winter.  I made ALOT of trips to the woodshed outside of each building that winter!



Cool! Timbercreek is nice!

LOL! I knew they had the ceiling fan up there for a reason! Our next weekend adventure will be at "Glen Run" (kinda partial to that name :grin: ) so I'm interested in seeing how those go. We'll be up at Season's in Dec. I remember staying there when I was younger. I'm always split between what to get...house or a condo? Granted, it's a few years off...but something to dream about.  

LMAO! Yeah, that would buy a lot of nights at a steezy hotel. I may be able to tollerate that for a night or two, but Mrs. Glenn wouldn't. :lol:


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## drjeff (Oct 7, 2008)

Glenn said:


> Cool! Timbercreek is nice!
> 
> LOL! I knew they had the ceiling fan up there for a reason! Our next weekend adventure will be at "Glen Run" (kinda partial to that name :grin: ) so I'm interested in seeing how those go. We'll be up at Season's in Dec. I remember staying there when I was younger. I'm always split between what to get...house or a condo? Granted, it's a few years off...but something to dream about.
> 
> LMAO! Yeah, that would buy a lot of nights at a steezy hotel. I may be able to tollerate that for a night or two, but Mrs. Glenn wouldn't. :lol:



My wife and I had a BIG debate about the stand alone house vs. the townhouse also before we bought.  It was literally flip a coin type descion between a stand alone essentially new house maybe 1/4 down the road from the entrance to Haystack and where we bought in Timbercreek.  The prices within 5 grand of each other and both within our target price range.

What it finally came down to for us was the following that saw us buy in Timbercreek.  #1 at Timbercreek, there's always a maintenance person/people in general around to watch/look out for the place when were not there - the stand alone home wouldn't have had that.  #2 townhome for us = all the extreior maintenace from painting to windows to roofing to trash and plowing and mowing and even wod delivery is included in our quarterly association fee, whereas I would have had to line all of that up in a stand alone.  #3 Townhome has a community clubhouse with an indoor pool, raquet ball courts, basketball court and fitness center as well as x-country ski trails/snowshoeing trails, skating pond and tennis courts in the summer all on property and included in the association fee, stand alone didn't/  Lastly, from Thanksgiving weekend through the end of March on Weekends + Holiday weeks, the Moover stops about 50 feet from my front door and takes me to the base area every 15 minutes between 7:30 and 5:30 - wouldn't be that way at the stand alone.

For a second home, the townhome and the association made more sense both interms of opportunities and peace of mind when I'm not there, and in the big scheme of things, my yearly association fee isn't that much more than I would have paid for property up keep/security of the stand alone.


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## ctenidae (Oct 8, 2008)

We jsut got  another 1/2 point this morning. Fat lot of good it'll do...


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## Glenn (Oct 8, 2008)

drjeff said:


> My wife and I had a BIG debate about the stand alone house vs. the townhouse also before we bought.  It was literally flip a coin type descion between a stand alone essentially new house maybe 1/4 down the road from the entrance to Haystack and where we bought in Timbercreek.  The prices within 5 grand of each other and both within our target price range.
> 
> What it finally came down to for us was the following that saw us buy in Timbercreek.  #1 at Timbercreek, there's always a maintenance person/people in general around to watch/look out for the place when were not there - the stand alone home wouldn't have had that.  #2 townhome for us = all the extreior maintenace from painting to windows to roofing to trash and plowing and mowing and even wod delivery is included in our quarterly association fee, whereas I would have had to line all of that up in a stand alone.  #3 Townhome has a community clubhouse with an indoor pool, raquet ball courts, basketball court and fitness center as well as x-country ski trails/snowshoeing trails, skating pond and tennis courts in the summer all on property and included in the association fee, stand alone didn't/  Lastly, from Thanksgiving weekend through the end of March on Weekends + Holiday weeks, the Moover stops about 50 feet from my front door and takes me to the base area every 15 minutes between 7:30 and 5:30 - wouldn't be that way at the stand alone.
> 
> For a second home, the townhome and the association made more sense both interms of opportunities and peace of mind when I'm not there, and in the big scheme of things, my yearly association fee isn't that much more than I would have paid for property up keep/security of the stand alone.



