View Full Version : BOHICA - QE3 is on!
Zundfolge
09-13-2012, 11:33
Zimbabwe here we come! (http://www.washingtonpost.com/blogs/ezra-klein/wp/2012/09/13/qe3-is-on/)
Singlestack
09-13-2012, 11:46
Bernanke and Beeho are proven insane: doing the same thing over and over and expecting different results. Even worse is that inflationary money printing has even less and less effect the longer you do it. The election can't come soon enough, but of course the damage from QE3 will be done by the time there is a changing of the guard.
Singlestack
Zundfolge
09-13-2012, 11:49
Bernanke and Beeho are proven insane: doing the same thing over and over and expecting different results.
You assume that they want to make things better and aren't getting the exact results they want.
They know what they're doing ... they are engaged in the destruction of the US dollar, the US economy and capitalism in general on purpose.
Until we wake up and realize that Stalin, Lenin and Khrushchev didn't hate us as much as "Beeho" and the left in this country do, we're not going to make any headway.
BushMasterBoy
09-13-2012, 11:59
http://www.kitco.com/images/live/silver.gif
Is this why the .gov purchased 750 million bullets?
Great-Kazoo
09-13-2012, 13:01
You assume that they want to make things better and aren't getting the exact results they want.
They know what they're doing ... they are engaged in the destruction of the US dollar, the US economy and capitalism in general on purpose.
Until we wake up and realize that Stalin, Lenin and Khrushchev didn't hate us as much as "Beeho" and the left in this country do, we're not going to make any headway.
^^Winner^^
This one is open ended. 40 billon a month into MBS and another 20 bil through twist. Until further notice. Interesting times!
http://www.youtube.com/watch?v=U_JpfK2TUxk
stevelkinevil
09-13-2012, 22:50
And so many of you still call Ron Paul a nut job. Welcome to Rome 2.0
That explains the jump in bitcoin prices right now.
sbouslog
09-14-2012, 06:19
Gone
I respectfully disagree sbouslog. Hopefully,"we will be ok" perhaps, as it will barely affect markets- maybe 1.5-2%?? as we are approaching zero, the dollar amounts required to show effect grow larger, but this is another tax.
Every dollar that is printed in this (and QE1/QE2), devalues purchasing power by the same dollar amount. Period.
How can that show a return? How possibly could it "cover some of obamacare" other than in some sort of slight-of-hand election year math?
How are we not straddled with more risks (both personal and national) from the additional Federal leverage/exposure?
sbouslog
09-14-2012, 07:52
Gone
Let look at what is in the MBS's. To obtain a new home loan you have to have some skin in the game these days. You also have to have 2 years of tax statements and all sorts of other documents. These are not the same shady lending practices that were going down 8 years ago.
Yes lets look at what is in MBS! How do you do that?Source? These are good MBS? So the junk MBS generated during the "housing scam" have all magically disapeared and the fed is only buying good MBS? I would guess more buying of junk by the Federal reserve to keep their crony banksand a pension fund or three afloat.
Pancho Villa
09-14-2012, 08:14
We do have a bit more added risk by doing this. I dont believe that we are using derivatives to back these MBS's though (which makes it different then pre 2008).
Let look at what is in the MBS's. To obtain a new home loan you have to have some skin in the game these days. You also have to have 2 years of tax statements and all sorts of other documents. These are not the same shady lending practices that were going down 8 years ago.
So the US is selling 30 year treasurys at 2.95% and buying these MBS's at 3.4% (give or take a little). Unless we have another huge drop in the housing market this plan should work pretty well and generate a profit. ((.45%/12) X 40 billion per month). You can do the math.
This should stabilize housing for the next 4 years or so. Now they just have to find a way to stabilize the job market. Keeping the interest rates low will stimulate some job growth in the construction, commodities, and finance sectors.
Stabilizing housing is the PROBLEM, though.
You can only defy gravity for so long. The housing bubble never deflated all the way; the govt has been busy (through putting pressure on the banks to start loaning again and various other laws) propping up housing prices.
