Wall street understood the importance of Feds mortgage policy because there is the major growth in the US economy.
And it is easy to see that Fannie Mae and Freddie Mac and Feds selling bills; tell them the progress of mortgagee growth Feds control. Then there is private mortgage growth in the economy.
Feds basically reduced mortgage of 13% down to 8% or less. My son is still refusing to reduce his mortgage interest rate down. When he refinance my house for $60,000 on a house worth $300,000. The remortgage people gave him $100,000 cash to do a $160,000 mortgage for 15 years at 8%. My son had income to pay the monthly installment, and do not want more cash forced on him for a remortgage; the house is now worth $500,000. So, there are human factors resisting Feds policy of giving out more cash.
Then, two years ago, mortgage from housing investing bubble subsided. Las Vegas no longer have $10,000 profit every week on their new housing boom. Houses are harder to sell today with $300-500,000 profit in the value of L.V. houses, so far. All the investing money in housing now is seeking opportunity on Wall street. Which accounts for all the cash put in for borrowed stock.
Wall streeters did not know what hit them. Too much cash on the sideline can bankrupt specialists and market makers with excess short interests. We have been working hard to reduce the short interests, so cash on the sideline can be more productive(paying for commissions and increased wealth to buy more expensive stocks) instead of losing on borrowed stock. |
