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Old 08-10-2010, 08:39 PM
 
132 posts, read 397,108 times
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Federal Reserve officials decided to reinvest principal payments on mortgage holdings into long-term Treasury securities, making their first attempt to bolster growth since March 2009 to keep the slowing U.S. economy from relapsing into recession.

“The pace of economic recovery is likely to be more modest in the near term than had been anticipated,” the Federal Open Market Committee said in a statement in Washington. “To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level.” The Fed retained a commitment to keep its benchmark interest rate close to zero for an “extended period.”

Fed Looks to Spur Growth by Buying Government Debt - Bloomberg

What is your take on this..?
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Old 08-10-2010, 09:30 PM
 
Location: Texas
5,873 posts, read 7,241,391 times
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I think it's a brilliant move by the Fed, not really ground breaking but they left themselves room to use tools they haven't yet and the move to reinvest into Treasuries gives the Gov't and the Fed more 'room' to be creative.
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Old 08-10-2010, 09:35 PM
 
Location: Great State of Texas
86,068 posts, read 76,103,547 times
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Those are the toxic mortages they bought out in 2008 I believe to bail out the banks.
Can't imagine there's any value in them. It's not like RE is going up.

We need a Zerohedge or Rolling Stone investigation into these "mortgages".

Monetizing the debt is never a good idea.
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Old 08-10-2010, 09:51 PM
 
Location: Texas
5,873 posts, read 7,241,391 times
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No, the toxic derivatives that were purchased are already on the books. The maturing assets are mortgages that have matured and are still sound or at least sound enough. The fact that RE is not rising is moot. Monetizing the debt is NEVER a good idea, I agree. But the banks and Wall Street, now that they have stuck the American tax payer with their mess for the 4th time in 25 years in the trillions of dollars, back to their leveraging ways, doesn't leave us with more options.
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Old 08-10-2010, 09:56 PM
 
Location: Great State of Texas
86,068 posts, read 76,103,547 times
Reputation: 27635
Quote:
Originally Posted by txgolfer130 View Post
No, the toxic derivatives that were purchased are already on the books. The maturing assets are mortgages that have matured and are still sound or at least sound enough. The fact that RE is not rising is moot. Monetizing the debt is NEVER a good idea, I agree. But the banks and Wall Street, now that they have stuck the American tax payer with their mess for the 4th time in 25 years in the trillions of dollars, back to their leveraging ways, doesn't leave us with more options.
Not derivatives..mortgages from Fannie and Freddie..that's what the Fed bought in 2008.

Fed Will Buy Mortgage-Related Assets

Fannie and Freddie sound ? Didn't they just ask for $1.8 billion MORE in bailout money ?
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Old 08-10-2010, 10:12 PM
 
Location: Texas
5,873 posts, read 7,241,391 times
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Do you know that the toxic assets are CMO's...Collateral Mortgage Obligations. Assets, packaged together from mortgages and other credit collateral sources to produce bonds. Those are what are on the books from the banks and investment/hedge fund banks. The direct mortgages taken from Freddie/Fannie are only a very small percentage of what is being held. As of 4 Aug it was $159 Billion. The total SOMA account is over $2 TRILLION dollars...

Fannie and Freddie were not allowed to be "bailed out" in the same sense as the leveraged to the hilt investment banks and hedge funds. The losses you're seeing now...are the ones, the very same ones that the banks and the government encouraged them to gamble on. They are the one's left holding the bag so to speak. Not saying they don't deserve to be...but attempting to say that they're the only one's left in bad shape is more than a little misleading.
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Old 08-10-2010, 11:17 PM
 
2,024 posts, read 4,779,581 times
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They thought the economy was recovering so they let their balance sheet shrink after they greatly expanded it during the first wave down of the economy. It didn't work last time around, just made food and energy prices go up and it will not work when they do go all out quantative easing again. Also with this being a election year and with the presidents approval rating going down, they put pressure on the privately owned Federal Reserve to do something to help make the economy look better before the elections.
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Old 08-10-2010, 11:30 PM
 
Location: Exeter, NH
5,441 posts, read 4,665,616 times
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Sounds like China and Japan and the rest of the world are no longer willing to buying up the continuing flood of Treasury Securities that finance the national debt (deficit spending for 2010: about $1.6 trillion). So now The Fed has to do a shell-game of using US "money" that it has control over, to continue to buy up the newly issued securities. In effect, using US debt to finance US debt, or using one credit card to pay off another.
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Old 08-10-2010, 11:46 PM
 
Location: Phoenix,Arizona
5,151 posts, read 5,353,190 times
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In a November 2008 interview with Spiegel, George Soros made some comments

"I think it is better to have a government that wants to provide good government than a government that doesn't believe in government…. At times of recession, running a budget deficit is highly desirable."

And the dot's are starting to connect

In 2008, Obama announced that upon his election to the office of President, he would create a "Social Investment Fund Network,"

http://www.discoverthenetworks.org/i....asp?indid=977
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Old 08-11-2010, 08:38 AM
 
20,983 posts, read 18,942,083 times
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It kind of sounds like they're buying debt with money that has no value. Actually, that's exactly what they're doing. Oh well, as long as nobody knows who owes who what or what happened to their money, I guess its all good.
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