What index is used to reset those mortgages?
Posted on 03/15/2009 6:30:49 PM PDT by NormsRevenge
WASHINGTON (AFP) – In his first television interview, Federal Reserve chairman Ben Bernanke predicted that America's worst recession in decades likely will end this year, and that the economic recovery would gather steam next year.
In the "60 Minutes" interview broadcast by CBS late Sunday, which the network said was the first by a sitting Fed chairman in 20 years, Bernanke said the "green shoots" of economic revival were already evident.
Predicting that no more big banks will fail, Bernanke also called on Washington's squabbling politicians to show the will needed for recovery as he spelled out just how close the world came to financial meltdown last autumn.
The US central bank chief, whose decision to sit down last Wednesday for the rare interview underscored the gravity of the crisis, said much depends on fixing the crisis-hit US banking system.
"We're working on it. And I do think that we will get it stabilized, and we'll see the recession coming to an end probably this year," Bernanke said.
"We'll see recovery beginning next year. And it will pick up steam over time," he said.
Asked if the United States had avoided a repeat of the 1930s Great Depression, Bernanke said: "I think we've averted that risk.
"I think we've gotten past that and now the problem is to get the thing working properly again."
(Excerpt) Read more at news.yahoo.com ...
I’m not expecting a recovery in the next couple years, unless Congress changes hands dramatically in the off year elections.
China has already publicly announced a lack of confidence in US Treasuries. At this point, the only way to finance current spending is by selling debt.
The Chinese statement was serious enough that President Obama went on record in order to try and reassure China.
President Obama was caught in a Catch 22. He couldn’t afford not to make a statement, but, he also shouldn’t have made the statement he made.
What index is used to reset those mortgages?
good post.
remember warren buffet several months ago was trying to get the public to buy stocks.
Have to say it is a pretty story but...let’s just say I’m skeptical.
The article link is not working.
I am seeing signs of recovery. 52" TV's going out Walmart's doors. Housing prices starting to slowly inch up again.
Betting against Americans has been a losing proposition for over 200 years, and it’s still a losing proposition.
Just an FYI, George W. is out of office. It's safe to admit there's actually some economic troubles goin' on.
And he’s basing all this on a Bear Market rally? Where did he get his econ credentials? At Olbermann’s aggie alma mater?
But as you said, then we were dealing with American people. Now we have 50% Obamanites in the mix. Not hardly American in any way, shape or form.
Thanks, having the link corrected.
as to the story.. I hear ya.
Is Bernake ready to cover the banks when the Commercial Real Estate developers default on their 5 year Balloon mortgages and also cover the losses as credit card defaults rise with unemployment rates. We are talking about losses as large or larger than the residential mortgage defaults. Recovery in one year, how? We have a four to five year worth of bank owned foreclosed property, assuming an average healthy real estate market. When those properties are released into the market, home prices will remain depressed or lower. How is the consumer going to refinance and/or recover their lost home equity. Bernake is too optimistic.
Gloom and Doom?? Betting against America. Saxxon should try dealing with reality. I agree with your data because I have seen them before. Saxxon is not doing the public a favor because wrong info will cause some people to invest what ever they have left in their 401k into the stock market when they should not be in it.
“I wonder how he’ll spin it if (dare I say when) his prediction proves inaccurate.”
* * * *
Der Fuhrer will remind us that we wont be able to get anything done if we continue listening to Rush Limbaugh.
Retail sales are going up, but the retailer is forced to take losses to clear inventory. Home prices vary from one location to another. Some places have inched up, but many places it has been stagnate or dropping a bit. Problem for regular sellers is banks are holding up to a 4 to 5 year supply of foreclosed property. They have not released it onto the market yet, hoping for better prices. If the economy does not improve, the banks can not hold onto these foreclosed properties forever and will be forced to sell them in waves. Best indicator for possible recovery is Dec 2009, the Xmas sales numbers. Right now data is too premature and still indicate recession or depression trends.
“Green shoots”? Who’s running the Federl Reserve, Chance the Gardener?
The authors of this piece make it sound that Bernanke was rather much more confident and adamant about these predictions than viewing the interview would lead one to believe.
Bernanke qualified all of his predictions upon “if” we get (NB - he said ‘if’ not ‘when’) the banking system functioning again.
This is where the Obama administration has gone clear off the road and into the weeds — they’ve piled hundreds of billions into dubious social spending, while continuing the ad hoc approach of the Bush administration and squandering whatever confidence the financial world might have had in their plans.
A viable plan for recovering the economy should go like this:
Step 1: fix the banking system.
Step 2: create a climate that creates jobs.
The situation requires that those two issues be addressed; most everything else is optional or of much lower priority. The Obama administration has constantly defered step #1, and they have a very mixed message on step 2. I think Bernanke knows this, which is why he made so many qualified statements in that interview.
Money quote:
“The lesson of history is that you do not get a sustained economic recovery as long as the financial system is in crisis. We’ve seen some progress in the financial markets, absolutely. But until we get that stabilized and working normally, we’re not gonna see recovery. But we do have a plan. We’re working on it. And I do think that we will get it stabilized, and we’ll see the recession coming to an end probably this year. We’ll see recovery beginning next year. And it will pick up steam over time.”
Now, what is unclear is “who is the ‘we’ there, Ben?” If he means “The Federal Reserve has a plan” — then yes, they do.
If he means “The Fed and the Obama administration...” I think he’s being rather generous in his assessment.
Depends. Some use LIBOR, some use 10 year T’s.
For the option-ARM situation tho — heh. It doesn’t matter what interest rate benchmark those loans use to reset - what matters most is that the majority of people who have those loans have been paying the minimum payment, which causes a negative amortization of the unpaid interest to add to the loan’s principle. Even if you hold the interest rates constant, the payments go way up if you’ve been paying the minimum payment since the inception of the loan.
There is no more fiendish mortgage product out there than the option-ARM product. To this day, I cannot for the life of me fathom why any bank would a) create such a product, and b) then allow it to be sold so indiscriminately for such highly priced housing. It was typically used on the higher-end housing markets in CA - so it won’t take nearly as many defaults to crater a balance sheet as with the sub-prime loans.
green shoots? I guess he means that the fruit trees are blooming in California, and the illegals will be picking fruit in a few months..
Still, a change from the recent steady declines.
Balony! There is not going to be a “recovery” . The Democrats and environmentalists already have the mechanism in to destroy the economy.By this summer, the Democtats will have taxed gasoline up to ten dollars a gallon. The new environmental regulationson farmers will take care of them. Look for food shortages, higher prices, and rationing.
The destruction of America has been foretold, hoped for, and predicted for years. How was it accomplished? By allowing idiots to vote.
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