Fed May Buy Mortgages Next, Treasury Investors Bet
March 24th, 2008The Fed will buy trillions of dollars worth of mortgages? WTF?! Will the Fed buy the Pay-Day-Loans from all the baby daddies in the ghettos as well?
What will happen to the dollar after this nonsense?
Via: Bloomberg:
Forget lower interest rates. For the Federal Reserve to keep the financial markets from imploding it needs to buy troubled mortgage bonds from banks and securities firms, say the world’s biggest Treasury investors.
Even after cutting rates by 3 percentage points since September, expanding the range of securities it accepts as collateral for loans and giving dealers access to its discount window, the Fed has been unable to promote confidence. The difference between what the government and banks pay for three- month loans doubled in the past month to 1.95 percentage points.
The only tool left may be for the Fed to help facilitate a Resolution Trust Corp.-type agency that would buy bonds backed by home loans, said Bill Gross, manager of the world’s biggest bond fund at Pacific Investment Management Co. While purchasing some of the $6 trillion mortgage securities outstanding would take problem debt off the balance sheets of banks and alleviate the cause of the credit crunch, it would put taxpayers at risk.
The Federal Reserve may think it can play Atlas, but there really is only so much they can take on their shoulders before they also end up on their knees groaning under the burden.
Fed has already traded Treasuries for toxic mortgages using the recently created special lending facilities. One word for this: assignats.
Loveandlight, I”m no expert, but from what I’ve seen, TPTB are pretty good at passing that burden onto us taxpayers, who they seem to see as having an infinite capacity to pay for their greed-induced f***-ups. We’re already groaning, and I expect it’ll get worse. And if the Fed doesn’t have the funds, hey, print more! Who cares if eventually the dollar’s only good to wipe your butt with; they’ve already moved their wealth to Europe, China, and the Middle East.
I am moving out of this toilet NYC/PHILLY
suburb (NJ) in 3 days.
I got held back from my planned activities
an ENTIRE year because of an unscheduled encounter with the gestapo.
Hope the $ is still good by the time I get to
South Dakota I have a nice 15 acre farm in my sights.
It’s always SOOO disappointing when A bubble bursts. I bought my nephews a toy about 20 years ago, a giant bubble maker. They loved it. But when the giant bubbles – sometimes 3 feet across – would burst, they started crying. Hearing this story a.m. – my thoughts:
1) borrow from Fed retirement account (because it will be more worthless than it is now -e.g. the U.S. government is bankrupt but is currently able to cook the books to hide it) to buy land;
2) convert any investment “controlled” by anyone else – including the U.S. govermint or Wall Street or any stock broker – including a 401 k PLAN into quasi self controlled investment such as a Roth IRA (this IS KOSHER). I think, for me, taking the tax hit now is better than losing it all to the Federal Reserve Board, who, appears to have no master (except for maybe Ron Paul).
Devolving oneself of the Fed scheme to put all Americans into debt slavery to save the investment banks will take considerable effort, and will make NO sense to anyone you know who isn’t or hasn’t been educating themselves. But short of leaving the US of A, I think divestiture from any or all of this CRAP is the only answer for anyone in the U.S.
And John Doh, I hope you get your farm!