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Generally speaking, at this particular time seniors as a group are relatively well-off compared, say, to a young couple struggling to buy a starter home. The Fed's effort to push down mortgage rates may help in that area.
I realize that this may sound callous, but the fact is that only seniors with a fair amount of money to invest (like my wife and I, for instance) are being crimped by the low interest rates. Those seniors who are really hurting don't have a lot of extra cash lying around to put into a CD... that's the least of their worries.
Something worth noting when it comes to gold and money printing...I came across these "concepts/strategies/set of thoughts" this past week:
"Money "printing" involves a central bank buying "assets", usually sovereign debt, and crediting the seller with money that it has created electronically. The theory being that this money is used to encourage spending by way of loans to consumers and corporates, but which has the potential outcome of higher inflation. It should also drive short term rates down if, like with the OMT [Outright Monetary Transactions] operation, the ECB is buying at the short end of the curve - the complete reverse of the Fed's Operation Twist by the way. The announcement of OMT has had the desired effect on rates, especially Spanish and Italian, where the cost of new issuance was creating the debt servicing issue mentioned earlier. However with more than a nod to the Bundesbank, the ECB has declared that it will sterilise the purchases so that there will be no inflationary effect. They can do this either by selling other assets, for example long dated issues or attract deposits at the ECB both of which remove the newly created money from circulation. The first option is unlikely as they really don't want to drive longer term rates upwards, so they are left with the second or they could instead sell some of their gold reserves, but that would be akin to selling the family "silver". They wouldn't do that would they? Well they might! Thinking that politicians and central bankers would be so crass is another example of one of life's "heroic" assumptions. The Chinese would have it off them in a trice and how would that help the cause?
-Source: View from the Bridge an alternative view of the investment world by Clive Hale viewfromthebridge
"We suggested that China's gold reserves should reach 6,000 tons in the next 3-5 years and perhaps 10,000 tons in 8-10 years," the paper quoted him. Has China managed to accumulated 6,000 tons yet? We won't know for sure until the official disclosure which will come when China is ready and not a moment earlier, but at the current run-rate of accumulation which is just shy of 1,000 tons per year, it is certainly within the realm of possibilities that China is now the second largest holder of gold in the world, surpassing Germany's 3,395 tons and second only to the US."
-Source: China Imports More Gold In 2012 Than All ECB Holdings - Zero Hedge zerohedge
Maybe the yuan will soon be the reserve currency...
Reply to @Old_Joe: I'm guessing that would be because gold (see also silver and other commodities, silver up higher than gold and part of PRPFX) are doing well today due to yet another QE. Gold currently up higher on a % basis than any of the major indexes. That's probably why he said that....
It's also probably why I'm pleased I have a large position in ARCNX, not to mention several other commodity-related and hard asset plays, largely due to the view that there would absolutely be more QE (this one while the market is at a new high, no less...hmmm), more stimulus, etc.
Reply to @Hiyield007: Those would be seniors with assets to invest, therefore among the relatively well-off. It is pretty well universally acknowledged that the AARP cohort is the wealthiest and most well-off senior generation ever in this country. At least they have something to chase yield with... they're the fortunate ones.
Actually, Uncle Ben made some interesting comments - huge issue is lack of aggregate demand (er, not enough folks buying widgits); credit not reaching main street; and that they were hoping that QE3 would improve the wealth effect - we'll all feel richer and will then start spending and building stuff. Oh, and his biggy is that they were proving to one and all that they are willing to do everything they can to improve the economy.
1. lack of agg demand is due to unemployment around 20% and no one really able to buy stuff. This means that companies are operating under capacity and therefore are not interested in building a new plant or hiring new works - regardless of what they claim about supply side/trickle down economics. What we need right now is some Demand Side economic fiscal policy.
2. credit not reaching the street - duh, what banker in is right mind is going to write a mortgage for 4%? geez, they'd take him out and shoot him. sorry, but at 3-4% I'm clean out of money but if you want to pay 6% . . . well maybe we can talk.