This is a short-term play. It gets votes with home owners, but the bottom line is: lots of people have homes that have no business having them, and prices are still way higher than they will be when it all comes crashing down, either in absolute or relative terms (ie either the dollar value of your home will come way down or the value of the dollar will come down.)
The govt has no business propping up prices anywhere. It won't last, and it's long-term harmful. It'll end poorly.
sbouslog
09-14-2012, 08:17
Gone
Rust_shackleford
09-14-2012, 08:18
great buy more food
We do have a bit more added risk by doing this. I dont believe that we are using derivatives to back these MBS's though (which makes it different then pre 2008).
So the US is selling 30 year treasurys at 2.95% and buying these MBS's at 3.4% (give or take a little). Unless we have another huge drop in the housing market this plan should work pretty well and generate a profit. ((.45%/12) X 40 billion per month). You can do the math.
Your statment implys you consider the US government and the federal reserve to be one enity? The US government creates debt (treasuries) most of it is bought by the federal reserve. The money created by the federal reserve to buy US treasuries is created out of thin air. The money created by the fed to buy these mbs and other purchases is created out of thin air. There is no wash. Currency destruction ala Zimbabwe pure and simple. If you consider the federal reserve and the US government to be one and the same, and im not saying your wrong if you do, the 16 trillon of US debt is on the feds books and this program will add 3/4 of a trillion to the debt a year on top of the four trillion of spending. The only wash is the two trillion of revenues (taxes). Or is your point that you feel that these MBS have more value than the Treasuries than the Federal reserve has bought with previous QE's? Please clarify.
Dude, come on. Have you gotten a home loan/refi in the last 2 years? Its not the same process that it was 10 years ago. We have a few loan officers on the site that will back up what I am saying. All the junk loans generated from 2002-2007 have already defaulted.
You are saying that all ( or even half)of the loans that were generated during the housing bubble and their derivitives have defaulted and the real estate they represented has been absorbed by free markets?
And so many of you still call Ron Paul a nut job. Welcome to Rome 2.0
ron paul IS a nut job, im not sure what this has to do with ron paul. other people being evil doesn't make ron paul any less of a nut job.
sbouslog
09-14-2012, 09:09
Gonr
All of the synthetic CDO's that are going to bust already have. The banks are still holding on to some properties but those are on existing CDO's.
I am under the assumption that the 40 billion of CDO's that we are purchasing are for new mortgages rather than existing. I could be wrong on this. If they are existing then the damage is done and they would/should be bought at a discount to represent the current value.
If you are correct it might indeed be helpful to stabalize the housing market. We will know if mark to market is ever unsuspended I guess.
Faber says buy real estate.
http://bloom.bg/PhXCyt
Zundfolge
09-14-2012, 10:56
And so many of you still call Ron Paul a nut job.
I don't believe anyone here ever called Ron Paul a nut job because of his views on the Fed. In fact it's a big part of the reason why many of us gave him the time of day to begin with.
Those that disagree with him generally do so because of his views on foreign policy.
Goodburbon
09-14-2012, 11:00
Those that disagree with him generally do so because of their misinterpretation of his views on foreign policy.
FIFY
Zundfolge
09-14-2012, 11:26
Those that disagree with him generally do so because of their misinterpretation of his views on foreign policy.FIFY
Yes, because anyone that disagrees with you is an idiot, it can't possibly be that they actually disagree with you or Mr. Paul on the substance of the issues. [Shake]
THIS is why people dislike Paulians (y'all "debate" like libtards).
Goodburbon
09-14-2012, 12:09
Did I call you an idiot? Did I imply that you're an idiot? I had no idea whether or not you agreed with or disagreed with Paul's policies until you stomped around in a mini rant like I was calling you names or insulting your intelligence. I wasn't.
I was merely pointing out that an overwhelming number of people mis-interpret his stance on foreign policy. You then, called me a Paulian and insinuated that I debate like a libtard. Touche' I guess.
ChunkyMonkey
09-14-2012, 12:21
Yes lets look at what is in MBS! How do you do that?Source? These are good MBS? So the junk MBS generated during the "housing scam" have all magically disapeared and the fed is only buying good MBS? I would guess more buying of junk by the Federal reserve to keep their crony banksand a pension fund or three afloat.