Awesome, I appreciate your insight on that. We were really thinking "house" at first. Then we stayed at SnowTree for a night a few weeks back. We really really liked being that close the mountain. Plus, there's always the opportunity to rent the unit out to help offset some of the costs. But that would certainly have to be looked into; especially if you go through an agency and what their cut would be. But you bring up a good point of someone always being there and that's really important up there during the winter: No snow removal worries, mechanical issues can been quickly addressed....

But there are things about a house I still like...quiet, land, storage space. 

My buddy jokingly said: "Get a condo now...then get a house down the road. Keep the condo and rent it out..." Sounds good on paper.


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## drjeff (Oct 8, 2008)

Glenn said:


> Awesome, I appreciate your insight on that. We were really thinking "house" at first. Then we stayed at SnowTree for a night a few weeks back. We really really liked being that close the mountain. Plus, there's always the opportunity to rent the unit out to help offset some of the costs. But that would certainly have to be looked into; especially if you go through an agency and what their cut would be. But you bring up a good point of someone always being there and that's really important up there during the winter: No snow removal worries, mechanical issues can been quickly addressed....
> 
> But there are things about a house I still like...quiet, land, storage space.
> 
> My buddy jokingly said: "Get a condo now...then get a house down the road. Keep the condo and rent it out..." Sounds good on paper.



Mount Snow itself actually has a pretty good rental program that they send you info on soon after the ink is dry on your mortgage.  We don't opt in, simply because we actually use our place just about every weekend during ski season, and close to 1 weekend a month in the summer.  

If you choose to rent through them, you get the benefits of your unit being listed through their central reservations line so you get volume exposure, plus they have things like ticket discounts and rental management services for you.

My place before we bought it was actually year in and year out rented for the full summer(as are many units by the "snowbird" population who winter's down South and summer's in VT),  and the couple that used to rent it actually called contacted us directly (as well as through Timbercreek's onsite rental manager) to see if we'd reconsider our move to take it out of the rental pool.  For a couple of reasons we chosen not to.  First off, with just my family using our place, we never have to worry about "our stuff" and what might be happening to it by someone else.  Secondly, and more importantly there's just as much fun, enjoyment, and relaxation to be had in the warm weather months as in the cold weather months up there!


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## Glenn (Oct 8, 2008)

drjeff said:


> Mount Snow itself actually has a pretty good rental program that they send you info on soon after the ink is dry on your mortgage.  We don't opt in, simply because we actually use our place just about every weekend during ski season, and close to 1 weekend a month in the summer.
> 
> If you choose to rent through them, you get the benefits of your unit being listed through their central reservations line so you get volume exposure, plus they have things like ticket discounts and rental management services for you.
> 
> My place before we bought it was actually year in and year out rented for the full summer(as are many units by the "snowbird" population who winter's down South and summer's in VT),  and the couple that used to rent it actually called contacted us directly (as well as through Timbercreek's onsite rental manager) to see if we'd reconsider our move to take it out of the rental pool.  For a couple of reasons we chosen not to.  First off, with just my family using our place, we never have to worry about "our stuff" and what might be happening to it by someone else.  Secondly, and more importantly there's just as much fun, enjoyment, and relaxation to be had in the warm weather months as in the cold weather months up there!




We just realized the same thing when we went up for the Brewfest. "Gee, you could spend a weekend here in the summer easily and have plenty to do." I'm in agreement with the once a month thing in the summer...that's totally doable. It's not a bad drive from CT, but it's far enough away to feel like you're away. 

I noticed Mt. Snow is pretty good with their rates...as well as their stay requirements when you book a condo through them. They don't have a minimum number of nights and the rates are really inline with what you can get through the local realestate agencies.


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## GrilledSteezeSandwich (Oct 8, 2008)

ctenidae said:


> We jsut got  another 1/2 point this morning. Fat lot of good it'll do...



Sucks I want them to go up so CDs go up..


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## Moe Ghoul (Oct 8, 2008)

GrilledSteezeSandwich said:


> Sucks I want them to go up so CDs go up..



Keep dreamin, Fed will cut to 0, they prolly saved the other 1/2 point for the FOMC meeting later this month for a Halloween treat. SCAAARRRRRRYYYYYYY!!