3. more uncle ben bucks - make some feel richer, but no one on main street. duh, you've got to own stocks to benefit from this stuff.
4. trust the FED - they're on watch. damn, I feel better, don't you?
Reply to @rono: 1. When you wish upon a star.... I don't think the Fed really wanted to do this. They previously said there wasn't much Fed action could do and begged for help from fiscal policy. Demand side help will not come. For some reason our leaders don't really care about the fabric of the country. There are some "fiscal" goals that can be realized by plunging a country into deep doo-doo as far as one can. Fed can try what they want but it probably won't do much. 2. Just a one datum observation - I get promos from my credit union (Pentagon federal). Most of the good rate on loans are for shorter term loans like car loans, even used car loans. The majority/all of housing loan promos are for ARMS. In fact I took advantage of the credit union's good will in 2010. I used the 5/5 no-closing bargain they offered me to buy a house until my currently house sold. So three months later I paid off the 5/5 ARM in cash when the house sold. Maybe the fed can't really affect prices but if people need a 3% loan to buy houses in their area, the price of the houses is still too high. People don't want housing to fall to it's reasonable affordability at normal rates. Stalemate! (How does the fact that this is MBS purchases affect the picture I have?) 3. Punt. I'm not very good at ball games. It strikes me that I have lurked here for years watching but not partaking so my little stockpile of wealth has not seen the advantage of your wisdom. I doubt if people like me will be able to make much off QE3. I really needed a market correction more than QE3 but that's my own stupidity. I wanted to retire so I could devote more time to my investments. I retired and lost interest, I guess. 4. Decidedly better. Why not?
I'm quasi-retired also and so have put much of my portfolio onto cruise control. feh. Better things to do I guess.
I'm afraid you're right on all counts. Washington will be deadlocked as they leap merrily off the fiscal cliff. Afterwards will much be accomplished? Probably not.
Nice catch on the loans and what we all pretty much know. I keep reading about mortgage rates being at 3.5% on a 30 . . . er, show me. Huge overhang of wouldbeforeclosures being held back by the banks in hopes of not craming themselves down. Considering how they fought allowing mortgages to be adjusted by a bankruptcy judge - serves them right. Alas and alack, it is postponing the recovery by about another decade.
We need to have EVERYTHING subject to bankruptcy, particularly mortgages and student loans.
Comments
lucky I still have gold and prpfx
More on Fed... Reuters
More on Fed... Washington Post
Surprised that vote was 11 to 1... only Richmond against (of course).
I realize that this may sound callous, but the fact is that only seniors with a fair amount of money to invest (like my wife and I, for instance) are being crimped by the low interest rates. Those seniors who are really hurting don't have a lot of extra cash lying around to put into a CD... that's the least of their worries.
"Money "printing" involves a central bank buying "assets", usually sovereign debt, and crediting the seller with money that it has created electronically. The theory being that this money is used to encourage spending by way of loans to consumers and corporates, but which has the potential outcome of higher inflation. It should also drive short term rates down if, like with the OMT [Outright Monetary Transactions] operation, the ECB is buying at the short end of the curve - the complete reverse of the Fed's Operation Twist by the way. The announcement of OMT has had the desired effect on rates, especially Spanish and Italian, where the cost of new issuance was creating the debt servicing issue mentioned earlier. However with more than a nod to the Bundesbank, the ECB has declared that it will sterilise the purchases so that there will be no inflationary effect. They can do this either by selling other assets, for example long dated issues or attract deposits at the ECB both of which remove the newly created money from circulation. The first option is unlikely as they really don't want to drive longer term rates upwards, so they are left with the second or they could instead sell some of their gold reserves, but that would be akin to selling the family "silver". They wouldn't do that would they? Well they might! Thinking that politicians and central bankers would be so crass is another example of one of life's "heroic" assumptions. The Chinese would have it off them in a trice and how would that help the cause?
