Posts for Tag: mortgages

The Crisis of Credit - Great video detailing the current credit crunch

This is a great video. Created by Jonathan Jarvis and on his website Check it out and send him a donation!

By the way, I just finally figured out how to embed tags within my post via the subject line.  Also, gotta give much props to Posterous for making embedding video so easy.  I just put the URL of the Vimeo video in the email body and bam, there it goes.  Used to take me a while to embed YouTube videos just right when I tried blogging on my own platform.

Nice day!

I've parked myself outside of Peet's for a brew. Also snapped a shot from our balcony earlier today - you can see Marin County across the water! A beautiful day today - slightly on the warm side; just the way I like it.

It's a great way to start what will be a hectic week. We're starting our big fundraising push tomorrow and while Ike is on the road, I'll be pushing out some interesting improvements to some of our core products. Good news is that January is shaping out to be a blockbuster month for us (best month of our existence!). The right combination of the post holiday credit card rush (always happens - people max out their cards and need more) plus news that the Fed lowered interest rates a few weeks back have opened up the floodgates for mortgage apps. Let's hope the remaining 19 days of the month are just as good as the first 12.

Rate cuts are not necessarily good...

I'm far removed from my days as an economics grad but I think rate cuts by the Fed are not necessarily a good thing. Yes, it'll make it cheaper for banks/corporations/small businesses to borrow money but it seems somewhat artificial versus real value/wealth creation. Remember it was this artificial (and arguably fraudulent) boost that led us into the current recession. It's almost like a drug that the economy has grown accustomed to. I wonder if the Dow would have jumped almost 900 points today had a rate cut not been rumored.

But why is the rate cut necessary? As a corporation, would borrowing money at 5.5% versus 4.5% swing you from profitability to a loss? As a small business, if your credit card rate was 15.99% versus 14.99% would that really matter much? And if you couldn't afford to buy a house at 6.75%, you probably won't be able to afford that house at 6.25%. If nothing else, the market correction of the past few weeks should reset everyone's expectations that life won't be as it was during the boom. We should all adjust our spending accordingly and move on to the business of true value creation. Innovate more - work harder. Then the gains you have are real gains and not artificial ones.

If you have the time, This American Life has a great show on the background to the mortgage implosion and how interest rate cuts made by Greenspan contributed greatly to the downward spiral.