Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : Buy and Sell Signals, and Other Market Perspectives -- Ignore unavailable to you. Want to Upgrade?

To: Fiscally Conservative who wrote (41638)	12/11/2012 8:48:00 PM
From: Keith Feral	Read Replies (1) \| Respond to of 222390

We didn't see much economic growth for 2 reasons - outrageous inflation and outrageous levels of balance sheet contraction by the banks from the prior housing bubble. It was funny today, CNBC finally started complaining about housing affordability beginning to slide. They have been adamant the economy could not grow with housing prices heading back up. However, I don't think housing affordability has gotten that much worse - yet. As long as mortgage rates don't go up for another 4 years, it's easy to keep mortgages very affordable. As for the cliff, the market and the politicians will keep running back and forth until some compromise is reached. We already have an ultimatum that is worse than what either party is currently proposing. Everyone will be led to believe that whatever agreement is reached is better than the alternative. Frankly, I never thought the fiscal cliff would be that bad of a deal in the first place. As for the deficit, it will only go up over time. It's amazing how banks were able to reduce 50% of their LT debt since the 2009 peak in 4 years. I wish there was some visibility how the government could do the same, but the best path toward fiscal balance is keeping rates very low. At current rates, at least the damage from compounded interest is being kept to a minimum. As the FED collects a bigger chunk of the debt pool, I guess the interest doesn't really matter.