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24 Hours Until The End Of MBS Purchases By The Fed; Then What?
Beginning in January 2009, and every single business day since then, the Fed has been buying up Mortgage Backed Securities (in a very non transparent market). The program, which ends tomorrow, will have transferred $1.25 trillion of MBS "on behalf" of the US taxpayer, representing the single biggest asset on the Fed's balance sheet, and backing up such liabilities as currency in circulation (yes, that dollar in your pocket is collateralized more than half by rapidly devaluing, and in many cases cash flow non-producing houses) and excess reserves. Ironically, this year's biggest April fool's joke may end up being not only quite scary but very much true: on midnight of the night of March 31 into April 1 the Fed's MBS program ends, and the market will be on its own for the first time in over one year. What happens next is anyone's guess but here are some suggestions.
From Market News, here is a list of the things that the mortgage market has going for it and against it:
POSITIVES:
1) Fast and real money accounts are known to be very underweight or short the MBS market. Some have already covered recently as option adjusted spreads have widened. Others will wait for widening in nominal spreads. How long they will wait is a big unknown;
2) The recent backup in Treasury prices caused foreign investors to have renewed interest in the market, particularly for Ginnie Mae paper. A further drop in dollar prices could encourage other investors to come back into market;
3) Banks have been supporting the market for a while now and, with short-term interest rates low, they are expected to continue to pursue the carry trade. As long as the Fed's low interest rate policy stays in effect for an extended period, this is widely fostered investment strategy;
4) Freddie Mac already finished its delinquent loan buyback program. But Fannie Mae's buybacks take place over the next several months and are likely to amount to about $150 billion. Surely some of this money will be reinvested in MBS;
5) The housing market still shows no signs of a turnaround and credit is still very tight. This should keep new origination supply very manageable in the absence of the Fed buying. If and when it ever picks up again, it is hoped the MBS market will have its sea legs back on;
6) The Fed has been buying all the lowest coupons around, the coupons no one wanted. But The government-sponsored enterprises' buybacks and the ongoing changes to the government's Home Affordable Modification Program (HAMP) have recently wreaked havoc with the higher coupons. Consequently, that is pushing some investors into the lower coupons;
7) Finally, the market strongly believes if the housing and/or the mortgage markets got in severe trouble, the Fed would have no choice but to begin buying assets again.
NEGATIVES:1) When everyone is on the same side of the boat, it often ends up badly. In other words, the idea that the investment community is heavily short does not guarantee success;
2) Even with a short investor base, the market still lacks a "backstop" bid like it used to have in the old days when the GSEs would buy MBS when they widened out to attractive levels. Without the Fed, and with the GSEs crimped, who will become the new backstop bid;
3) It may not happen for a very long time, but eventually the economy will recover and the Fed will raise rates. Over time, 10-year note yields are expected to rise. If that is the case, why buy any fixed income product now;
4) How high 10-year rates get down the road is anyone's guess. But market sources say the end of the Fed MBS buying, heavy Treasury supply and the potential of a boycott by overseas investors in the Treasury market could send yields from the current 3.87% to 4.25% or even 5.25% over time;
5) It is highly doubtful that the Fed will sell any of its huge MBS holdings for a very long time. But the possibility is there and it has made the market very nervous;
6) Before the Fed sells assets, it would likely do reverse repurchase operations with its MBS holdings. Market sources say that will most surely raise the cost of carrying MBS securities;
7) Because the Fed was such a large buyer of MBS and it did not hedge its positions, hedging convexity has not been something the market has worried about for well over one year. But now that the Fed is no longer buying, the new duration that comes into market will have to be hedged. Indeed, part of last week's selloff was blamed on convexity selling.
With the Fed having gone all in and then reraised tenfold courtesy of fractional reserve banking, there is no way that the Fed will allow house prices to drop further, which is why we are particularly partial to the option that the Fed will immediately reinstitute QE at the first hint of mortgages at or approaching 6%, as a 1% widening in mortgage rates will be the equivalents of a several hundred billion loss in household net worth. And the administration can not have that in an election year.
