.jpg)
I'm serious, someone explain this to me. I understand, I think, how the Fed can "buy" mortgages, but how exactly does that make the interest rate go down? My only guess would be that mortgage lenders who sell those mortgages now have cash to lend again. More money available for the same potential home buyers means lower rates based upon supply and demand?
But how in the world are mortgage interest rates the problem? They are at all time lows.
39 comments:
this was just an obama campaign contribution,
Not sure where you pulled that news graphic from, but I'm pretty sure it is wrong. The purpose is not to lower mortgage rates, it is to inject money (increase monetary supply -- looser monetary policy) into the economy and drive broader growth. Why they would buy MBS instead of some other type of security is a mystery to me (usually they just buy treasury bonds).
It sounds suspiciously like the government is repeating the actions that caused the housing bust and economic collapse.
The Fed essentially buys mortgages to protect the lender from default. It has no effect for the qualified mortgage but it allows lenders to finance for the non-qualified. Sound familiar? Isn't that what caused the housing meltdown? The Feds are not buying mortgages, they are buying votes. It doesn't work in Texas because we have much tougher lending laws than the rest of the nation. We actually learned something from the savings and loan crisis in the late 80's and early 90's.
And also, the lenders will not have an entry on their balance sheet for doubtful accounts...you and I will cover that.
Right you are Wordkyle this is exactly what got us into the mess we are in now of coarse the libs will never admit it. Remember it's all Bush's fault not the dem congress who pushed this stinking pile.
It sounds suspiciously like the government is repeating the actions that caused the housing bust and economic collapse.
The one under Bush, right? RIGHT?
Rage
Is drugs r alkeyhol involved?
Obammy/Biden. Wat a team. That a team I say.
Thanks for all you do.
Lord help us...this don't look good
Both banks and big businesses are sitting on a pile of cash. Banks have been reluctant to loan and business to build and hire - until they can get rid of Obama. This Fed move will pump a little more $$$ into the economy but don't expect any dramatic increase in employment. What the Fed is doing is similar to what Freddy Mac and Fannie Mae were supposed to do. Because the banks made bad loans, Freddie and Fannie wound up with those bad loans. Now the Fed seems to be taking on that risk. This may increase inflation pressures but that's the cost of an improving economy. At least that's my view.
Also, if they buy mortgages, maybe they can "reduce foreclosures" by refraining from foreclosing those in default, thereby also making things look "better"?
Also heard recently from a local banker that programs that were created to help out those borrowers in default on their mortgages (who shouldn't have gotten a loan in the FIRST place), have been 95% unsuccessful! WOW! I mean, those people REALLY shouldn't have been allowed a loan, and yet to think, there were programs that gave those banks INCENTIVES to loan to those people! THAT is the very definition of "IDIOCRACY"!
LOL When an administration sees the disastrous consequences resulting from a policy, then repeats that policy, they are the people of whom Santayana spoke.
Word Kyle that exactly what I thought!!!!
How dumb can the left be?
Romney has to be laughing his arse off!
I know I am!
Well, basically, it boils down to if you want a wlfare state where 20% of us work to provide for women who breed like rats and their offspring and house in prison the worthless scum who father those same children then you vote Democrat.
If you want to live in a free society where maybe, just MAYBE you get hang on to a nickel here and there you earned and go about your business without some homo in your face sacreaming,"We're here and queer..." then you vote Republican.
Was that Wordkyle admitting that a Bush policy was a disaster?
And of course, who knows if this is repeating the same policy or not, he's just speculating. Glad to hear he's coming around on admitting that Bush's policies were failures though. Baby steps, big boy, baby steps.
Rage
Rage has some daddy issues with former President Bush. He can't go a day without invoking his name.
Get over it already.
Rage/Monica, If you will check facts about the Community Reinvestment Act, you will find that it was drafted under Jimmy Carter that started the housing debacle. Also you will discover it was Janet Reno that threatened banks with law suits if they were to discriminate against poor people in turning them down for home loans. It was not a Bush policy that led to the housing bust. Has your dry cleaner gotten the stain out of your blue dress?
Then y'all must have some daddy issues about Rage, because he doesn't even have to post in here before you morons start bringing his name up.
Rage...you can blame Bush all you want because frankly, people are too lazy to research themselves. The loose mortgage lending policy actually started under Bush Sr. but flourished under Clinton. A bulletpoint during Clinton's tenure as president was percentage of home ownership. As it turns out, not everyone is responsible enough to own a home. Even though the crash came during G.W. Bush, that is one albatross you cannot hang around his neck. He made plenty of mistakes but that is not one of them. It is your right to call Wordkyle a liar nearly every time he posts but it makes you look disingenuous when you lie, especially since I suspect you know better.
