Thank You Bryco!
[Another short break from the 2005 gold stories is being taken today in order to look at another housing related piece, this one published on September 18th, 2005 and one that stuck in the craw of the mortgage lender Bryco, that is, right up to the point that they went belly up a few years later. They contacted me on a number of occasions asking that I take the original piece down due to some of the comments that were left, but I never did. Here are a couple of follow-up items for anyone who might be interested in seeing this through to its conclusion - What to Do with the Bryco Post in 2007 and then Goodbye Bryco! in 2008.]
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Well, it looks like all the home equity lending risk management guidelines are working wonders. As you’ll recall, five federal agencies issued these guidelines back in May. At the time we likened this guidance to fitting a patient suffering from back pains with a back brace, while a cancerous tumor was growing inside, impinging upon his spinal cord.
It looks like the patient isn’t even wearing the back brace.
Here’s the transcript from a TV commercial that we stumbled across this morning. Fortunately, thanks to DVR (Digital Video Recorder) technology, the only time we watch commercials is by accident – this was just such an accident, however we did learn something.
We don’t know if what Bryco Funding is offering the public is typical of others in the industry – our sample size of one is probably too small, but here it is:
If you are backed up against the wall financially, and you own a home and have a mortgage, there is a simple easy way to get fast cash.
Even if you’ve been in your home for six months, one month, or a day, Bryco Funding can use a new appraised value to get you cash instantly.
Credit scores as low as 500, bankruptcies, or foreclosures are not a problem. You don’t even need proof of income or past tax records.
Call Bryco Funding now to pre-qualify, there’s no obligation and there are no charges or fees for pre-approval. And since Bryco Funding lends their own money, they can make instant decisions and approvals.And, they can wrap up your loan in as little as ten to 14 days.
Stop worrying and screening phone calls from nagging creditors. Help Bryco help you today with a quick-cash loan. Just call the toll-free number on the screen. Our number one goal is to say yes.
At Bryco Funding we believe in loans, not limitations.
Yes, things are better now that five federal agencies have weighed in on home equity lending and Bryco must have some very cooperative appraisers to work with. While not stated in their ad, we can reasonably conclude that the minimum requirements for a Bryco home equity loan are a home with equity and a pulse.
You have to wonder if the grand plan is to forestall as long as possible the inevitable outcome of the housing bubble. In California, as long as prices remain elevated, with all the equity in California homes, we could probably go on for at least another five years borrowing against our homes even if everyone lost their jobs.
With a median income of around $50,000 and say, $250,000 equity in your home, that’s an easy five years living off your house with no other source of income.
Maybe someone does have a plan.
The Time is Surely Not Far Off
[As summer prepared to give way to fall seven years ago, there was real change in the air. Gasoline prices had surged to $3 a gallon in the wake of the devastating Gulf Coast hurricanes and some people were really starting to worry about the housing bubble. Of course, not enough policy makers shared this concern, not the least of which was future Fed chief Ben Bernanke who, over the summer, cited strong fundamentals in the housing market as immortalized in the beginning of this video. What was also bubbling beneath the surface was the gold price that, on the day this item was published on September 15th, 2005, checked in at $455 an ounce and was poised for a sharp move higher in the months that followed.]
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As gold makes attempt after attempt to once again surpass and hold the $450 per ounce mark and then take out the $457 level that marked a new 18 year high last December, more and more commentaries about the yellow metal are popping up in all sorts of places. Somehow these recent commentaries are different.
It used to be that there were only two sides to the gold story – the story told by economists and the story told by gold bugs.
The economists would say that gold is a “barbarous relic” that pays no interest and has been relegated to its proper place as but a footnote in history – that today’s financial wizards are wholly capable of managing fiat money and that the world is a better place without the restrictions on money creation that were in place when money was linked to gold.
The gold bugs would respond by pointing out that today’s fiat money has no intrinsic value because it is backed by nothing other than confidence in the government and the central bank which issues it – that ultimately, it will revert to its intrinsic value because of promises politicians can not keep and the hubris of central bankers.
Today there seems to be a growing middle ground when it comes to gold. Some question the current relationship between the oil price and the gold price and note that it is far from historical norms. Others wonder why gold has nearly doubled in value since the technology boom went bust and real estate became the world’s primary driver of wealth creation.
