Skip to comments.Fed Pulls Trigger, to Buy Mortgages in Effort to Lower Rates
Posted on 09/13/2012 11:01:38 AM PDT by Free ThinkerNY
The Federal Reserve fulfilled expectations of more stimulus for the faltering economy, taking aim now at driving down mortgage rates.
The Fed said it will buy $40 billion of mortgages per month in an attempt to foster a nascent recovery in the real estate market. The purchases will be open-ended, meaning that they will continue until the Fed is satisfied that economic conditions, primarily in unemployment, improve.
There's strong hints that they'll do Treasurys next," Joe LaVorgna, chief economist at Deutsche Bank Advisors, said in a phone interview from London."They're pulling out all the stops to try to get this economy to gain some traction and, most important, to get unemployment down."
Enacting the third leg of quantitative easing will take the Fed's money creation past the $3 trillion level since it began the process in 2008.
"The Committee is concerned that, without further policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions," the Open Market Committee said in a statement.
(Excerpt) Read more at finance.yahoo.com ...
It’s so reassuring, knowing that our nation’s money supply is in the hands of Ivy League grads who know more than everyone else.
Yeah...right. We are in what’s called the Keynesian Liquidity Trap which makes monetary policy totally ineffective. All monetary policy can hope to do here is raise prices. What’s called for is fiscal policy. In this case, since the previous stimulus spending was a total bust, what’s needed is a massive tax cut to shift the IS curve outward. I don’t think the people in Washington have the stones to do it.
yeah...they’re gonna get those mortgages OFF the banks’ books
before they all blow this fall
Tax cutting is reliquishing power to the “little people” and that can’t be allowed. The insiders want power and want to keep power. Obama is now beholding to useful idiot bernake. Obama does not share power.
So does this mean some people will now send their mortgage payments to Bernanke?
I know stimulus like this is a bust...but in the mechanics of it, what does it mean will happen?
A ridiculous Keynesian type policy.
Don’t think this will have a huge impact on the economy or the real estate market. Some of that depends on WHICH mortgages they go after. Ideally, if they buy up a mortgage there is something of value attached to that mortgage. If the process happens as I expect though, a bunch of Dem cronies will be selling off mortgages for badly-overvalued propoerties, and the only benefit the country will see is... nothing.
The Bernank is now “all in” with Obama.
He has pulled out the stops and is trying to buy Obama the election with printed U.S. currency.
If the Bernank loses, he is done as is the Fed’s “dual mandate.” Let’s hope he loses and we can get our currency back.
30 year fixed mortgage is at 3.25% - how much lower do they want it ?
That is the intent. The mechanism is devaluation precipitating the price rise you noted. That effectively means the debt is devalued and when there is enough debt devaluation to be comfortable the QE can cease. It is the only way the debt can be reduced. There will not be adequate growth or revenue to pay it off.
“yeah...they’re gonna get those mortgages OFF the banks books”
You got that straight. Phony MBS paper makers, with no collateral. (and their so called “insurance” company backers and equity holders.)
They’re chompin-at-the-bit, to get hold of everyones wallets with Extortion-Care, as soon as possible.
What will FedGov do once they hold paper on poor underclass borrowers?
This is a bogus claim.
Mortgage rates are within a historically lows range.
Buying a home in the Carter years you were lucky to get a mortgage at 10%.
The real reason for this is to make Obama look good until the morning of November 7th and everyone knows that to be the truth.
Up next.. releasing the strategic petroleum reserves to get gas down below $4 per gallon in time for elections.. but as many here keep stating, Romney would be worse.. (sarc)
Have a friend making on offer on a repo right now,she got a 30 year fixed at 2.5%.
Au and Ag are nice investments in climates like this.
What a bunch of fools.
I wonder what will happen when FedGov owns 80% of all the mortgages? That’s a lot of power.
“obozo re-elected in a landslide. Free skittles for all!”