Han wrote:
"Swingman" wrote in
:

"Han" wrote

Value, whether fine woodworking, solar installations (BG!!), FR notes
or gold, is best defined as "what a willing buyer would pay for it".

Problem is definition of willing buyer. In a "hot" economy he is
much easier to find than in an economy just entering a recession.
All those properties secured by subprime mortgages were quite
valuable 2 years ago. Now they're worth much, much less. Most likely
they'll be worth much more again in a few years.
... and with regard to the bailout, subprime mess, and attendant stock
market hysteria/plunge, let me repeat, once again, what I said/posted
the other day:

The absolute proof of something's true worth is how quickly it loses
its value.

The meteoric rise in home prices was just as artificial as the current
decline in those markets where there (apparently) was most manipulation.

With NINA (no income no assets) loans available to boost demand for new
homes to "flip" in a shortage environment, the rise couldn't have been
anything less than meteoric. A lot of builders cashed in by building
high-profit "McMansions" and local banks (who had no skin in the game)
were happy to write mortgages being sought by Wall Street types who
couldn't sell shares of their mortgage-backed funds fast enough to eager
big-money investors around the globe.

Normally, a great deal of that investment money would have gone into
Treasury Bonds, but former Fed Chairman locked that yield down so low
those folks were desperate for some kind of reasonably secure investment
with a reasonable return. Funds secured by real property in the USA
looked like a good way to go.


--
Morris Dovey
DeSoto Solar
DeSoto, Iowa USA
http://www.iedu.com/DeSoto/