Chris Martenson
What follows is a snippet from the most recent Martenson Report (Housing and Wealth: Part II).
This is important information. What I’ve found and present below is that the Federal Reserve is not just supporting the housing market, it is the housing market.
Just as important as a person’s desire to buy a home is their ability to gain access to mortgage funding.
The mortgage market is a gigantic beast with many moving parts, but it is pretty easy to understand from a high level.
The process works like this: A homeowner secures a mortgage from a bank or mortgage company. Then the mortgage is sold off to another company, with the cash generated by that sale now available to lend to other potential homeowners. Ultimately the mortgage may pass through several sets of hands but ultimately it lands with a terminal holder.
In that chain, the mortgage might get sold off several times, or perhaps sliced and diced by Wall Street wizards, but all that matters is that some company (with cash) is there at the end to buy the mortgage to keep the whole chain moving along.
Lately, the “terminal buyers” in that chain have increasingly ended up being the federal government (through the GSEs) and the Federal Reserve.
And not just by a little bit, but by a lot.
Here are the numbers:
Federal Reserve Buys More Than 100% of Mortgages Issued in 2009
What follows is a snippet from the most recent Martenson Report (Housing and Wealth: Part II).
This is important information. What I’ve found and present below is that the Federal Reserve is not just supporting the housing market, it is the housing market.
Just as important as a person’s desire to buy a home is their ability to gain access to mortgage funding.
The mortgage market is a gigantic beast with many moving parts, but it is pretty easy to understand from a high level.
The process works like this: A homeowner secures a mortgage from a bank or mortgage company. Then the mortgage is sold off to another company, with the cash generated by that sale now available to lend to other potential homeowners. Ultimately the mortgage may pass through several sets of hands but ultimately it lands with a terminal holder.
In that chain, the mortgage might get sold off several times, or perhaps sliced and diced by Wall Street wizards, but all that matters is that some company (with cash) is there at the end to buy the mortgage to keep the whole chain moving along.
Lately, the “terminal buyers” in that chain have increasingly ended up being the federal government (through the GSEs) and the Federal Reserve.
And not just by a little bit, but by a lot.
Here are the numbers:
The Federal Reserve policy statement yesterday was a masterful blend of contradictory words and ideas.
Nonetheless, the markets reacted with great volatility to these words, as though there was some useful information within them. You can read the entire statement for yourself here at this link.
To save you the trouble, what I’ve done is chopped the whole statement up into smaller sections and translated them (with tongue in cheek, but only slightly):
Decoding the Fed
PREVIEWThe Federal Reserve policy statement yesterday was a masterful blend of contradictory words and ideas.
Nonetheless, the markets reacted with great volatility to these words, as though there was some useful information within them. You can read the entire statement for yourself here at this link.
To save you the trouble, what I’ve done is chopped the whole statement up into smaller sections and translated them (with tongue in cheek, but only slightly):
A new Martenson Report is ready for enrolled members.
Link: Housing and Wealth
There are several economic issues and data sets that we are tracking closely here on a daily and weekly basis because they have the best opportunity to help us illuminate the path for a few more feet.
One has been the flow of money into and out of the US. There we’ll continue to track and explain the mechanisms while keeping a firm eye on the dollar and interest rate (via Treasuries) pair.
Another has been the various government and Federal Reserve programs to inject money into the economy and financial institutions, respectively, as these maneuvers have distortive effects on the rest of the data.
But the main driver from a consumer standpoint has been housing. Every so often we dive into that area pretty deeply and this week we head into housing and where we currently stand with respect to prices, inventory, liquidity, and demand.
This is part one of a two part report.
(Comments turned off here, leave them in the posting further down the main page…)
Housing and Wealth
A new Martenson Report is ready for enrolled members.
Link: Housing and Wealth
There are several economic issues and data sets that we are tracking closely here on a daily and weekly basis because they have the best opportunity to help us illuminate the path for a few more feet.
One has been the flow of money into and out of the US. There we’ll continue to track and explain the mechanisms while keeping a firm eye on the dollar and interest rate (via Treasuries) pair.
Another has been the various government and Federal Reserve programs to inject money into the economy and financial institutions, respectively, as these maneuvers have distortive effects on the rest of the data.
But the main driver from a consumer standpoint has been housing. Every so often we dive into that area pretty deeply and this week we head into housing and where we currently stand with respect to prices, inventory, liquidity, and demand.
This is part one of a two part report.
(Comments turned off here, leave them in the posting further down the main page…)
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