Posted on 03/21/2008 4:39:40 PM PDT by RDTF
Central banks on both sides of the Atlantic are actively engaged in discussions about the feasibility of mass purchases of mortgage-backed securities as a possible solution to the credit crisis.
Such a move would involve the use of public funds to shore up the market in a key financial instrument and restore confidence by ending the current vicious circle of forced sales, falling prices and weakening balance sheets.
-snip-
(Excerpt) Read more at ft.com ...
Thank you, Mr. and Mrs. Taxpayer.
So less than 5% of house loans are sour and they want big bureaucracies to save their. Something smells, besides their rears!
So let’s see. Injecting liquidity into our financial institutions by the Feds increases the money supply here and increases the inflation of our country.
Would this now mean that other currencies will be affected as well? We will have world wide inflation of all currencies, right?
I wonder if they are going to bail us all out. WE need to forma bank and get into bad loans so we can be bailed out too and make really really big bucks or euros.
Why not call it what it is and insure all investors everywhere at zero cost?
No, no, no and HELL NO!
"There is no means of avoiding the final collapse of a boom brought about by credit expansion. The alternative is only whether the crisis should come sooner as a result of a voluntary abandonment of further credit expansion, or later as a final and total catastrophe of the currency system involved."~~Ludwig von Mises
If these securities are bought at a discount, there could be some big profits for Mr. and Mrs. Taxpayer. If history is a guide, that's what usually happens with these "bailouts."
The government made a $350 million profit on the airline bailouts after 911.
Another cut and paste from the Von Mises cult.
Let's listen to some REAL financial experts instead.
“Derivatives have permitted financial risks to be unbundled in ways that have facilitated both their measurement and their management…. As a result, not only have individual financial institutions become less vulnerable to shocks from underlying risk factors, but also the financial system as a whole has become more resilient.”~~Alan Greenspan, May 2003
"American consumers might benefit if lenders provided greater mortgage product alternatives to the traditional fixed-rate mortgage."~~Alan Greenspan, February 22, 2004
“The use of a growing array of derivatives and the related application of more-sophisticated approaches to measuring and managing risk are key factors underpinning the greater resilience of our largest financial institutions.”~~Alan Greenspan, May 2005
"We're not about to go into a situation where (real estate) prices will go down. There is no evidence home prices are going to collapse."~~Alan Greenspan, May 21, 2006
“The damage from the subprime market has been largely contained. Fortunately, the financial system and the economy are strong enough to weather this storm.”~~Richard Fisher, Federal Reserve Bank of Dallas President, Apr 4, 2007
"All that said, given the fundamental factors in place that should support the demand for housing, we believe the effect of the troubles in the subprime sector on the broader housing market will likely be limited, and we do not expect significant spillovers from the subprime market to the rest of the economy or to the financial system."~~Fed Chairman Ben Bernanke, May 17, 2007
I don't think we're headed into a recession. But there's no question we're in a slow down and that's why we acted with over $150 billion worth of pro-growth economic incentives, mainly money going into the hands of our consumers... The purpose is to encourage our consumers - to give 'em money - to help deal with the adverse effect of the decline in housing values.~~President George W. Bush, Feb 28, 2008
"There is absolutely no truth to the rumors of liquidity problems that circulated today in the market. Bear Stearns' balance sheet, liquidity and capital remain strong."~~Alan Schwartz, Bear Stearns CEO, March 10, 2008
"I cannot help but raise a dissenting voice to statements that we are living in a fool's paradise, and that prosperity in this country must necessarily diminish and recede in the near future." ~~E. H. H. Simmons, President, New York Stock Exchange, January 12, 1928
"Stock prices have reached what looks like a permanently high plateau. I do not feel there will be soon if ever a 50 or 60 point break from present levels, such as (bears) have predicted. I expect to see the stock market a good deal higher within a few months."~~Irving Fisher PhD, leading U.S. economist , New York Times, October 17, 1929
"If recession should threaten serious consequences for business (as is not indicated at present) there is little doubt that the Federal Reserve System would take steps to ease the money market and so check the movement."~~Harvard Economic Society, October 19, 1929
"This is the time to buy stocks. This is the time to recall the words of the late J. P. Morgan... that any man who is bearish on America will go broke. Within a few days there is likely to be a bear panic rather than a bull panic. Many of the low prices as a result of this hysterical selling are not likely to be reached again in many years." ~~R. W. McNeel, market analyst, as quoted in the New York Herald Tribune, October 30, 1929
FOFLMAO!
Around the corner we shall meet the past.
It’s sure looking like it.
Hey, don’t worry. “It’s different this time.”
If things are so great, why does the Feral gubmint have to get involved?
How many trillions has the government got taxpayers in debt? Your analogy is akin to collecting beer cans on the side of the road.
They're proposing that people in McMansions with ARMs be bailed out, because they... made bad decisions? or what?
Any move to buy mortgage-backed securities would require government involvement because taxpayers would be assuming credit risk. There is no indication as yet that the US administration would favour such moves.
A "mortgage-backed security." What is that? A mortgage loan, switched around and called an asset? And the USG is considering doing this outright (as opposed to doing it undercover behind the various private banking whatevers that have been existence for decades now)? So taxpayers will be owners of foreclosed properties?
Sorry so many questions. I can't quite get my mind around what the dilly here.
I meant to ping you both on 19.
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