Posted on 03/18/2009 12:02:49 PM PDT by wk4bush2004
WASHINGTON — Saying that the recession continues to deepen, the Federal Reserve announced Wednesday that it would pump an extra $1 trillion into the mortgage market and longer-term Treasury securities in order to revive the economy.
(Excerpt) Read more at nytimes.com ...
BINGO. We've been shooting craps and the bet gets bigger each time.
It is going to lower interest rates so people can resume buying homes they can’t afford? Thats how we got into this mess in the first place. This will eventually drive down the value of the US$. Insane in my opinion.
The problem with this type of action is the general problem that occurs whenever government gets involved in a market. It crowds out the private buyers to the point where they won’t be there anymore.
So, in the end, the Fed will become the only buyer of Treasuries and everyone will sell them to him (or at least as much as they can).
If the Fed threatens to cut off the spigot, then rates will skyrocket. Why? There will be no buyers left.
I think I have it right here (although there are probably other bad possibilities I’m missing). Anyway, we’re going to be screwed sometime in the very near future with these types of actions.
Hello, I’m hyperinflation. Nice to meet you President Obama...
Obama’s $100 a pound beef is going to triple!
Bernanke and Geithner are idiots. Govt-guaranteed mortgages are not the assets that got the banks in trouble. In fact, these GNMA, FNMA, and FHLMC MBS are the type of securities are the type of assets that banks should be buying, but the Fed is driving the prices up to astronomical levels. I know the Fed is trying to drive mortgage rates down, but this is only working for conforming loans. And if people are going delinquent on their mortgages because of job loss, then there is no way they can refi into these lower rates. Instead, there should be massive tax CUTS to stimulate the private economy and create jobs. We have Captain Hazelwood stearing the ship here. Inflation is going to be a HUGE problem. To quote R. Lee Ermey in “The Siege of Firebase Gloria,” “It is my professional military opinion that we are in a deep shit situation here.”
Have you looked at the Fed’s balance sheet ? What reserve dollars ?
Clearly you missed this:
IMO this is the reason the Fed is going ahead with this insanity. They’ve reached their last trick-they’re trying to look like they’re not printing to less sophisticated investors and J6P.
NEW YORK (Reuters) - Net overall capital outflows from the United States were reported at a record $148.9 billion in January, the Treasury Department said on Monday.
Article Controls
imageemail
imageprint
imagereprint
imagenewsletter
imagecomments
imageshare
imagedel.icio.us
imageDigg It!
imageyahoo
imageFacebook
imagerss
Yahoo! Buzz
The outflow, which includes short-term securities such as Treasury bills, was well short of covering that month’s $36.03 billion trade deficit.
The prior outflow record was $133.0 billion in August, 2007.
“The market impact is minimal because the data was two-months old,” said Matthew Strauss, senior currency strategist, at RBC Capital Markets in Toronto. “But the reluctance of foreign investors to buy U.S. assets is a concern for the dollar going forward.”
Investors sold a net $43 billion in long-term U.S. securities in January, the Treasury Department said. Demand for long-maturity securities such as bonds, notes and equities shifted from a revised inflow of $34.7 billion in December.
Net purchases of U.S. Treasuries added up to $10.7 billion, down from $14.97 billion in purchases in December.
Comment On This Story
Private overall net outflow of $158.1 billion was also a record, up from a revised inflow of $77.9 billion in December and exceeding the previous August 2007 record outflow of $110.7 billion.
If you’d like a little adjunct to this, read the following:
Here’s an excerpt: (This is from a Q & A session with Red State)
Congressman Kirk spoke for a few minutes - but his discourse was focused on an account of a fascinating learning-experience that he recently had.
Noting that the new budget comes with a $2 trillion borrowing requirement, he decided to try to dive down into the depths of finding the actual mechanisms by which this borrowing is done.
...........................
He actually went down there in person (kudos, Congressman!!) to visit a sale of debt - in which he witnessed the sale of $34 billion in debt in about 15 minutes.
.............................
Now for a really scary part. He asked the traders what would happen (mechanically) if a U.S. debt auction should fail (to get “cover”) and have to be canceled. Apparently, this would lead to an instant crisis, since these auctions are followed by the financial media. The number mentioned was that an auction failure would be a news item in about 90 seconds - or as he put it, MSNBC would be reporting it before the President had even heard what had happened.
.................
There is quite a bit more. I highly recommend reading it.
Meanwhile, during all this, our President is appearing on Leno.
Over my lifetime I have had an uncanny political sense. I’m not always right and try to guard myself from paranoia :)
But, listening to CNBC today, as this unfolded I had this weird sense that the talking head response was contrived. Like someone put out the word to put a positive spin on this development. “The market loves this, blah, blah, blah.” This step by the FED could have huge negative consequences in confidence, IMHO.
And yet, our President is appearing on Leno.
It’s a great idea if it works.
It’s just that, by my reading of history, it has never ever worked.
Huh?
Don't worry dude, you can sell you unused gold jewelry to those companies advertising on the TV and Radio. Just send in your valuable assets, your inflation protection, to where all that stuff can be concentrated for easy confiscation. Its a win, win for everyone !
Huh?
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.