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Thread: Bernanke blasted after surprise no-taper decision

  1. #11
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    Re: Bernanke blasted after surprise no-taper decision

    Interesting that the fed is purchasing mortgage backed securities. First, the toxic MBS market caused by no doc loans caused a huge part of this mess. But hten, not willing to let a good crisis go to waste, the federal government instituted the big bank "bail out", which was really handing the banks free money to use to buy out the MBSs and then foreclose on them without risk to the banks themselves. Then the federal government by way of Fannie Mae, ended up holding the paper on about 80% of the residential housing market.

    So then Bernanke starts talking about tapering off QE which signals to the consumer market that interest rates will start to rise. Have you wondered why there have been so many home refi commercials on the radio lately? The possibility of interest rates going up pushed consumers who still owned a home (or still believed they should) to run out and lock that OMG IT WILL NEVER BE THIS AWESOME AGAIN rate. Except now there is a personal indemnification clause in these mortgages too. See, in the past, when people still thought the housing market was bulletproof, if you stopped paying on the house the bank took it back and resold it on the open market. If you had less than 80% equity then you had Private Mortgage Insurance, which was never there to protect YOU, it is there for the lender. Thing is when the market went belly up the insurance companies did not have enough liquidity to pay all the claims. The loss in effect ended up being absorbed by the banks with federal (fake, printed, borrowed, choose one) money. But now the government owns the market, people are jumping back in, interest rates have been creeping up in anticipation of the end of QE and now there are more fresh MBSs available with the added security that if the homeowner is caught out again, the difference between the sale price and the amount owed on the property remains the buyer's responsibility. So now the MBS is a more secure investment than it used to be. This basically means that PMI you are paying is now just another bank fee, because YOU, not the bank, are responsible for any market losses. Nice, huh? Still trust your government?

  2. #12
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    Re: Bernanke blasted after surprise no-taper decision

    This is what I wrote one year ago about Q.E. 3.

    739. The third housing bubble (10/1/2012)

    This was what happened in 1990s. The Feds started to buy in the real estate property from 1990 when they drove down the housing price. In 1997, when they found I trying to buy a house, the Feds passed the “Taxpayer Relief Act” to check other buyers from competition. Then they pushed up the housing market with the “dot com” babble. Why? Because the area where I live is the Silicone Valley where the high tech. companies gather in and where the Feds hold a lot of property they bought in my case. The tactic was to encourage the establishment of new company. The high salary employee would boost the property price.

    The “dot com” bubble exploded in 2000. The Feds might have made good profit in property market in elsewhere but the San Francisco Bay Area where they invested heavily in my case. How to release their wealth? Then came the second bubble.

    In April 2001, Pentagon created EP-3 spy plane collision incident in South China Sea. In secret deal with China to release the spy plane crew, the Feds bribed China to frame a drug case in US. As a payback to Pentagon, the Feds helped Pentagon prepared 911 terror case. Silverstein leased WTC at that month. 911 also gave the Feds the Patriot Act they have longed for. (See: “695. The collusion of D.O.D. and D.O.J. (11/28/2011)”)

    With Patriot Act and a framed drug case in hand, the Feds now was sure Kat Sung would be eliminated. What needed was a booming housing market. How to get it? By manipulate the Federal Reserve.

    http://graphics8.nytimes.com/images/....graph.190.gif

    You can see how dramatically the interest rate dropped to the bottom in 2001 that created a housing babble US ever had which finally caused financial collapsing in 2008.

    However, the property the Feds hold in Kat Sung’s case is still there, how to deliver the hot potato into other people’s hands? It’s still the mission of Federal Reserve.
    Reuters – Wed, Sep 26, 2012.. .

    (Reuters) - The U.S. Federal Reserve launched a new round of monetary stimulus this month, saying it will buy $40 billion in housing-backed bonds each month until the labor market improves substantially.

    The Fed has kept interest rates near zero since December 2008 and now says it expects weak economic conditions will warrant keeping them there through at least mid 2015, half a year longer than it had earlier expected.
    http://news.yahoo.com/factbox-fed-of...-business.html
    When Federal Reserve exhausted their interest rate tool, to help the Feds to break away from their straits, Federal Reserve will turn papers into money by printing 40 billion dollars each month – all of them will poured into the real estate market in order to create a third housing babble. This time, the bubble will come with severe inflation, I foresee.

  3. #13
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    Re: Bernanke blasted after surprise no-taper decision

    791. Summers withdrew candidate of Fed chair and oil price (9/26/2013)

    Former FBI Chief Robert Mueller’s stepping down on 9/4/2013 obviously was a core time of recent big events. The sudden break out of Syria war crisis caused by Chemical weapon accusation in late August was a tradition way of Feds to distract. My relatives sudden trip to Turkey in early September was part of the elimination plan. When the plot went soured, the Feds has to change the original promise to the Chairman of Federal Reserve – we saw Bernanke having a “surprise no-taper decision”.

    No-taper of Q.E. decision is only a temporary decision. For the huge amount of real estate property the Feds hold, they need a person to keep the interest rate low. There comes another big surprise that on September 15, the Fed Chair candidate Summers withdrew his name from the list. Summers was Obama’s top choice for the Fed. What made a man to abandon the fruit he almost certain to grasp? Or in another word, who has the power to manipulate celebrities? It’s the Feds. I’ve talked about it many times. They could force Chief Justice Roberts to change his mind on Obamacare. (see “726. The surprise turnaround of Chief Justice (7/4/2012)”) They could force Petraeos resigning from CIA Chief post. (see “747. Petraeus case is an extortion (11/27/2012)”) So what for a candidate for the Fed’s chair?

    The point is Summers concerns more on inflation which will restrict the easy money of Q.E.. What the Feds need is a person who favors more Q.E. to boost the housing market.

    The other news indicates how the Feds does to keep interest low (by lower the oil price).

    Oil falls as US shows signs of patchy growth

    PAMELA SAMPSON 9/26/2013


    BANGKOK (AP) — Oil prices fell again Thursday amid worries about the U.S. economy and signs of a slowdown in demand.

    Oil falls as US shows signs of patchy growth
    In Autumn, a gas price fall

    Per-gallon fuel costs expected to drop 40 to 45 cents by Halloween

    By Gary Richards Mercury News 9/22/2013
    A low oil price will draw dawn the inflation to offset the pressure to raise the interest rate. The Feds could manipulate politicians and manipulate oil price by financial group as well.

  4. #14
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    Re: Bernanke blasted after surprise no-taper decision

    The Federal Reserve announced the start of its tapering process. Beginning in January, the Fed will be purchasing $75 billion in mortgage-backed and long-term Treasury securities per month rather than the current figure of $85 billion.

    From the FOMC's monetary policy statement:

    Beginning in January, the Committee will add to its holdings of agency mortgage-backed securities at a pace of $35 billion per month rather than $40 billion per month, and will add to its holdings of longer-term Treasury securities at a pace of $40 billion per month rather than $45 billion per month.

    IMO, this timing is no big surprise.

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