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by 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
by 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:

by Chris Martenson
Monday, September 28, 2009

Executive Summary

  • In the prior report, we covered housing supply and prices; in this one, we cover demand and liquidity.
  • Housing demand is easy to measure, but hard to predict.  The prime determinant of housing demand is jobs.
  • We are not likely to recover from our current unemployment slump for 5-10 years.
  • The “housing ATM” is not only broken, but operating in reverse, putting additional pressure on potential housing consumers.
  • Artificially low interest rates give us some temporary stability in the housing market – in exchange for an increased risk of future losses.
  • The Federal Reserve and federal government are the housing market.
  • Our nation is suffering from “stimulus addiction,” and the path of least resistance is to continue feeding the habit.
  • For the housing market to recover, the job market has to recover first.
  • These are all indications that our debt-based money system is seriously flawed.

We are covering housing at this time because it is one of the key determinants of whether or not our economy will enjoy a decent bounce or merely a false statistical recovery here.  As goes housing, so goes the economy.

Here we will focus on the US (primarily because I have good data for it), but the lessons and implications are virtually identical for other areas of the world.  Ireland, Spain, the UK and a number of other spots are in far worse shape by this measure than the US.

In the prior report, we covered housing supply and prices.  Here we are going to cover demand and liquidity

Housing and Wealth – Part II (Demand and Liquidity)
PREVIEW by Chris Martenson
Monday, September 28, 2009

Executive Summary

  • In the prior report, we covered housing supply and prices; in this one, we cover demand and liquidity.
  • Housing demand is easy to measure, but hard to predict.  The prime determinant of housing demand is jobs.
  • We are not likely to recover from our current unemployment slump for 5-10 years.
  • The “housing ATM” is not only broken, but operating in reverse, putting additional pressure on potential housing consumers.
  • Artificially low interest rates give us some temporary stability in the housing market – in exchange for an increased risk of future losses.
  • The Federal Reserve and federal government are the housing market.
  • Our nation is suffering from “stimulus addiction,” and the path of least resistance is to continue feeding the habit.
  • For the housing market to recover, the job market has to recover first.
  • These are all indications that our debt-based money system is seriously flawed.

We are covering housing at this time because it is one of the key determinants of whether or not our economy will enjoy a decent bounce or merely a false statistical recovery here.  As goes housing, so goes the economy.

Here we will focus on the US (primarily because I have good data for it), but the lessons and implications are virtually identical for other areas of the world.  Ireland, Spain, the UK and a number of other spots are in far worse shape by this measure than the US.

In the prior report, we covered housing supply and prices.  Here we are going to cover demand and liquidity

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