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Its a Fed goldberg machine..
ha ha. totally.
speaking of goldberg machines...
http://www.youtube.com/watch?v=qybUFnY7Y8w
love that video. you know that was made out of trash by high school kids? the era of the artful scavenger is coming...
Awsome video a mon avis aussi ... Are you from west lafayette Tip?
indiana? nope, been through there a couple times. never been a good experience. sure it's a lovely place, but not for me.
"This hole's too deep! Keep digging!"
"To China." Yelled BS as he raised his silver shovel above his head. "Tee Cheenie! Yeeeeeahhhh!" Screamed Timmah. His shovel was plastic. "Ta-Ta-Ta-Ta Chi-Chi-Chi-Chi..." Hank kept stumbling along as She La Bear interupted and leaned on her shovel, "Hank, where is YOUR shovel? Oh never mind. Where is Green-Span?" Out from the sky 'ol Greenie came, paraCHUTE in tow after the others caught him at landing. He could barely stand. "Lets do this." Greenie said with a wimsical expression as he wet his lips. He was followed by the Romers, who did not exaclty make a gracefull landing either. "Ugh. [Fart noise] Sorry we're late," said the plump Mrs. She was smiling, like ALWAYS. "We had all the soda and candy loaded up when Larry took off with the stash. While we stole the candy from wall mart he was fast asleep in the parking lot the whole time, but after we had it in the van he sped off!" "No need for that," quipped BS as he passed around a pipe. "I've got a little more peyote left." Timmah stared wild eyed around him with a look of rapture. He was dressed in uniform, with a shredded American flag bandana around his frizzly hair. Then he screamed once more and began digging. "Twwwwooooo Chaaaanaaa!"
brilliant
That was great!
It's like you read my mind.
lennon... I vote you head of the resistance , we will build an army of concubines
Popcorn!
No worries... the "tsunami of liquidity" will render this entire problem just another fart in a windstorm.
What really blows me away is how much money they've wasted that wound up reflating everything *but* the very asset class they set out to support. And, of course, wages, which is the only way this actually ends.
+1
Two questions:
What is the difference if a man owes $5, 50 or $500 million if his net worth is a mere fraction of the total? Either way he is insolvent. As these numbers were mere illusions in an account ledger, mortgage holders (pensions) will come to realize that they too are worth -0-.
As to the various actions that have taken place in our name to 'save the system', the degree of illegality & outright fraud is merely an indication of the peril we collectively face. Hank was right - there are going to be tanks in the street. All the power elite accomplished was buying themselves a little time to get out of Dodge.
I would advise anyone not to make the mistake that we're going to somehow be able to get out of this little mess via some political resolution. That's not how these types of historical events unfold:
isn't net worth usually a fraction of total debt? did you mean assets? also is the reference to the u.s. civil war apropos considering the deflationary depression immediately prior to now didn't have a civil war in the u.s.? (the deflationary depression nearest the u.s. civil war was in the 1840's right?) if you mean ww2, is that quote instructive? keynes noted at the time that the peace treaty ending ww1 (known then as "the great war") would probably start another war when germany grew a new generation of soldiers. but certainly (known then as) "the great depression" helped birth ww2.
Vaporize 12 Trillion and what do you get?
http://www.youtube.com/watch?v=jIfu2A0ezq0&feature=related
The deficit will be history. Unemployment will be .01% and the dollar will be backed by 25% silver, 25% gold, 25% oil and 25% agricultural commodities.
The first sign of trouble and the buying will be done through a stealth party like treasuries. The goal is to make it look like there is a valid market. It is all a confidence game.
Just bend over, you won't even feel it!
Daddy, tell me a lie so that I may pretend it's the truth.
They will probably jack the indeces to new highs into mid April just to act like there is sustained buying by retail.
I think you're right but they'll likely be another event to camouflage and then another and another. What in God's name will it really take? Still believe it's the Bonds, the Bonds man!
What do they need these programs for?
Stocks are skying every day, they don't need no more stinkin' stimulus.
LOL....
