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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Smiling Bob who wrote (109142)	3/11/2008 6:46:04 PM
From: patron_anejo_por_favor	Read Replies (2) \| Respond to of 306849

I think Barry Ritholz's take (from the WSJ) was the best: The good news is this will help brokers and banks; the bad news is it will do nothing to help the Housing market, or stop the decline in House prices. Nor will it help resolve the inverted pyramid of derivatives that sits atop Housing. And, one has to believe it will only add to inflationary pressures. No recession at any cost seems to be the Feds’ philosophy in light of the latest massive cash infusion to banks. –Barry Ritholtz, Fusion IQ Got GOG (Gold/Oil/Grain)? Here's the next-best take: Let’s see now, just how did the Fed get those Treasuries in the first place. Well, they monetized the part of the U.S. Government’s debt. Now, they are swapping, if only temporarily (but that remains to be seen), those Treasuries for a bunch of other securities; i.e., they have de facto switched from monetizing Federal debt, to monetizing private debt (however, securitized by whatever GSEs). And, why? In order to provide capital to financial institutions by increasing the value of the assets they hold. To what end? To grease the skids in the credit markets. But how is that done? By increasing lending. Just what this totally overleveraged-in-every-sector economy needs. God help us! Comment by William Barnett II - March 11, 2008 at 10:31 am