I disagree and agree. Junk MBS are on their way out if not out already. However, we are in 'fair market price range' right now, the Fed/Obama Administration is about to inflate the housing price again... In the next bubble housing market burst, banks won't lose money - the taxpayers will! [Rant1]
Pancho Villa
09-14-2012, 12:55
I disagree and agree. Junk MBS are on their way out if not out already. However, we are in 'fair market price range' right now, the Fed/Obama Administration is about to inflate the housing price again... In the next bubble housing market burst, banks won't lose money - the taxpayers will! [Rant1]
Fed/Obama have been busy trying to keep the housing bubble inflated since it started deflating. Passes on paying, readjustment of terms for loans, pressure to start loaning again when banks in no way should have, you name it, they've tried it, except for this.
We're still a significant (double digit %) ways above what fair market prices would be. This will push them higher, and like all bubbles will eventually burst - leaving taxpayers with another $trillion+ loss. I think the hope is just it'll burst some time after Obama leaves office. Then it's the other guy's fault, whoever that ends up being.
Singlestack
09-14-2012, 13:32
Fed/Obama have been busy trying to keep the housing bubble inflated since it started deflating. Passes on paying, readjustment of terms for loans, pressure to start loaning again when banks in no way should have, you name it, they've tried it, except for this.
We're still a significant (double digit %) ways above what fair market prices would be. This will push them higher, and like all bubbles will eventually burst - leaving taxpayers with another $trillion+ loss. I think the hope is just it'll burst some time after Obama leaves office. Then it's the other guy's fault, whoever that ends up being.
+1 to this and the Chunkmonkey. This is another housing bubble, and the outcome is a foregone (bad) conclusion. Sure, house prices will rise, but the desired outcome (more consumer spending) will be negated by higher energy and food prices. The stock market loves this, but it is a severe hit on the US dollar. Bad for us.
Singlestack
sbouslog
09-14-2012, 13:51
Gone
Sharpienads
09-14-2012, 14:15
I think they should just print off $16T and pay off the debt. Problem solved.
[Bang]
Pancho Villa
09-14-2012, 14:26
These are not synthetic CDO's that they are buying. This will NOT cause another crash like we experienced in 2008.
Pushing housing prices artificially higher (which is what this will do) is what causes bubbles, and bubbles eventually pop.
The problem wasn't the synthetic CDOs, it was that the government (via the fed, which causes the easy money to flow, and the govt, which directs the easy money to industries that are politically favorable, like housing) first distorting loan markets (cheap money via the overnight rate by the fed encourages lending and discourages saving, the source of actual strong economies.) That is the source of all this bad lending and borrowing (since it costs money to save, due to inflation, and costs so little to borrow, you create a situation where it is foolish to save instead of borrow.) The govt laws and politically created orgs (fannie mae, freddie mac) directed that money to the housing market.
Now the govt wants to keep the easy money flowing (witness the still-historically-low fed rates) and still wants it flowing into the housing market (all the laws passed post-crash helping prop up housing prices, and now this.)
The problem though is that you can't borrow indefinitely, and eventually any bubble pops. You can reinflate it, but you jsut get a more violent (and costly) pop later.
You can't defy economic gravity indefinitely, is the bottom line, and the bottom line is that there's still too much easy money floating out there, and government support for housing.
I think they should just print off $16T and pay off the debt. Problem solved.
[Bang]
Point of interest, for those who haven't taken the time to do the math. 16 trillion breaks out to approximately $48,000 of debt for every person in the United States. Yep, that's what you would have to fork over to do your "fair share" in paying off our current national debt. A family of 4? $192,000.
At the pace we're on, at the end of Obama's next term, unless he ramps up spending even more, which is likely, those figures will spike to $63,000 and $252,000. Nice, huh? That's what we're saddling the next generation with. Before they even see their first paycheck they're already that much in debt.