Robo, I recall you are in SoCal. What do you think of the Irving Housing Blog's report that BofA will increase foreclosures to 45,000 per month by December, up from 7,500 today?
http://www.irvinehousingblog.com/blog/comments/bank-of-america-to-increase-foreclosure-rate-by-600-in-2010/?source=patrick.net
A big fraction of those mortgages have PMI written against them. Who the hell is going to pay that bill?
how deep is Ben's Black card???
http://www.mahalo.com/how-to-get-an-american-express-black-card
Reading some of the news posted in the AM by ZH. The Fed said it will stand behind those that buy their MBS. Backed by the full faith of the gov, that's us the US Taxpayer. I believe we're still paying for the SnL Crisis in the 80's. When will enough be enough with us?
What happened when the BOJ stopped QE? Nothing.
If you truly believe that the Fed will stop buying on 3/31/10 then I have some SDS that I bought at 43.20 that I can let you have for only a ten percent premium
Nice one - they will just switch to stealth purchases to keep the charade going as long as possible.
If there is one thing Obama loves it is SDS. Half his cabinet were members.
radicals in youth, conservatives in middle age.
Except these particular 'utes' never got over it.
That's my thought. The FED will still support the mortgage market. They just won't make the support official policy.
Agree with most of the piece TD. Except for the part about the Fed not allowing pricing to drop further. They will most certainly spray more QE in the second half ....but on house pricing, that baby will move as it needs to progressively and regionally at different paces of deterioration til it finds the affordability base. Banks are aggressively managing inventory to create the illusion of scarcity.....and that will work til it doesn't and is very expensive for the lender's bottom line. But they have absolutely no choice but to keep current, meet the nut and stall transactions and build capital cushions.
The magic bullets to prop housing prices are jobs and loose(r) lending standards......two events that will not be seen again soon. This assumes F/F don't go NINJA on their standards, which is insane but not impossible.
QE will march back in by year end when the equity markets accelerate their downside punishment phase......a reminder paddling for BB to return to the game. BB is their Tiger Woods. The whole franchise. He will be back for sure.
"The magic bullets to prop housing prices are jobs and loose(r) lending standards....."
Well said. Though it does appear the GSEs are going lax on one of the standards - their approval standards for the mortgage insurers. Without the MIs, it is much tougher for them to get more business.
http://online.wsj.com/article/SB1000142405270230473910457515427419353411...
"
What is curious is that Freddie's and Fannie's support potentially puts taxpayer dollars at risk, while helping PMI shareholders—the company's stock jumped more than 40% last week. The moves also come as debate continues over how much skin in the game homeowners should have.
Help for PMI, and for Mortgage Guaranty Insurance Corp. last month, is also notable because Freddie has suggested that firms like this mightn't be able to meet future claims.
Freddie in its annual filing said "some of our mortgage insurers lack sufficient ability to fully meet all of their expected lifetime claims-paying obligations to us as they emerge." PMI has the lowest credit rating of Freddie's rated mortgage-insurance counterparties."
capitalism in bull markets, socialism (for the rich) in bear markets.
Very well thought out, and I do agree with most of Rainman's sentiments here.
A major push behind the Fed's reflation campaign was to provide a net to the financial system and bolster balance sheets for the next wave of liquidations. The Fed has given banks and other financial institutions ample warnings that the pig spread is likely to narrow, and many have taken heed of that warning.
I think we might be surprised to see a brief period where mortgage spreads might remain relatively tight as those looking for yield will (again) be seduced into feeling safe with the implicit guarantees they will get from marketed MBS. Still, there is not much in the way of underlying collateral that lends confidence.
Before the Fed pulls the trigger on QE 2.0, the conditions are in place to engineer another quality trade. Sure, many will be on the wrong side of that trade-- but the migration away from risk assets will create demand for Treasuries and keep interest rates low across the board. Even though mortgage spreads may expand, they could remain well below 6%. The curve will flatten... but not because the short end is going up.
Equities and other risk assets are likley to be the sacrificial lamb here, and I think the investment bankers are beginning to position themselves for the other side of that trade. A big complication on sacrificing equities is that many of the banks the Fed has been trying to help had been net equity buyers. Hopefully, this isn't a widespread phenomenon.
