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Economy
In reply to the discussion: Weekend Economists' Harvest Ball September 21-23, 2012 [View all]DemReadingDU
(16,000 posts)50. Charles Hugh Smith: It's not about "saving" housing, it's about saving the banks.
9/21/12 It's not about "saving" housing, it's about saving the banks.
The Fed's policies of keeping interest rates at zero and buying mortgage-backed securities are intended, we're assured, to bolster the housing market by making it cheaper for buyers to borrow money. With mortgage rates under 4% and a trillion (soon to be two) dollars of dodgy mortgages transferred from the banks' tottering balance sheets to the Fed's wonderfully opaque balance sheet, then this appears plausible. But of course it's all a PR ruse, like everything else the Fed says.
If the Fed wanted to "save" housing and not the banks, why not buy mortgages directly from homeowners? Instead of buying underwater mortgages from the banks, why not just buy the entire $10 trillion of residential mortgages outstanding and charge the homeowners the same rate the Fed charges banks, i.e. zero?
The Fed's goal is not to relieve debt-serfdom, it's to enforce it. The entire purpose of the Fed's policies is to ensure homeowners keep paying interest to banks for the rest of the lives, and to encourage those who are not yet debt-serfs to join the serfdom with a "cheap" mortgage.
more...
http://www.oftwominds.com/blogsept12/Fed-housing9-12.html
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Oh, I think you've been aware for awhile, this just solidfies the conversion, n/t
DemReadingDU
Sep 2012
#42
Charles Hugh Smith: It's not about "saving" housing, it's about saving the banks.
DemReadingDU
Sep 2012
#50