Goodburbon
09-14-2012, 15:12
Point of interest, for those who haven't taken the time to do the math. 16 trillion breaks out to approximately $48,000 of debt for every person in the United States. Yep, that's what you would have to fork over to do your "fair share" in paying off our current national debt. A family of 4? $192,000.
At the pace we're on, at the end of Obama's next term, unless he ramps up spending even more, which is likely, those figures will spike to $63,000 and $252,000. Nice, huh? That's what we're saddling the next generation with. Before they even see their first paycheck they're already that much in debt.
Eff that fair share BS. Tax the rich, make them pay their "fair share" and mine, and my kids, and most of my wife's...
jhood001
09-14-2012, 15:43
You guys need to stop worrying. We can always print more money.
q6vi528gseA
http://youtu.be/q6vi528gseA
BushMasterBoy
09-14-2012, 16:59
We keep going this way and toilet paper will be worth more than money. At least with toilet paper you have decent ass wipe. We keep going this way, and its has been said in another online forum, "the day is coming when someone will drop a $100 bill in the street and nobody will bother to pick it up"
Eff that fair share BS. Tax the rich, make them pay their "fair share" and mine, and my kids, and most of my wife's...
It's about time EVERYONE started paying their "fair share". That they don't is a major root of the problem. Half the population with their hands out, paying nothing in. Easy votes to buy, just keep promising them more, and tell them the rich will pay for it.
Margaret Thatcher - "The problem with socialism is that you eventually run out of other people's money. "
Rucker61
09-14-2012, 17:51
It's about time EVERYONE started paying their "fair share". That they don't is a major root of the problem. Half the population with their hands out, paying nothing in. Easy votes to buy, just keep promising them more, and tell them the rich will pay for it.
To presume that the 48% of the citizenry have their hands out is hyberbole f not plain dishonesty. A substantial portion of those people have jobs, but make too little to owe federal income tax. They still pay plenty of other taxes, especially consumption taxes. They follow the same tax code that (presumably) you do. I know I don't want to lose the mortgage deduction, do you?
Sharpienads
09-14-2012, 18:26
To presume that the 48% of the citizenry have their hands out is hyberbole f not plain dishonesty. A substantial portion of those people have jobs, but make too little to owe federal income tax. They still pay plenty of other taxes, especially consumption taxes. They follow the same tax code that (presumably) you do. I know I don't want to lose the mortgage deduction, do you?
Whether they have their hands out or not is irrelevant. The fact is almost half of the population pays no federal income tax, yet still gets to have a say in what should happen with my money. And even if they do pay other forms of taxes, at least some of them make more in federal returns than they pay out in all the other taxes combined. The tax code is a cluster fuck. Big time.
Here's a fun fact: If the federal government cut it's budget in half (which could easily be done), we wouldn't have to pay individual income taxes and the budget would be balanced.
There is a radical change occuring in what I have thought as debt. To me debt is somthing to pay off, a monkey to get off your back. Thats old man thinking. Debt seems to have become somthing present from birth to grave like the water a fish swims in. Does anyone here think the 26 year old with $80k in student loans, and a degree in sociology will pay off her debt? Does any one here think Italy will pay off their debt? Does anyone here think the USA will pay off its debt? A liberal friend of mine told me that the US debt was "just like carrying a credit card balance". Why is this a problem? The individual debtor still has a car a nice place to live good food. The goverments still get to spend on the programs they like to spend on. Owning shit is a drag its just ties you down. Getting stuff paid off is not freedom. True freedom is embracing debt learning to swim freely in it, and aqquiring the material things you want. Birth to death. Like the water a fish swims in.
To presume that the 48% of the citizenry have their hands out is hyberbole f not plain dishonesty. A substantial portion of those people have jobs, but make too little to owe federal income tax. They still pay plenty of other taxes, especially consumption taxes. They follow the same tax code that (presumably) you do. I know I don't want to lose the mortgage deduction, do you?
Our federal government is slated to spend 3.8 trillion dollars in 2012, about 12,000 on average on every person in the country. Half the populace pays not a single cent for all the beneficial things that money brings to them. No hyperbole there, nothing dishonest, it's just cut and dry facts.