My guess is QE 2.0 will start about 6 weeks BEFORE the November elections to ensure that voters appreciate another "saving" of the system, and that some confidence is rebuilt in the system before voters make their choices. If Bernanke doesn't care about political implications, then making a move by end-of-year makes sense. My guess is that Uncle Ben is a political whore.
Otherwise, I agree on just about everthing said here.
Sounds about right -- 6 weeks before the election or end of the year. Maybe January.
And bingo on the notion that mortgage rates hold steady or decline while spreads widen. A calculated bet -- and a reasonable one -- on the part of BB.
I do wonder if Obama and Rahm really want to maintain Democratic control of both houses. Healthcare has been pushed through. Now Obama/Rahm need to look forward to 2012 and need to have the Republicans to run against and blame for the continued malaise. Harder to do that if Dems have both houses. Triangulation is the name of the game.
they think like a minority party even when in the majority.
very astute observations...always got to play the underdog.
I think the assumption that there is another who is ready to step in to take the Fed's unquestioning (and let's face it, risk free as the Fed) place and buy this particular sausage is amusing. We shall see, and I agree measures are already in place to foster the illusion of a seamless transition. Give it six months, and then we'll see who's the buyer of all this. Of course, one thing is true, at the rate homes are selling, there's not much to buy.
I actually think there will be a buyer. The buyer will either continue to be the Fed (like we know twhat their balance sheet really is), or it will be done by primary dealers borrowing money from the Fed to by the trash under Fed orders. The Fed is not going to step away form the market. It had to have a QE end to prevent people from thinking inflation.
http://www.youtube.com/watch?v=_gJgVvwUkiw&feature=related
>Then what?
Party!
All you need to know to answer this is to look at the UST auctions. Stronger B2Cs than other nations, despite collapse in indirects.
So, the bills "blew out" to .15%...whoopie shit. The market is artificially supported by ZIRP and the Fed.
Two major mature industrial nations with ZIRPs means a strong, exponential carry trade tailwind for emerging economies. But we'll see about jackshit here because even 0% interest isn't enough to turn a profit in the US anymore. We're tapped out, the ROI is negative, as in Japan.
They will migrate the currency to all the backwards places until those are tapped too, then it will be a champagne supernova. Just wait until we smack into the overhead oil supply curve again.
Despite the bullshit I hear about the DXY showing a strong dollar, oil is still 80+ and gold is 1100+
Douchinger says to short wheat because his squiggly futures price chart lines can apparently predict the coming harvest.
"Despite the bullshit I hear about the DXY showing a strong dollar, oil is still 80+ and gold is 1100+"
Agreed, DXY is a measure of relative value against other failed fiats. Oil and gold are measures of the dollar's absolute value against real goods and real money.
As far as wheat....one guy on the floor says to buy it after tomorrows Crop Report.....and no, it's not Clarence Beaks! Big day in the Grains tomorrow!! Look at the March 08 corn/bean chart...might be a repeat.....corn by any measure is cheap
You might want to look at this....can't eat gold...and if there's no food, it won't buy you any either.
http://www.marketskeptics.com/
I am with you Dangeroo, grains look too cheap compared to the rest of the shit storm complex.
Backwards places? Like the Southern Hemisphere? Littered with banana republics hosting corrupt governments that are happy to sponge up hot money and take a little cream for themselves. Latin America, Africa, Australia - take your pick!
USD/UST is the worst currency/debt except for all the others.
To win the poker game you don't need the best hand. Just some combination of not-the-worst-hand, good ability to bluff, and skill in placing your bets. Helps too if you start with the biggest pile of chips.
Then you can pick off the marks one by one.
with so much broken.. how do you put weight on any of the news??
also, home prices do not have to go down much lower - people and banks will just sit on them. The banks books are being covered up, so there is no 'margin call' type firesale that needs to be done
the homebuilders on the other hand... maybe they will get paid to not produce, like farmers do
Works as long as you can afford to keep them kept up. Housing is an asset that requires maintenance (even stone houses with slate roofs).
true..the game will go on until all abandoned homes left are full with cats or rats..then it will be time to go long CAT
the longer a house sits vacant, the more likely it will be looted and vandalized,the yard will go to shit, the taxes will accrue, and if its in florida, the mold growth, will destroy the interior, without AC .
