Sunday, 19 April 2009

Cash for Crap

Late last year, the Fed announced that it would begin a cash for crap scheme. It would use crisply printed dollars to buy toxic mortgage backed securities, so long as they were guaranteed by Freddie Mac and Fannie Mae. The Fed wanted to use the scheme to prop up the housing market by increasing credit availability.

Four months into the scheme, and already things are beginning to spin out of control. The Fed has already purchased almost $300 billion of this rubbish.

7 comments:

Anonymous said...

Watch that number grow.

electro-kevin said...

Shhhh ! You're not meant to criticise. The whole point of these deliberate exercises in mass delusion is that people close their eyes and keep wishing.

And then one day people magically regain their confidence and say "Hey. Our houses aren't piles of hyped up cack after all." and then all of a sudden that $300bn of toxic MBS is purified, central banks are quids in and everything is fixed...

... jus' like that.

Mark Wadsworth said...

But will it make a difference? Total outstanding mortgages in USA are $14,800 billion, according to this.

And it's not just underwriting existing mortgages, they have to LEND LEND LEND to more mugs further down the ponzi scheme food chain to get them to BUY BUY BUY the houses at overvalued prices.

Welcome to Obamanomics. It's the same as Bushonomics but twice as bad.

dearieme said...

How does anyone gain by the Fed (an arm of the US govt) demanding that the stuff be guaranteed by Frannie (ditto)? This is Oozlum Bird economics. Or "Oozlomics", for short.

K T Cat said...

How far into their latest mound of $1.2T are they?

Jo said...

Just found this and hoping you will interpret/comment

http://seekingalpha.com/article/131731-credit-bubble-who-lent-to-the-hedge-funds?source=feed

Boat52 said...

Dateline 2015......
Geithner now employed by Goldman Sachs,

Bernanke now employed by Goldman Sachs,

DJIA 16,000

Gold $16,000

Everybody is happy because the stock market has surpassed its prior high.

China has bought a controlling interest in Exxon.

Federal Reserve now owns 100% of treasuries with maturities greater than 5 years.

Hearing will begin in Washington on what to do with the unsaleable assets on the Fed's balance sheet.