There's a reason Obama has mushroomed the number of people on food stamps (1 in 6 americans now) and other federal subsidy programs. It locks more people into dependency on the government. The more he can lock into dependency, them more votes he can buy via borrowed money from China.
Everyone needs to be paying something. They need to feel like stakeholders, like contributors. It invests them into the future well being of the country. I'm for implementing a national value added tax, coupled with a balanced budget amendment. Any deficit would be resolved by an increase in the value added rate. Now that, would get people interested in putting a stop to the deficit spending that is on the verge of crippling us.
There is a radical change occuring in what I have thought as debt. To me debt is somthing to pay off, a monkey to get off your back. Thats old man thinking. Debt seems to have become somthing present from birth to grave like the water a fish swims in. Does anyone here think the 26 year old with $80k in student loans, and a degree in sociology will pay off her debt? Does any one here think Italy will pay off their debt? Does anyone here think the USA will pay off its debt? A liberal friend of mine told me that the US debt was "just like carrying a credit card balance". Why is this a problem? The individual debtor still has a car a nice place to live good food. The goverments still get to spend on the programs they like to spend on. Owning shit is a drag its just ties you down. Getting stuff paid off is not freedom. True freedom is embracing debt learning to swim freely in it, and aqquiring the material things you want. Birth to death. Like the water a fish swims in.
The problem is there's this nasty little thing called "debt service" That's the interest you have to pay each month on the money you owe other people. As your debt level grows it starts to suck up all your money. Dollars you could have been using to buy "cool stuff", just gets pissed away on paying debt service on dollars you spent frivolously in the past. You become slave to working your ass off, just to pay your debt master, with nothing left over to show for all your hard work.
It's quickly happening to our country.
From Pajamas Media
http://pjmedia.com/zombie/2012/09/13/quantitative-easing-weimar-edition/
Since the Federal Reserve can just create dollars out of thin air, it can buy up assets like long-term Treasuries or mortgage-backed securities from commercial banks and other institutions. This pumps money into the U.S. economy and reduces long-term interest rates further.
There is a radical change occuring in what I have thought as debt. To me debt is somthing to pay off, a monkey to get off your back. Thats old man thinking. Debt seems to have become somthing present from birth to grave like the water a fish swims in. Does anyone here think the 26 year old with $80k in student loans, and a degree in sociology will pay off her debt? Does any one here think Italy will pay off their debt? Does anyone here think the USA will pay off its debt? A liberal friend of mine told me that the US debt was "just like carrying a credit card balance". Why is this a problem? The individual debtor still has a car a nice place to live good food. The goverments still get to spend on the programs they like to spend on. Owning shit is a drag its just ties you down. Getting stuff paid off is not freedom. True freedom is embracing debt learning to swim freely in it, and aqquiring the material things you want. Birth to death. Like the water a fish swims in.
I think your liberal friend is only partially correct. Most people are so afraid of the national debt, because most people are only familiar with one type of debt, i.e. consumer debt. Consumer debt is your credit card, car payment, house payment, and anything else that does not generate money. There is another type of debt though; I'll call it investment debt.
**I apologize in advance for using another, way too simple, real estate example; but it is the best way I can articulate what I'm trying to suggest about the national debt.**
Let's say you spend $1,000,000 to buy an apartment complex and you finance most of it. Your debt service (the loan payments) might be $5,000 a month. However, your total collection in rents each month is $20,000. If after your expenses, including the debt service, you are still bringing in $5,000 a month, then it doesn't matter that you still owe $800,000.
Most people would be terrified to have $800,000 in debt, because they don't think about how that debt is being paid off. In the apartment building example, you don't even use your own money to pay the debt. You're bringing in $5,000 a month, so who cares that you end up paying $2,500,000 for the building by the time you pay off the building? You made money the whole entire time.
Anyway, back to my point. The US hasn't been purchasing really cute outfits at the mall for the last 200 years. The US doesn't owe $16 trillion to The Gap and Old Navy. Sure, some of that debt is similar to consumer debt, but not all of it. I think people worry about debts being called up, but I don't think that is a realistic concern. No one purchases a house with a 30 year loan, and worries the whole time that the bank is going to call up one day and say, "We're tired of making so much money off the interest you owe us, so pay us back NOW!" The mortgage contract prevents that.