You can add the entire Southeast to the list of homes overrun by mold. I spent several weekends brushing mold off of basement floor joists in a house near Atlanta. It only sat for 6 mos and the A/C was on the entire time.
Wood homes can not handle being abandoned. They do not tolerate humidity or temperature ranges very well.
"It is the abuse of the Federal Reserve System to which we object. Every little while some smart Alec mounts the bema and roars about the great good that the Federal Reserve System has accomplished. It is called the Savior of Credit and Industry. But it is misbranded. There's a vast difference between the picture on the tomato can and the contents of the can."
From 1922.....I promise you will like this book....really!
http://books.google.com/books?pg=PP10&id=JECL0VEKI2oC#v=onepage&q=&f=false
That's some good stuff! They pulled no punches. Example from pp. 62-63:
Well, on this topic I have no idea what is going to happen, but I'll be watching.
I will watch it all: Fed/MBS, oil, wheat, gold, bonds, the news... And read ZH.
+1. I am going very long on whiskey this week. Thinking of it like preparation for a SuperBowl party.
Well, well, it's dinner time here.
My wife and I are now going to watch 2012 on our big screen! That'll probably make me all paranoid again... :)
noooooooooooooooooooooo
they said they'll end March 2011
2010 was a typo... sleep comfortably, uncle Ben is here to help
Now that the banks are over capitalized (more like a stagnant pool of liquidity), it makes sense that the Fed dumps these MBS's back onto the banks balance sheets. The US gov., through their GSE's, cannot afford these non performing loans without smashing the debt ceiling so it would back the Fed's proposal......besides the Fed has given the gov more than enough time to hatch a plan.
Likely to end in a double reverse repo all the way back to where the loan was originated (C, WFC, BAC, JPM etc)
Good point, ozzy. There will be an effort to detect fraudlent activity among originators and sell back non-performing, tainted loans to offending banks. I don't know how much that will total-- or to the extent that the Fed can sell back a pre-packaged MBS tranche. I'm thinking, at most $200 billion might be sold back.
The other thing to remember is that the banks are NOT OVERCAPITLIZED. They are better capitalized than they were in March 2009. But net tangible equity is hard to determine when modified accounting standards overstate the asset side of the equation, and off-balance sheet entities are still hovering out there with crappy assets. Hopefully, for the affected banks, there will be enough "excess" capital to weather the next wave of liquidations. Some will survive... others won't.
With the government getting the Hell Outta Dodge on Citi ownership, I'm guessing that Panditville isn't going to make it into 2011.
I think Antarctica will be the new mystery buyer.
lots of growth potential there.. can we just send a few hundred people there, call it a country and have them start buying our debt?? enron style?
Exactly, and we'll call it...NEW ICELAND!
They can print their money on penguin pelts! It'll be great!
perfect.. the old Iceland became such a buzzkill.. send the CNBC cameras now!
If we can choose which few hundred people we send there, I'm all for this idea!
Good, get the heck out of the mortgage market, I need rates to go up and prices to fall so I can buy.
1. Mail in your keys
2. Keep paying and watch your value dissolve.
Anybody with another option? Buhler?
Cash out refi and buying commodity items you can go under the radar with!
Believe it or not, I still have about $30k of capacity on a HELOC that for all intents and purposes-- is essentially useless.
So yeah, there are more things that can be done. I'm just procrastinating.
I vote more lies, or popcorn. Take your pick.
What's going to happen? The desperate lie. Hold on to your hat. This lie machine is going to 11. 1Q 2010 was awesome. It was an incredible earning machine. They are going to throw around unbelieveable numbers on growth, jobs, top end growth. They'll be unbelievable because they are a lie. They'll try to suck as many people into a peaceful bullcrap bubble so they can turn it into peaceful resolution of acceptance for the rape that's coming. Remember a couple months ago when I said this would be the lying season of our discontent. Well it's here. This week should be HIGHlarious if you take drugs.
Question is, who's going to be the scapegoat when it all goes down? The banks still have image problems with the public, so they need a really big goat to scape...China?
