Green Man Economy! Nothing Has Been The Same Since The Housing Bubble/Banking Crisis Of 2008 (Unprecedented Federal Debt Issuance And Federal Reserve Takeover Of Markets)

Confounded Interest ^ | 05/22/2021 | Anthony B Sanders

[Browns Ultra Fan]

The infamous financial crisis in the late 2000s caused a fundamental shift in the role of The Federal Reserve and Federal government. The cause of the financial crisis? One of the root causes was loans to subprime households coupled with the now famous ALT-A (aka, NINJA loans) which helped fuel a price bubble that burst.

Home prices in the USA (according to FHFA’s purchase-only index) is growing at 12.2% year-over-year, a rate even higher that during the 2000s housing bubble. Like in 2005, there is a visible spread between home price growth and wage growth. The spread today is even larger than in 2005.

Today’s home price growth is not due to ALT-A or subprime lending, but rather due to staggering amount of money available. The Federal Reserve under Ben Bernanke intervened in late 2008 to purchase assets and lower interest rates. But The Fed never went away and only increased their footprint, especially with the Covid epidemic.

With massive support of The Federal Reserve, US public debt has soared to near $28 trillion, up from $9.5 trillion in mid 2008. That is almost a 3x growth since 2008.

Money velocity (GDP/Money stock) has crashed to historic lows since the financial crisis and housing bubble.

Inflation? At 4.2%, the highest growth in consumer prices since The Great Recession.

The economy has been turned over to The Federal Reserve … and the Biden Administration. As opposed to a free-market economy, we how have the Fed’s “Green Man” economy.

[Browns Ultra Fan]

Ever since Obama, The Federal Reserve has become the driver of the economy and Federal debt, driving money velocity to historic lows. Inflation is rearing its head.

[Mariner]

With each mortgage rate increase of 1% you take at least 1 million people out of the bottom tier of home ownership.

And probably more than that.

And rates must go up.

That has a cascading effect throughout the market.

10s of millions of dumb people are going to be financially obliterated.

Again.

Who wants to pay a $350,000 mortgage on a house that is valued at $200k?

Walkers. Walkers everywhere.

[9422WMR]

Oh yes, the “liar loans”! No proof of income required. Everyone deserves a home. Housing subdivisions going up everywhere. Just to crash the economy and get the idiot obummer selected. 2008
Seems like a pattern with the DiCS
(DemocRATS including Communists, Socialists)

[Hostage]

Wall St predatory lending showed up on Main Street as planned with the:

REPEAL OF GLASS-STEAGALL

Once people grasp what happened in 1999 with this REPEAL, then it’s clear to see how it took less than 10 years for the sharks to crash the economy and blow out everyone’s equity.

[PerConPat]

Yep...And for thirty years, the inflation rate has averaged around 2.25 %. It will be interesting to see how folks accustomed to low inflation will weather the coming high inflation rates, courtesy of a government that likes to toss money to the masses.

Squeezing an overpriced home into a tight budget might be fun for a while, but the cost of eating, heating, cooling, and driving etc. is heading north. I hear the sound of a a bubble stretching.

[SaxxonWoods]

We’re all gonna die.

[VTenigma]

The liar loans happened under W 43.

[Mariner]

I bought my first house late, circa 1989.

Mortgage rates were 10.5% VA.

Of course I refi’d later, but the house value was there in Puyallup, WA. I paid $85k.

I sold it in 2004 for $260k.

The current Zestimate is $455k.

And it was never worth more than $100k to me. At 1433 sq ft 3/2 it’s certainly not a steal now and will absolutely drop at least $150k when rates pass 6%.

Puyallup is the “bedroom community” for Tacoma. Not exactly a major metropolis.

[teevolt]

And now that they own the whole damn thing, they are demanding compliance with “woke” for survival through ESG. Debt has destroyed this country, gave too much power to the idol worshipping socio-paths.

[9422WMR]

“The liar loans happened under W 43.”
Done by the rats to crash the economy so idiot obummer could be installed.
Yes I remember it well!

[PerConPat]

Likewise...I bought a home at 10% in 1980; it was a brutal time. At least, I knew the danger of inflation and was able to keep things above water by living within my means. These low interest rates have and are suckering many into purchases that will sink them.

If I was younger, in my 70s now, I'd be planning to bottom feed again, like I did in 2010.

[Theophilus]

And rates must go up.

You might be right. You should be right. But I couldn't say why the rates are so low now except that the Fed loans money they make up ex nihilo by changing a number in a computer. It appears to cost them nothing to loan money for nothing and if a Loanman Brothers, Government Motors or Crysisler goes bankrupt and pays back nothing, they just change the numbers a little bit more. So why should that change? Can you demand any more interest on your savings while they play that game?

[sauropod]

bkmk