For the first time in recent memory the markets seem to be rebounding from record losses. In an effort to continue the sustained improvement of the economy the Fed recently announced a plan to buy $300 million in T-Bills and as much as $1.45 trillion of toxic mortgage debt. The plan is aimed to get banks to start lending money again…the same goal of all previous government stimulus packages.
Long term interest rates immediately dropped after the announcement and, of course, Wall Street applauded the Fed’s continued efforts to improve economic conditions. The question still remains, however, whether the Fed’s strategies will sustain positive economic growth or if printing more money will only result in short term economic improvements.
Bloomberg:
Yesterday’s decisions will add $750 billion in purchases this year of mortgage-backed securities issued by government- sponsored enterprises Fannie Mae, Freddie Mac and Ginnie Mae, for a total of $1.25 trillion. The Fed has already announced $217.1 billion in net purchases out of $500 billion planned through June, under a program unveiled in November.
The central bank will also double to as much as $200 billion this year its planned purchases of debt issued by Fannie Mae, Freddie Mac and Federal Home Loan Banks. The Fed bought $44.4 billion of the so-called agency debt as of March 11.
Policy makers acted after the economy worsened since they met in January. Reports today added evidence of a deepening recession. The Conference Board’s index of leading indicators, a measure of the economy’s future performance, fell 0.4 percent in February. The Labor Department said the number of Americans receiving unemployment benefits surged to a record 5.47 million.
Source: Bloomberg.
{ 2 comments… read them below or add one }
I’m not sure what it means exactly when we say that the central bank will purchase these mortgage debts. Does that mean that the homeowner will owe the money to the central bank? If so, will the central bank perform modifications? Or does it really mean that the central bank will cover the losses incurred by the (scam artist, predator, evil-to-the-core) lender after it forecloses?
I’ve read somewhere that the reason that CW seems to want to foreclose is that they can turn around and sell the property for pennies and the government will give them the difference between the sales price and their loss, not the value of the property, which has declined in nearly all cases. There is very little incentive at this point for them to help anyone if this is true.
The behavior of Countrywide seems to support this. It appears that they are helping NONE of their customers. A cursory review of the modifications they *have* done reveals that the modifications have not been particularly helpful and are not sustainable long-term, especially given the current state of the economy.
As I look at the actions of my government in this situation and others, it is hard for me to reach a conclusion other than that they are causing intentional harm to the people of this country, particularly the (former) middle class. Here are some of the areas in which we are under attack:
- Employment
– outsourcing of high-tech jobs to India and others
– continuation and increase of H1B worker visa program (In my field, the only people I know who are currently working here in the US are those who are here on H1B visas.)
- Healthcare
– what healthcare? since my last fulltime (information technology) job was outsourced in 2005(thank you Walt Disney Company) I have had no insurance
– high cost of treatment
– FDA approved drugs killing people
- Environment
– Environmental protections have been eroded to the point of almost being laughable. Drill baby drill? Once again, money is more important than people or the environment.
- Wars
– aside from being unnecessary and ineffective and based on lies, thousands of our young people have been killed with no real end in sight. The ramifications of this disaster will be felt resoundingly by the people for many, many years to come.
– all the money spent on wars and armaments is unnecessary. we could spend 50% of the military budget on universal healthcare and we’d still have the biggest military budget on the planet, by far.
- Education
– The No Child Left Behind Act, the latest weapon in the half-century long attack on public education, is a travesty which has resulted in kids learning only what they need to score well on the standardized tests because if they do not score well, the government will cut their funding. Of course the real goal of the nclb program is to ensure that there is no time to teach other more important things, such as critical thinking, logic or civics/government. In a recent survey, a majority of high school students thought that newspapers must obtain government permission before publishing stories. So much for the notion of free speech. It will be easier for that inconvenient part of the constitution to disappear once enough of people never really knew it was there in the first place.
- Economy
– deliberate and methodical erosion of consumer credit protections (usury laws). If you’re late on your mortgage, your Visa interest can jump from 0% (or 4% or whatever) to 39% or more, even though you may have been a customer of theirs for years and never been late.
– the bailout(s) – what a joke. I can’t get help, at least not from the clowns at CW. The debt management places we’ve talked to say we don’t make enough money for them to be able to help us. Um, who’s fault is that? I have been unable to find work for over a year and I am collecting the maximum unemployment. My husband has also become unemployed but was able to find a part-time job where his hours have recently been cut (because of the economy). We have given up our one cell phone, taken in a renter, stopped driving unless absolutely necessary, don’t turn on the heat or air conditioner, have given up cable and are thinking of giving up internet and maybe even the telephone. I’ve even been making my own laundry soap in order to cut costs (and to stop feeding the corporations). In the not-so-distant past (early 2008), we were considered upper middle class. Now we struggle just to buy enough to feed ourselves and our daughter may have to drop out of state university because we cannot afford the tuition.
To recap.
It would appear that our government wants us to be
- uneducated (nclb & a citizenry unable to question the actions of its government, history of education erosion, skyrocketing costs of public universities)
- sick or dead (no healthcare, dangerous drugs, dangerous environment, importing toxic food from China, wars)
- poor (unemployed, underemployed, increased outsourcing & H1B programs,loss of manufacturing and high tech jobs in the US)
For years I’ve heard the expression “War on the Middle Class” but I didn’t really ‘get’ it or maybe it was that I didn’t take it seriously. Well now I’m taking it seriously and I don’t think it’s just an expression to describe what is happening. The War on the Middle Class is REAL. Someone has set out to methodically destroy the middle class in this country and recent activities have ensured that their work will be done soon. What I’d like to know is WHY and to what end is the middle class to be destroyed. I’m pretty sure the answer will be scary.
I posted a comment a while ago and don’t see it. So I reposted and saw a message saying that a duplicate comment was detected. So I’ve been waiting to see if my comment appears, but it still has not.
Meanwhile, I have submitted and can see displayed comments on other threads.
What gives?