Greenspan: Threat or menace?
Mar. 3rd, 2004 10:03 am![[personal profile]](https://www.dreamwidth.org/img/silk/identity/user.png){kind=small}
holzman_tweedIt's a popular joke amongst Mage players that Alan Greenspan is a Syndicate Mage with Blatancy 5. It's an even more popular joke that his final fate will be to spontaneously combust on national TV while announcing interest rate changes.
I now add the joke that either he's entered Quiet, or he's trying to subtly tell us that the economy is fucked sideways with a sledgehammer. (If this is all gobbledegook to many people reading, I'll add explanations of all this gamer speak later.)
Earlier this week, Greenspan put forth the advice that American homeowners should all run out and trade in their nice, stable fixed rate mortgages for variable-rate mortgages. The advantage of variable-rate mortgages is that you usually get a better interest rate when you sign up. The disadvantage is that the rate you pay is tied to the Prime rate. If Prime goes up, your house payment goes up.
Of course, if Prime goes down, so does your house payment. But take a look at the interest rate. It's in the basement. It's not likely to drop much because there isn't a whole lot of space left for it to drop. Lots of people are wondering when the Fed is going to raise Prime, though. Everone gets surprised each time the Fed announces they're not raising it.
So either Greenspan is trying to get people to get into deals that are going to cost them a hell of a lot of money when the rates do go up; or he's trying to tell us that rates are going to go down without coming out and saying so.
So one must ask: why's he doing that?
I now add the joke that either he's entered Quiet, or he's trying to subtly tell us that the economy is fucked sideways with a sledgehammer. (If this is all gobbledegook to many people reading, I'll add explanations of all this gamer speak later.)
Earlier this week, Greenspan put forth the advice that American homeowners should all run out and trade in their nice, stable fixed rate mortgages for variable-rate mortgages. The advantage of variable-rate mortgages is that you usually get a better interest rate when you sign up. The disadvantage is that the rate you pay is tied to the Prime rate. If Prime goes up, your house payment goes up.
Of course, if Prime goes down, so does your house payment. But take a look at the interest rate. It's in the basement. It's not likely to drop much because there isn't a whole lot of space left for it to drop. Lots of people are wondering when the Fed is going to raise Prime, though. Everone gets surprised each time the Fed announces they're not raising it.
So either Greenspan is trying to get people to get into deals that are going to cost them a hell of a lot of money when the rates do go up; or he's trying to tell us that rates are going to go down without coming out and saying so.
So one must ask: why's he doing that?
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(no subject)
Date: 2004-03-03 07:34 am (UTC)http://www.nytimes.com/2004/03/02/opinion/02KRUG.html Krugman's article today. I was already weirded out by Greenspan announcing that we should cut Social Security to pay for the tax cuts; the concept that back in the 80's the payroll tax was increased to save Social Security and hence created the surplus that was part of the argument for the tax cuts.... Eyuck.
(no subject)
Date: 2004-03-03 09:31 am (UTC)