When mortgage banks are constrained by their warehouse lines, and they have to decide which loans to fund or not to fund, is that an example of “opportunity cost”? Yes, although it doesn’t show up on P&L statements. “Opportunity cost” is defined as “the value of the next best alternative forgone as the result of [...]

My father used to say, “It’s OK to kiss a nun, but don’t get into the habit.” Speaking of habits, the bond market has become accustomed to the Fed buying mortgages. What if they stopped? Federal Reserve President Lacker suggested the Fed may not need to spend the full amount it pledged ($1.25 trillion, for [...]

Q: In these busy market times, how can you get the attention of your broker? A: Say, “Hey, waiter!” To tell us how the economy is doing, should we really look at the stock market? Probably not, as many experts believe that prices are more impacted by psychology than by fundamental items such as earnings [...]

When I was growing up, people didn’t have health clubs, thigh master, or Richard Simmons. We had Jack LaLanne. Everyone my age will be pleased to know that Jack (born in 1914) is still alive and well, living on the Central Coast in California. Born in San Francisco, his fitness show lasted 34 years on [...]

Ah, inflation – at all levels. During the life of a 30-yr fixed-rate mortgage, there are bound to be periods of inflation. It is debatable, in the market of mortgages, whether or not borrowers and lenders take inflation into account. Certainly ARM loans do to some extent. But bond prices (aside from TIP securities, some [...]

Housing Bottom Watch Two blonds are facing each other across a large river. One cries out to the other, “How can I get to the other side?” The other responds, “Duh, you ARE on the other side!” Are we on the “other side” when it comes to the housing market? Not according to a Harvard [...]

Over the weekend I was in the express lane at the store quietly fuming. Completely ignoring the sign, the woman ahead of me had slipped into the express check-out line pushing a cart piled high with groceries. Imagine my delight when the cashier beckoned the woman to come forward looked into the cart and asked [...]

Over the weekend my daughter and a friend had a lemonade stand on the street. They weren’t selling much lemonade for 50 cents a cup, so they decided to increase the price to 75 cents a cup. I told them that is not how economics works. My daughter replied, “The price of a postage stamp [...]

Stocks, Especially Banks, Rally On Stress Test Results I am the first to admit that if I had to make a living as a day trader, I would be bankrupt within a month. Yesterday was a perfect example. Bank stress test results have been leaked out, showing, for example, that Citi, Bank of America, and [...]

Bernie Madoff and his wife are saying they have $69 million that is theirs and is not part of the money he swindled. They say it’s money he saved by switching to GEICO.