China will be an obvious source. And don't forget about Iran, and Osamabinladen somewhere in a Taliban cave.
Just as likely, is that many of our so-called "leaders" will feign stupidity, and plead to public that they didn't see the bad stuff coming. Folks, they are laying the groundwork for the bad stuff as we speak.
Indeed, why should they warn us? Or even hint that there's a whiff of a possibility something bad might happen as a result of their own machinations? It's all about massive plausible deniability now...which depends on a whole lot of opacity.
Which leads me to think, the best defensive strategy China might have, is to hope that the US keeps clamoring for a currency de-peg, and then do the de-peg as requested. The likelihood of the crash happening then goes up, and if it happens, the US's scapegoat has just jumped the fence.
Which leads me to think further, the US is probably lining up scapegoats B, C, D, etc, for some dodecapedal fingerpointing. Oh what a tangled web.
What has always been the scapegoat? Massive CIA operations directed at "gang" centers of various foreign governments. Massive sleights and repressive deals attempted to shove down trading parteners throats. Leading to staged trade embargo's. Staged wars, staged terrorism, staged everything. Someone and something has to be at fault. Every "thing" is tugging to hard. Some sucker is being pumped with weapons and tools with a promise to take over the world, when all they'll get for it is blame.
What do you think all this google crap in china is about. Do you really think the CIA who has spent the last 60 years doing every horror known to man is suddenly concerned about china's repressive culture? People will spend any amount of money to win wars. Wars will be the amount of desperation necessary to cover this stinking shit pile over. With budgets scheduled to explode in about 3 months the war starting will come very quickly but first they have to try the everything is great!!! The economy is awesome trying to pull people in to emotional investing in a "recovery" that never started, never budged one inch, never happened and redirect all that from it's true source to something stupid. By the end of June world war III will be looking something that just happened without any intent after May turns into the hugest consumer clampdown ever seen. This is final round of saturn oppose uranus. Everybody who is willing to see things for what they are has done it. If you are in authority you will hear fuck you!!! hundreds of times before years end. But first they have to pretend that it's all going to benefit more than just a few stupid people. But when it comes down eastern hemisphere verus western hemisphere it it will look all too strangely symetrical.
I personally want to see the CEO bragging next month. It's going to be funny because it's all bullshit.
> Question is, who's going to be the scapegoat when it all goes down?
I suppose they could blame it on the Joos. Even though most of them are poor or middle class, that blame does seem to work well historically.
If that fails, there's always war -- kicked off by a false-flag attack, of course. Then we can raise our hands and say "The economy was doing great. If only those darn Iranians hadn't detonated a dirty bomb on the subway."
Then we get "clean up" jobs, military manufacturing jobs, and the added benefit of lots of casualties on some foreign battlefield. All of which are great for the economy.
They'll blame Bush and Cheney, and most of the readers at ZH will nod their heads and cluck.
And just like clockwork comes the Yahoo finance headline:
Bush administration "the least fiscally responsible in history": budget hawk
OT - Dylan Ratigan, subbing in for Joe Scarborough radio show, is going nuts right now, speaking something not often heard in media - truth.
huh?? somehow cutting through all the Hannity chatter?? call the FCC
huh?? somehow cutting through all the Hannity chatter?? call the FCC
on good authority,,, the word will go out that all bldgs with glass windows will be broken with bricks ,
this will be a boon for glass, trades, and the insulation business,, as the government will fund this effort 100%
also the street sweeper crews will go on overtime .
just think of the possibilities
more than one way to kill a broken economy,, use the big stick approach ,
most windows in big cities have been smashed out for years...
They will be settling the purchases through June. So let's relax a bit. The end date is important but more symbolic. The end of it is a process.
FED Fisher is hilarious: CRE overblown; Too early to raise rates;No comment on Greece; Economy stood on brink; Not time to sell MBS; TBTF to be broken up!!!
The parade of rhetoric doesn't stop coming from all freakin' fronts. If anyone doesn't think this entire monetary approach/solution is "NOT" a diabolical scam then you are drinkin' Kool-Aid! Fuck this bullshit!