-Source:
View from the Bridge
an alternative view of the investment world by Clive Hale
viewfromthebridge
"We suggested that China's gold reserves should reach 6,000 tons in the next 3-5 years and perhaps 10,000 tons in 8-10 years," the paper quoted him. Has China managed to accumulated 6,000 tons yet? We won't know for sure until the official disclosure which will come when China is ready and not a moment earlier, but at the current run-rate of accumulation which is just shy of 1,000 tons per year, it is certainly within the realm of possibilities that China is now the second largest holder of gold in the world, surpassing Germany's 3,395 tons and second only to the US."
-Source:
China Imports More Gold In 2012 Than All ECB Holdings - Zero Hedge
zerohedge
Maybe the yuan will soon be the reserve currency...
It's also probably why I'm pleased I have a large position in ARCNX, not to mention several other commodity-related and hard asset plays, largely due to the view that there would absolutely be more QE (this one while the market is at a new high, no less...hmmm), more stimulus, etc.
CONTROL+P, the command of the day
Being the print command, eh ???
Okay, back to work I must go...........
Actually, Uncle Ben made some interesting comments - huge issue is lack of aggregate demand (er, not enough folks buying widgits); credit not reaching main street; and that they were hoping that QE3 would improve the wealth effect - we'll all feel richer and will then start spending and building stuff. Oh, and his biggy is that they were proving to one and all that they are willing to do everything they can to improve the economy.
1. lack of agg demand is due to unemployment around 20% and no one really able to buy stuff. This means that companies are operating under capacity and therefore are not interested in building a new plant or hiring new works - regardless of what they claim about supply side/trickle down economics. What we need right now is some Demand Side economic fiscal policy.
2. credit not reaching the street - duh, what banker in is right mind is going to write a mortgage for 4%? geez, they'd take him out and shoot him. sorry, but at 3-4% I'm clean out of money but if you want to pay 6% . . . well maybe we can talk.
3. more uncle ben bucks - make some feel richer, but no one on main street. duh, you've got to own stocks to benefit from this stuff.
4. trust the FED - they're on watch. damn, I feel better, don't you?
and so it goes,
peace,
rono
1. When you wish upon a star.... I don't think the Fed really wanted to do this. They previously said there wasn't much Fed action could do and begged for help from fiscal policy. Demand side help will not come. For some reason our leaders don't really care about the fabric of the country. There are some "fiscal" goals that can be realized by plunging a country into deep doo-doo as far as one can. Fed can try what they want but it probably won't do much.
2. Just a one datum observation - I get promos from my credit union (Pentagon federal). Most of the good rate on loans are for shorter term loans like car loans, even used car loans. The majority/all of housing loan promos are for ARMS. In fact I took advantage of the credit union's good will in 2010. I used the 5/5 no-closing bargain they offered me to buy a house until my currently house sold. So three months later I paid off the 5/5 ARM in cash when the house sold. Maybe the fed can't really affect prices but if people need a 3% loan to buy houses in their area, the price of the houses is still too high. People don't want housing to fall to it's reasonable affordability at normal rates. Stalemate! (How does the fact that this is MBS purchases affect the picture I have?)
3. Punt. I'm not very good at ball games. It strikes me that I have lurked here for years watching but not partaking so my little stockpile of wealth has not seen the advantage of your wisdom. I doubt if people like me will be able to make much off QE3. I really needed a market correction more than QE3 but that's my own stupidity. I wanted to retire so I could devote more time to my investments. I retired and lost interest, I guess.
4. Decidedly better. Why not?
I'm quasi-retired also and so have put much of my portfolio onto cruise control. feh. Better things to do I guess.
I'm afraid you're right on all counts. Washington will be deadlocked as they leap merrily off the fiscal cliff. Afterwards will much be accomplished? Probably not.
Nice catch on the loans and what we all pretty much know. I keep reading about mortgage rates being at 3.5% on a 30 . . . er, show me. Huge overhang of wouldbeforeclosures being held back by the banks in hopes of not craming themselves down. Considering how they fought allowing mortgages to be adjusted by a bankruptcy judge - serves them right. Alas and alack, it is postponing the recovery by about another decade.
We need to have EVERYTHING subject to bankruptcy, particularly mortgages and student loans.
And so it goes,
peace,
rono