Like the S&L Crisis only MUCH WORST

[greekfire]

“If the American people ever allow the banking system to control their money, first by inflation, then by deflation; their children will one day wake up homeless on the continent their fathers conquered.” – Thomas Jefferson

[bubba99]

“Hello Deflation!! It’s coming on hard and fast now. What’s Ben’s next trick to get reflation going? I cant wait for this one.”

I have been wondering the same thing, and I came up with the following:

– Fed or Treasury takes over Fannie and Freddie

– The new nationalized lending institution offers home owners refinancing at Greenspan rediciously low rates 1% -2%.

– Now bad mortgages (6%) are refinanced to 2% and the defaults go much lower. The rent to own equation moves in favor of own – the ownership cost is cut by 60%.

– The Fed creates new mortgage bonds that it forces the reserve banks to buy (or locks them out of the short term, or long term lending facilities).

– The Fed justifies this by saying it would cost more to do nothing.

– The cycle of mortgages going bad is stopped or at least the housing crash is delayed and slowly deflates – in a manageable way for banks.

– The new money to pay for the above, adds to inflation, and in a few years, (10), the problem is solved.

I am really hoping that someone can explain why this will not work, and that the FED will need to come up with a real solution!

[bubba99]

“Hello Deflation!! It’s coming on hard and fast now. What’s Ben’s next trick to get reflation going? I cant wait for this one.”

I have been wondering the same thing, and I came up with the following:

– Fed or Treasury takes over Fannie and Freddie

– The new nationalized lending institution offers home owners refinancing at Greenspan rediciously low rates 1% -2%.

– Now bad mortgages (6%) are refinanced to 2% and the defaults go much lower. The rent to own equation moves in favor of own – the ownership cost is cut by 60%.

– The Fed creates new mortgage bonds that it forces the reserve banks to buy (or locks them out of the short term, or long term lending facilities).

– The Fed justifies this by saying it would cost more to do nothing.

– The cycle of mortgages going bad is stopped or at least the housing crash is delayed and slowly deflates – in a manageable way for banks.

– The new money to pay for the above, adds to inflation, and in a few years, (10), the problem is solved.

I am really hoping that someone can explain why this will not work, and that the FED will need to come up with a real solution!

[bubba99]

“Hello Deflation!! It’s coming on hard and fast now. What’s Ben’s next trick to get reflation going? I cant wait for this one.”

I have been wondering the same thing, and I came up with the following:

– Fed or Treasury takes over Fannie and Freddie

– The new nationalized lending institution offers home owners refinancing at Greenspan rediciously low rates 1% -2%.

– Now bad mortgages (6%) are refinanced to 2% and the defaults go much lower. The rent to own equation moves in favor of own – the ownership cost is cut by 60%.

– The Fed creates new mortgage bonds that it forces the reserve banks to buy (or locks them out of the short term, or long term lending facilities).

– The Fed justifies this by saying it would cost more to do nothing.

– The cycle of mortgages going bad is stopped or at least the housing crash is delayed and slowly deflates – in a manageable way for banks.

– The new money to pay for the above, adds to inflation, and in a few years, (10), the problem is solved.

I am really hoping that someone can explain why this will not work, and that the FED will need to come up with a real solution!

[bubba99]

“Hello Deflation!! It’s coming on hard and fast now. What’s Ben’s next trick to get reflation going? I cant wait for this one.”

I have been wondering the same thing, and I came up with the following:

– Fed or Treasury takes over Fannie and Freddie

– The new nationalized lending institution offers home owners refinancing at Greenspan rediciously low rates 1% -2%.

– Now bad mortgages (6%) are refinanced to 2% and the defaults go much lower. The rent to own equation moves in favor of own – the ownership cost is cut by 60%.

– The Fed creates new mortgage bonds that it forces the reserve banks to buy (or locks them out of the short term, or long term lending facilities).

– The Fed justifies this by saying it would cost more to do nothing.

– The cycle of mortgages going bad is stopped or at least the housing crash is delayed and slowly deflates – in a manageable way for banks.

– The new money to pay for the above, adds to inflation, and in a few years, (10), the problem is solved.

I am really hoping that someone can explain why this will not work, and that the FED will need to come up with a real solution!

[bubba99]

“Hello Deflation!! It’s coming on hard and fast now. What’s Ben’s next trick to get reflation going? I cant wait for this one.”

I have been wondering the same thing, and I came up with the following:

– Fed or Treasury takes over Fannie and Freddie

– The new nationalized lending institution offers home owners refinancing at Greenspan rediciously low rates 1% -2%.