Then what?
They steal our retirement.
Lets see what happens to the 10yr bond rate when Tiny Tim calls China a curreny manipulator and they respond by forgetting to show up at Treasury auctions.
The Chinese have been effectively "gone" for about 6 weeks running now.
The big even may be the wholesale selling of Treasuries on that the Chinese already hold.
That may cause a bit of a problem on a number of fronts, though.
"...which is why we are particularly partial to the option that the Fed will immediately reinstitute QE at the first hint of mortgages at or approaching 6%"
In FED (and debt) we trust; Feder-ama round 2
18 day Bills, is my guess.
I wouldnt be surprised if Tiny Tim and Bernanky appear tomorrow and say 'Although the housing situation is showing brilliant signs of recovery, we'll extend the MBS program another $1.25 Trillion for an extended period'.
Print you crazy bastards, print! Bottom line its all you ever had.
“We,” says Damon Vrabel, “are governed by private banks, not elected representatives of a free republic.” Nonsense? Not if you follow Vrabel’s logic as he guides us along the money trail, showing how “banks have a far more dramatic impact on us than governments do.”
More from Vrabel taken from Wall Street Oligarchy and American Empire | Canada Free Press | 02/24/10
[P]eople usually do not consider how banks also rule governments, businesses, non-profits, schools, and everything else that depends on money. A quick look at macroeconomic cash flows illustrates this… Just follow the money. Governments and businesses are hostage to bank money, therefore they work for the banks, just as you do. In fact the IRS is nothing but a collection agency for the mega banks that own most of our debt—forget the propaganda that it collects money for the children…
The United States is shifting from a long period of perceived growth to a significant period of decline that will surprise many Americans as they realize the political propaganda about economic recovery was a lie. At that point, it will also be clear that we do not live in a constitutional republic but rather a financial empire where the Wall Street oligarchy rules not only our lives but also the governments we elect. Ever since Wall Street grew to replace our constitutional system of towns, counties, and states, we have not had the freedom we thought we had.
As long as the banking system is inflating, thereby creating the perception of growth and freedom, people are lulled into compliance with top-down rule by bankers. But once the system starts deflating, banks will kick people out of their homes, jack up credit card rates, shutdown access to cash, employees will lose their jobs, and governments will ramp up the tax machine and may even confiscate bank accounts to force Treasury investments. General compliance by the population will then be replaced with anger. This is why a high tech police/military control system is now in place across the US. The situation will be particularly difficult for those who will go hungry as things worsen in the future. The government will make it very clear whom it serves—Wall Street vs. the people—and we will regret ever allowing the powers behind Wall Street to replace our constitutional government….
The top of this system is the Federal Reserve and the Wall Street cartel—the real government of the United States. Somehow this goes unnoticed despite the fact that bankers run the US Treasury, tell presidents what to do, and staff the rest of the executive branch with their own representatives… It even went unnoticed as the government and the Fed stole trillions from the people and handed it over to the bankers after the crash of 2008…
The great economic debate between socialism and capitalism that happens in the US (illustrated in the cash flow diagram) is no debate at all. People who believe in freedom through the benevolence of local community, i.e. the classic liberal, and those who believe in freedom through the benevolence of Main Street business and free market forces, i.e. the classic conservative, have both been hijacked. Due to our monetary system, their energies have been harnessed into unknowingly propping up the Wall Street oligarchy.
The debate is actually between nationally controlled socialism, quite different from the community socialism that has existed at the tribal/church/neighborhood level, and the non-free-market capitalism that exists in the US today, which is really corporatism under the Wall Street money monopoly. The oligarchy controls both. So the debate only allows us to choose between two sides of the same thing. Neoclassical economics hides this issue by ignoring the truth of our debt-based monetary system that gives the oligarchy control over all the value created in the economy. The type of socialism and capitalism we have in the US today props up the elite oligarchy just as much as any other top-down system used throughout history. Oligarchy is anathema to freedom, community, and the American republic. The system must be changed.
