The Fed has effectively admitted that the US Economy is fucked. Fed is now trying to outright buy mortgage debt, instead of continuing to flood the economy with cash - further devaluing the buck. I’m sure that’ll reassure the world…
The Fed pledged yesterday to lend, in return for mortgage debt, $200 billion of Treasuries to the securities firms that trade directly with the central bank. Officials told reporters later that the program may escalate from there as the central bank seeks to break the logjam in the home-loan market.
The step goes beyond past initiatives because the Fed can now inject liquidity without flooding the banking system with cash. Bernanke and his colleagues are trying to halt a cycle in which the losses on mortgage investments cause banks to cut their lending, sending the economy into a deeper contraction
Basically them buying mortgage debt is prolly good thing as far as the credit crunch is concerned… On the other hand it’s basically an admission that there is no short term fix for the economy as a whole.
Mortgage co.s regularly sell blocks (1000’s+) of mortgages to other mortgage companies. The old company uses the cash from the sale to lend new loans. The new companies service the loans and collect the interest.
I can only assume that teh fed is going to “buy” these loans and assign them to Freddie or Fannie to service…
I guess I don’t see how this is going to fix anything. all the govt is doing is enabling people to be idiots because they are always running in to fix their stupid mistakes. you all know the money is coming out of our pockets in taxes somewhere and that really makes me angry. i didn’t do anything stupid so why should I have to pay? i’m already paying for all the morons who leach off the system and this is just going to add to it in the long run
they should do something if you owe more then your house is worth then get some help… like me i owe 2times more then the house is worth yea i have 297 or so payments left but still
What they should stop doing is allowing for this shit to happen and make you fucking actually earn a god damn house through saving. AFAIK The US is the only place where you can get a 30 year mortgage and finance a fairly expensive car with nothing down. (two seperate things)
The federal reserve allowed it to get like this and then put it on the banks that also allowed people to borrow more than they were ever capable of paying back, creating the housing bubble with little to no regard for long term implications
The “rich” people in this country do not care about the masses, its just one scheme after another on how to soak the masses for their pennies because in the end those pennies make up some serious bucks.
Im betting(hope) that they arent going to relieve delinquent spenders and that they are just buying off the bite the banks are taking for giving money to these dumbasses. Either way someone is getting a freebie but i would rather see the banks have a get out of jail free then the dumb people who couldnt put together a reasonable living budget.
As said above I dont think it is ment to work like that at all. I dont think “people” are getting anything. It is banks that are getting bailed out so that credit can be repaired and normal lending/spending habits can resume. This in theory will work by getting banks to loosen up credit again but obviously they hopefully learned from their mistakes and will keep it in moderation. Then in return big business will start spending again instead of hoarding onto any cash they have in fear of what is to come. ETC. ETC. HAPPY HAPPY JOY JOY!!
