That is a long post, but well written. Real estate is a claim on the future prosperity or ruin of a geographical location. Real estate intrinsic values is its ability to generate cash or similar costs to rent in that area. Intrinsic value is above zero in most cases.

@ReformedTrader Ironically enough, the location that benefits most from property ownership are places where rising living costs expand faster than rising middle income wages. Deflationary areas are hostile to property ownership as price is falling make collateral and borrowing difficult.
@ReformedTrader Homes are bought using leverage with agencies loan subsidies by the governments. As long as you have fixed rates, the costs of living expenses for your housing is set for 30 or 15 years which allow family to budget. Wealth can be accumulate over time as asset and income risen.
@ReformedTrader Time passed, real estate become detach from intrinsic values. Monthly mortgage rocket pass incomes and growth in the area. Quick money into real estate turn into a landmine. The 2007 fiasco could have been better or worst, but the free market is effectively dead as an ideology.
@ReformedTrader At the time, investors attack the institutional that vulnerable to the MBS and structured derivatives linked to real estate bubble risks. Since many financial institution owned the agencies MBS, defaulting on these security means downward spiral for M1 and M2 in developed nations
@ReformedTrader The Gov and Fed fearing total collapse of the system bail out by effectively nationalizing the GSEs and back stop all the MBSs issued by them. Other thing deem non essential like LEH were left to rot. However, the financial institutions contagion effects are underappreciated.
@ReformedTrader In the end, the AIG bailout send clear message that Fed will do whatever it take to protect the system. Plan economy is the motto of the day, up to now . For traders, betting on system destruction is suicidal, but betting on system survival owning bail out assets means wealth.
@ReformedTrader Fed when facing difficult decision, will behave in a sandbox, and play within set of rules. Fed have lots of options, but often theirs choice is limited to a fews in order to avoid bad outcomes. The next step forward will be helicopter money and direct market intervention via BLK
@ReformedTrader If necessary Fed bankroll the equity market by buying junks, equity, and supplying liquidity necessary to maintain leverage positions in vulnerable financial institutions. What wrong with bailing out the fews while leaving the mass poor and restless? Soviet Union style collapse.
@ReformedTrader @threadreaderapp unroll

More from Business

The Mother of All Squeezes

How Volkswagen went from being on the brink of bankruptcy to the most valuable company in the world in two days

/THREAD/


1/ At the peak of the 2008 financial crisis, Volkswagen was considered a very likely candidate for bankruptcy.

Heavily indebted and already financially struggling before 2008, with car sales expected to plummet due to the ongoing global crisis.


2/ With GM and Chrysler filing for bankruptcy in 2009, shorting the VW stock would seem a safe bet.

If you are not familiar with stock shorts and short squeezes check my thread


3/ On October 26, 2008, Porsche announced it had increased its stake at VW from 30% to 74%.

This was a surprise to many who were led to believe that Porsche wasn't planning a takeover of VW, based on the company's announcements.


4/ Before the announcement, the short interest was approximately 13% of the outstanding shares, a number considered relatively low.

Porsche had a 30% stake, the Lower Saxony government fund held 20% of the shares, and another 5% was held by index funds.
I love Twitter.

It’s truly the Town Square of the Internet.

But finding the diamond in the rough voices can be tough.

Here are 20 of my favorite people to follow:

1. Alex Lieberman - @businessbarista

Alex writes extensively about the Founder journey.

The cool part is he’s lived everything he talks about - starting from $0 and selling for $75M with hardly any outside capital raised.

My favorite piece:


2. Ryan Breslow - @ryantakesoff

Ryan is a Top 1% founder.

This guy is a machine - he’s built 2 unicorns before the age of 27.

Ryan spells out lessons on fundraising, operating and scaling.

My favorite piece:


3. Jesse Pujji - @jspujji

Jesse is who I think of when I think “bootstrapping.”

He bootstrapped his company to an 8-figure exit and now shares stories about other awesome bootstrappers.

He’s also got great insight into all things growth marketing:


4. Post Market - @Post_Market

Post puts out some of the most thoughtful investment insights on this platform.

It’s refreshing because Post cuts through the hype and goes deep into the business model.

Idk who he/she/it is, but the insights are 💣.

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