Despite their rhetoric, both sides of the establishment, left and right, fuel the two key components of our pyramid system ruled by the Wall Street oligarchy. Rather than being two different choices of left VERSUS right, the debate creates a monolithic system of left AND right as the two sides swap positions every four to eight years while nothing substantial changes. This is the engine of fascism—big corporations and big government working together under the top-down rule of mega banks. Until the debate can move beyond the Wall Street establishment that controls both parties, this engine will continue. Its inevitable conclusion is frightening if nothing is changed…
http://canadafreepress.com/index.php/article/20368
Only economy we've had in months is borrowing money, now thats ended, so who is the first to tap out? Bonds? Stocks? Oil? No more extend and pretend. No more print and pump. So back to Tylers recent article about the FED exploring the seizure of 401K's for 'Gubmint management'. Really, what the hell else can they do?
Nah, the idea that theyll pump the Ponzi to 'fool the people into calm Hindu cow status' is over, no more point in it, stupid idea anyway as only morons believed in it anyway. Theyve got what they want, the deathcare law which btw gives Obama a personal army, (damn got to love that), so now fool the masses time is over, no further need for it and time to take it all down now. In my opinion.
Isn't the Fed purchases guarenteed by the tax payer? In that case, why would the Fed care if the prices tank? They get their interest payments either way.
"$1.25 trillion and THATS IT !!!"
http://www.youtube.com/watch?v=028oD4CEw_U&feature=player_embedded
A public service announcement from http://www.takeitbackday.org/Takeitback_Page.php
deleted double post
The housing mkt is now at a standstill. its really garbage like the fed balance shhet..
jJust wait those buyers will show up .. keep waiting and waiting. Put out a few colorful baloons to entice them.
Is the organic housing market,, good for fertilizing. lol
plz inform the Sellers and their 'agents; their homes are crap. Someone has to do it.
and also that financing no longer exists! The days of using a credit card check for down pmt are over.
Oh please, why are we pretending the Fed sets rates and the market follows. The Fed follows the market. They will raise rates when they are *forced* to, not when they deem it necessary.
The emperor is stark naked.
So it a good moment to buy some VIX warrants?
The 'market' has been like Hans in the Cliff Hanger game in the price is right - up, up, up! If for some reason the 'market' reacts badly to any government intervention, they'll just introduce Quantitative Fleecing 2, 3, 4, etc. The government should have thought before they got involved in this bubble - it'll be a decade at least before we're back to anything resembling normalcy.
And just how is the Fed going to stop housing prices from dropping further? The laws of supply and demand are still in effect. There are not enough qualified buyers to absorb the 18 milion vacant homes. The additional shadow inventory plus pace of foreclosures should crater the worst markets (like mine) another 15% this year from the 2006 highs and 7-10% in other markets which thought they had escaped the fiasco.
The Fed can only support housing prices if they start buying every vacant home and lot in the United States and I do not see that happening. Until the states start bulldozing vacant subdivisions this nightmare just grinds on and during this entire process part of the retirement safety net, the equity in the homes that retirees counted on all their lives, is being eviscerated while the mainstream continues to dismiss the demographic shift as a non-event. When you add all of this together along with the returns for any funds married to the equity markets for over ten years returning zippity doo-dah when adjusted for inflation, you have the foundation for another massive problem which eventually will require a government program to bail out underwater retirees who will have to abandon retirement and return to work. Where they'll get a job, that's another story......
+1000
Just keep blaming it on the snow, spring is hope eternal.
March adp -23k
est +40k
Its considered positive by sheeple because its only a 17k difference...
Credit is an illusion of wealth, when most wake up from the dream, it will be too late. The banks own it all, and the government owns the banks. It is just the way things go when good men do nothing.
You're being sold the American dream, not the American reality, so they're actually being quite truthful.
Also, what moron thought of the phrase "Chase Freedom". Seriously, could they make their spite towards us peons any more apparent than it already is?
The Treasury continues to pretend they are not lying to us and we continue to pretend we believe them. Of course, we all know that the system is corrupt to the core. They will use the blank check they gave themselves to fund the off-balance sheet Fannie and Freddie to purchase MBS. We will pretend it is legal despite no congressional vote because the law of the land has been traded for socialism.
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