– Now bad mortgages (6%) are refinanced to 2% and the defaults go much lower. The rent to own equation moves in favor of own – the ownership cost is cut by 60%.

– The Fed creates new mortgage bonds that it forces the reserve banks to buy (or locks them out of the short term, or long term lending facilities).

– The Fed justifies this by saying it would cost more to do nothing.

– The cycle of mortgages going bad is stopped or at least the housing crash is delayed and slowly deflates – in a manageable way for banks.

– The new money to pay for the above, adds to inflation, and in a few years, (10), the problem is solved.

I am really hoping that someone can explain why this will not work, and that the FED will need to come up with a real solution!

[peterb]

bubba99, I think the kind of inflation they’re thinking of is the kind that stimulates growth. Otherwise it’s really devaluing the UD$ even more and we still get a recession/depression.

I think that’s essentially what the Japanese did in the 1990’s. Bury the problem. But I think it is a recipe for stagflation at best. And it’s probably what we’ll get except that we’re not nearly the exporter that Japan is. So it’ll be way worse for us.

The real problem, as I see it, is that credit has been destroyed. This forces everyone to consume at the level of their real wages. And real wages have not increased in at least 10 years. I think this may be the major part of Peter Schiff’s thesis that we are headed back to housing prices of the late 1990’s. Because that’s when the mortgage lending practices were realistic and sustainable.

I think that this time, the market cannot be denied.

[peterb]

bubba99, I think the kind of inflation they’re thinking of is the kind that stimulates growth. Otherwise it’s really devaluing the UD$ even more and we still get a recession/depression.

I think that’s essentially what the Japanese did in the 1990’s. Bury the problem. But I think it is a recipe for stagflation at best. And it’s probably what we’ll get except that we’re not nearly the exporter that Japan is. So it’ll be way worse for us.

The real problem, as I see it, is that credit has been destroyed. This forces everyone to consume at the level of their real wages. And real wages have not increased in at least 10 years. I think this may be the major part of Peter Schiff’s thesis that we are headed back to housing prices of the late 1990’s. Because that’s when the mortgage lending practices were realistic and sustainable.

I think that this time, the market cannot be denied.

[peterb]

bubba99, I think the kind of inflation they’re thinking of is the kind that stimulates growth. Otherwise it’s really devaluing the UD$ even more and we still get a recession/depression.

I think that’s essentially what the Japanese did in the 1990’s. Bury the problem. But I think it is a recipe for stagflation at best. And it’s probably what we’ll get except that we’re not nearly the exporter that Japan is. So it’ll be way worse for us.

The real problem, as I see it, is that credit has been destroyed. This forces everyone to consume at the level of their real wages. And real wages have not increased in at least 10 years. I think this may be the major part of Peter Schiff’s thesis that we are headed back to housing prices of the late 1990’s. Because that’s when the mortgage lending practices were realistic and sustainable.

I think that this time, the market cannot be denied.

[peterb]

bubba99, I think the kind of inflation they’re thinking of is the kind that stimulates growth. Otherwise it’s really devaluing the UD$ even more and we still get a recession/depression.

I think that’s essentially what the Japanese did in the 1990’s. Bury the problem. But I think it is a recipe for stagflation at best. And it’s probably what we’ll get except that we’re not nearly the exporter that Japan is. So it’ll be way worse for us.

The real problem, as I see it, is that credit has been destroyed. This forces everyone to consume at the level of their real wages. And real wages have not increased in at least 10 years. I think this may be the major part of Peter Schiff’s thesis that we are headed back to housing prices of the late 1990’s. Because that’s when the mortgage lending practices were realistic and sustainable.

I think that this time, the market cannot be denied.

[peterb]

bubba99, I think the kind of inflation they’re thinking of is the kind that stimulates growth. Otherwise it’s really devaluing the UD$ even more and we still get a recession/depression.

I think that’s essentially what the Japanese did in the 1990’s. Bury the problem. But I think it is a recipe for stagflation at best. And it’s probably what we’ll get except that we’re not nearly the exporter that Japan is. So it’ll be way worse for us.

The real problem, as I see it, is that credit has been destroyed. This forces everyone to consume at the level of their real wages. And real wages have not increased in at least 10 years. I think this may be the major part of Peter Schiff’s thesis that we are headed back to housing prices of the late 1990’s. Because that’s when the mortgage lending practices were realistic and sustainable.

I think that this time, the market cannot be denied.

[Author]

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