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## GrilledSteezeSandwich (Oct 8, 2008)

Moe Ghoul said:


> Keep dreamin, Fed will cut to 0, they prolly saved the other 1/2 point for the FOMC meeting later this month for a Halloween treat. SCAAARRRRRRYYYYYYY!!



So does that mean in a few years when I buy a house in the burbs..I'll get uber low interest rates???


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## Moe Ghoul (Oct 8, 2008)

GrilledSteezeSandwich said:


> So does that mean in a few years when I buy a house in the burbs..I'll get uber low interest rates???



I have no idea. That's way too far out on my time horizon. I'm looking out 6 months to a year max. Depends on the election, if Bernanke stays or resigns, lotsa balls juggling in the air right now until year's end. Guaranteed that you'll prolly be in a sweet spot pricewise to buy a house, though.


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## GrilledSteezeSandwich (Oct 8, 2008)

Moe Ghoul said:


> I have no idea. That's way too far out on my time horizon. I'm looking out 6 months to a year max. Depends on the election, if Bernanke stays or resigns, lotsa balls juggling in the air right now until year's end. Guaranteed that you'll prolly be in a sweet spot pricewise to buy a house, though.



I read somewhere that home prices are going to drop another 13% or so before leveling off which would be awesome..


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## ski_resort_observer (Oct 8, 2008)

AIG promised, as they all did, not to widely spend money like the drunk cowboy's they were when they the company was worth something in acepting OUR money. Lo and behold they went to a top executive retreat over the weekend and spent 400,00 of OUR money on all those things you get at a fancy spa resort.

They went before the congressional committee today to answer to the gang who passed the bailout. They got in trouble, their hands got slapped and a senator said "I am really upset now"!    :lol:

Edit: I first put in Wachovia but changed it to the correct firm, AIG


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## GrilledSteezeSandwich (Oct 8, 2008)

ski_resort_observer said:


> Wachovia one of the big banks involved in the bailout promised, as they all did, not to widely spend money like the drunk cowboy's they were when they the company was worth something. Lo and behold they went to a top executive retreat over the weekend and spent 400,00 of OUR money on all those things you get at a fancy spa resort.
> 
> They went before the congressional committee today to answer to the gang who passed the bailout. They got in trouble, their hands got slapped and a senator said "I am really upset now"!    :lol:



400,000 is alot to spend at a massage..even if they all got massages with the happy endings..and took a giant mud bath together..something smells fishier than the fresh flown in sushi they indulged on at the expense of US taxpayers..


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## roark (Oct 8, 2008)

Not that it wasn't outrageous especially given recent news events, but to play devils advocate a bit...
The majority of the AIG party funds were already spent (deposit - see the invoice here) and was probably not refundable. This party wasn't for the finance division either.


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## Moe Ghoul (Oct 8, 2008)

roark said:


> Not that it wasn't outrageous especially given recent news events, but to play devils advocate a bit...
> The majority of the AIG party funds were already spent (deposit - see the invoice here) and was probably not refundable. This party wasn't for the finance division either.



I think it was for there top independent agents.


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## wa-loaf (Oct 9, 2008)

Credit Crisis Lexicon: http://www.cnbc.com/id/27085399

Handy


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## Moe Ghoul (Oct 10, 2008)

Moe Ghoul said:


> Benny and the feds will feed the fire with a rate cut. LIBOR is a red flag, forced auctions of CDO's for LEH has spilled over to Europe. Ultra shorts are rockin. China is pumping 200 billion into the system, sounds like 700 billion to try and stem the tide was the quid pro quo for the 200 billion. Meanwhile the fed is pumping money out the discount window by the truckloads.



Lehman default swaps may recover 9.75 pct area
By Karen Brettell
Fri Oct 10, 2008 10:45am EDT

NEW YORK, Oct 10 (Reuters) - Banks, hedge funds and other sellers of protection on Lehman Brothers are facing losses in the area of 91.25 percent of the insurance they sold, based on the initial results of an auction on Friday to determine the value of the credit default swaps. 

There are also substantially more sellers than buyers of the debt in the auction, indicating that the final price of the swaps may be even lower than the initial recovery levels of 9.75 percent, according to results published by auction administrators Creditex and Markit.

The net open interest to sell the debt is $4.92 billion, they said.

The credit markets are just a symptom of a much larger problem.


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