NY Times, Sept. 11, 2003, ”These two entities — Fannie Mae and Freddie Mac — are not facing any kind of financial crisis,” said Representative Barney Frank of Massachusetts, the ranking Democrat on the Financial Services Committee. ‘‘The more people exaggerate these problems, the more pressure there is on these companies, the less we will see in terms of affordable housing.”
Least we forget.
The Fed will purchase $85 billion per month by basically printing more money. It infuses capital without showing up on the federal deficit but at the same time, devalues every dollar you have managed to save. The end result is retirees, living on fixed income that at one time would have been sufficient for a comfortable lifestyle, take it in the shorts. Working people end up paying much more for anything from the world markets ie: oil and gasoline, food, etc. That means we will add >$1 trillion to the money supply each year. That is huge considering we only have something over $750 trillion in total money supply now.
horn dog ?? now that's funny
Economics for Dummies
Same damn pie! Smaller pieces!
Who was in charge during the last collapse? Bush. If we can't blame Bush for the events that hurt the economy while Obama is in office, why can you blame Clinton for what happened under Bush?
Because you're lying POS's, that's why.
Rage
So Rage...
Which client are you billing today? It better not be me.
The point, apparently too subtle for some readers, is that regardless of who was responsible for the housing collapse, it's the Obama administration that is now implementing the same policies. Whether through ignorance or willful maliciousness, the known mistakes are being made again.
I am an economist, and as I see it, what the fed is doing is pretty smart. A couple of points to make:
(1) Fannie and Freddie really no longer function. The service they used to provide doesn't exist. No liquidity, no mortgages, no sales. This helps that.
(2) This could be inflationary under normal circumstances, but these are not normal times. Real Estate is THE HEDGE against against inflation. Even if it is inflationary, we prop up real estate and screw our bondholders, who might just be chinese...
You folks need to think this through from where we are now, not from where we were...
"Because you're lying POS's, that's why."
Do you use that comment in the courtroom? I'm sure it goes over well with the court.
Contempt of court, $500, Rage(alleged attorney).
Bush tried 17 times to get congress to look into Fannie Mae and Freddie Mac, and the dems shot it down every time. How is it then Bush'e fault?
Rage...for all you purport to be, it turns out you are nothing more than a petulant child. Things seemed pretty civil until your POS post. When a lib sees he is losing an argument or someone makes a valid point, their answer is to call that person names to deflect attention and change the subject. Today, it is obvious why you use the name rage. You are a little man, with a little job that is taking you nowhere, and you anonymously post on a blog searching for significance. I no longer wonder where your anger comes from. In your position, I would be angry too.
Rage, Wasn't Bush trying to regulate and investigate the shady business practices of Fannie and Freddy to the strong objection of Barney Fwanks because his boyfriend worked there?
Rage is not an attorney, but he did stay at a Holiday Inn last night.
4:07
So its OK to screw stockholders if they are foreign? A lot of Americans are also vested in these investments. It is your kind of "economics" that got us into this mess to begin with. Keyens (sp) was an idiot. And all those that follow him are not much better. Sadly, our colleges teach Kension (sp?) economics as if it were gospel and not just a theory. Now, all you libs ignore my point and attack my spelling instead.
el gran poste....Ultimately, the only ones to get screwed in this deal are taxpayers. Money is available if you have credit and a downpayment. If you don't, you shouldn't borrow until you do. The only way to screw the bondholders is for America to default. The only way we default is if we continue to make the same mistakes over and over again.
Here we go again!!! You conservatives need to do some research, both branches of government were controlled by republicans from 2003-2007 and did nothing about the housing crisis! The democrats proposed legislation on July 31, 2007 when they took control of congress. HR 3221 granted the newly formed Federal Housing Finance Agency supervisory and regulatory authority over Fannie Mae, Freddie Mac and the and the federal home loan banks.
6:47...that is the problem. The democrats answer to everything is to create an agency to oversee another corrupt agency. our problems are systemic. As long as congress continues to scratch one another's back and turn a blind eye to the corruption, nothing will change no matter who is in office.
the interest rate isnt the problem its the stopping the 0 down and needing 20% down and a way too pay it back.......if they had done it right back in the clinton and even Bush years we wouldnt be in this shape , enough blame to go around ,especially Barney "the rat" Franks
Post a Comment