Inflation and Gold
[By the dog days of summer in 2005, gold was getting ready to break out of its $400+ rut in advance of one of the most important developments in recent years for the yellow metal - the nomination of Ben Bernanke as Fed Chairman in the fall. Originally appearing at the old blog on August 17th, 2005 when gold fetched $442 an ounce, this item looked at the inflation data at the time, that is, back when home prices were rising about 15-20 percent per year and gasoline only cost $2.50 per gallon - what some now think of as "the good 'ol days", when energy was still cheap and everyone was getting rich just by owning a house.]
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Inflation ticked up a bit yesterday with the Consumer Price Index showing a year over year increase of around 3%. Then inflation ticked up again this morning, with the Producer Price Index showing a year over year increase around 4%.
These numbers would probably tick up a bit more, probably a lot more, if they more accurately represented what most people experience in their lives. But, we know how that works. None other than Alan Greenspan once lamented that savings is confiscated through inflation (see the main page side-bar quote from 1967).
We prefer to think of inflation as a stealth tax. Really, is there any difference between people sending their money to the government and people keeping their money as it loses its purchasing power as a direct result of government fiscal and monetary policy?
The real trick is to make people think that the money they keep isn’t losing it’s purchasing power. Or, better yet, a more believable story would be that it is only losing its purchasing power at a rate of two or three percent a year. That trick, the trick of the confiscators, seems to have worked quite well for some time now.
Pay no attention to the budget deficits, soaring debt of all kinds, or the increasing difficulty in making ends meet, and repeat after me, “inflation is benign”, “longer-term inflation expectations remain well contained”, “the breakeven TIP spread shows no inflation impact from oil”, “the current cycle of non-inflationary prosperity can last for many years”.
Here’s yesterday’s Consumer Price Index summary:
Click to enlarge
Examining the right-most column we find that total year over year inflation clocks in at 3.2%. Despite the 0.5% monthly increase, the inflation beast is apparently still heeding its master.
Tin Foil Hats at Forbes.com
[We resume our look back at some of the 2005-era posts at the old blog that discussed the barbarous relic, this item from July 29th, 2005 (when the gold price stood at $429 an ounce) detailing how Chinese leaders ought to swap in some of their pile of paper dollars for something more tangible. Recall that just a few years after this was published (i.e., after the events of 2008), emerging market central banks turned into big buyers of the yellow metal, China announcing in 2009 that it had been buying throughout the decade and officially doubling its reserves to over 1,000 tonnes. Many believe the Chinese have been even bigger buyers in recent years (wouldn't you if you had something like $3 trillion of dollar denominated assets) and that someday they'll tell the rest of the world how much they've bought.]
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Well, well, well …
Someone in the mainstream financial media has finally stumbled across the obvious answer to the question of how China can avoid duplicating some of the mistakes that Japan made with their bulging U.S. dollar reserves back in the late 1980s. Over at Forbes.com we find this illuminating article by Richard Lehmann about the possibility of China acquiring gold bullion with some portion of those U.S. dollars that keep piling up in their central bank.
It seems that instead of being enamored with U.S. entertainment and recreation businesses as the Japanese were (e.g., Rockefeller Center and Pebble Beach), the Chinese are much more practical. (Maybe this practicality has something to do with the unusually high number of engineers, and unusually low number of lawyers, in the Chinese government – not sure where we heard this, but we believe it to be true. It seems to make sense. If it’s not true, then it was fun believing it for a while.)
Having recently grown a bit tired of purchasing U.S. Treasuries month after month, the Chinese now seem more inclined to spend those U.S. dollars on mining companies, oil companies, and other natural resource companies to help ensure the steady flow of raw materials needed for their manufacturing juggernaut.
The Weekend Update is Now Available
The latest issue of the Iacono Research Weekend Update has been posted to the website and is now available for subscribers here. There were no changes to the model portfolio or the buy ratings this week and the executive summary is as follows:
Amid rising concern that the European sovereign debt crisis will spin out of control due to instability in Greece and fear that this will spread to the rest of the world, risk assets had another bad week as both stocks and commodities tumbled while safe haven assets such as U.S. Treasuries and the U.S. dollar rose.
Commodity prices fell for the seventh time in the last eight weeks as precious metals led the way lower, related stocks seeing even bigger losses. For the week, the model portfolio fell 3.7 percent and is now down 1.0 percent for the year.
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