Similarly, China isn't likely to inform the US that they are no longer interested in the Kajillions of dollars we will end up paying them in interest over the years, and instead they want the Trillions we owe now instead. Additionally, there is very likely to be some sort of contract for any money we've borrowed.
As to the debt constantly rising, that could be a direct result of the country growing. That is exactly the way some businesses work as well. If you have your $1,000,000 apartment building that is bringing in $5,000 positive cash flow a month, you can buy a second, identical building and do the same thing all over again. Now you'll be $1,600,000 in debt instead of only $800,000 in debt. Most of your acquaintances will think you are retarded because now you owe $1,600,000 and they cannot fathom how you could possibly pay off that kind of money. Mean while, you will have retired from your day job because you're bringing in $10,000 a MONTH. Your acquaintances will be too busy working their asses off at their full time jobs to have the time to figure out that the debt you have, and the debt they have, are completely different.
Conclusion. The US has a LOT of debt. The US keeps getting MORE debt all the time. Is it as bad as it sounds? Maybe, but maybe it isn't. $16 trillion in debt isn't as big a deal as it sounds if the debt service on that amount is only $3 trillion a year.
**Of course my example was extremely simplified, but I think it is worth considering. Also, this position in now way means that I don't think that the US government doesn't spend way too much money on things, isn't full of corrupt people, and otherwise could use a serious reduction in size.**
Pancho Villa
09-15-2012, 08:35
Irving, any analysis of our debt shows that it is, indeed, as bad as it sounds.
We aren't buying stuff that's an investment, we're pissing it all away.
Well...shit.
Can I at least say that it is a pipe dream to assume that taxes would go down, even if we paid this debt off?
Pancho Villa
09-15-2012, 09:26
Well...shit.
Can I at least say that it is a pipe dream to assume that taxes would go down, even if we paid this debt off?
If all the debt was paid off...?
I mean theoretically we're on the right side of the Laffer curve (http://en.wikipedia.org/wiki/Laffer_curve) and so lowering taxes right now would actually increase revenue. So if we had a purely pragmatic man in office right now and the same in congress (ie not concerned with 'equality' in the same way Obama and a lot of folks in congress/senate are) then taxes could go lower and the result would be a surplus.
The problem, though is that we still have SS/medicare/medicaid and resetting the debt doesn't change that these problems aren't going away. We need systemic reform of a lot of stuff - monetary policy, govt regulation in the financial sector...you know what this list could probably go on for a few pages so let's leave it at "a lot of stuff."
So yeah, if the debt went away we still have a pretty screwy economy that will be getting worse without substantial reform. So the debt is the big, looming problem but the underlying causes go a lot deeper than just the debt itself.
I mean theoretically we're on the right side of the Laffer curve (http://en.wikipedia.org/wiki/Laffer_curve) and so lowering taxes right now would actually increase revenue. So if we had a purely pragmatic man in office right now and the same in congress (ie not concerned with 'equality' in the same way Obama and a lot of folks in congress/senate are) then taxes could go lower and the result would be a surplus.
The problem, though is that we still have SS/medicare/medicaid and resetting the debt doesn't change that these problems aren't going away. We need systemic reform of a lot of stuff - monetary policy, govt regulation in the financial sector...you know what this list could probably go on for a few pages so let's leave it at "a lot of stuff."
So yeah, if the debt went away we still have a pretty screwy economy that will be getting worse without substantial reform. So the debt is the big, looming problem but the underlying causes go a lot deeper than just the debt itself.
Spot on. Unfortunately, we have a person in the White House who cares more about his perception of "fairness" side of things than he does the economic side.
Watch this youtube, folks, Obama says it himself:
http://www.youtube.com/watch?v=54jr3Ceu894&feature=related
A good synopsis here.
http://kingworldnews.com/kingworldnews/Broadcast/Entries/2012/9/15_Felix_Zulauf_files/Felix%20Zulauf%209%3A15%3A2012.mp3
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