BOHICA - QE3 is on!

[ChunkyMonkey]

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!

[Pancho Villa]

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!

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]

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]

Gone

[Sharpienads]

I think they should just print off $16T and pay off the debt. Problem solved.

[FastMan]

I think they should just print off $16T and pay off the debt. Problem solved.

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]

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...

[Pancho Villa]

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.