Sub-prime scapegoat. Shame on the fed.
My thoughts today turn to the real estate market, the federal reserve, and the current reduction in home values around the United States, as well as the world wide crisis of confidence in U.S. commercial paper and the value of our currency. What ever happened to the gold standard, where dollars were backed 100% by gold, and a secret service of fed pundits did not have the ability to just print more money, further reducing the value of our dollar.
Values are softening, not just the prices. Times look like they are getting worse for the real estate market and our economy.. Our dollars are buying less. Top experts in the field of real estate estimate that if the market turned around right now, due to current interest rates, devalued dollars and new loan requirements for even the prime real estate market, we would need about 2 years just to market enough properties to level out the market.Tough times are ahead. Make your home one of the little gems that shines; without drainage problems.
The federal reserve has taken the position that investors and homeowners in the sub-prime real estate market have over extended themselves, and that they will just have to pay. While federal reserve officials meet behind closed doors in secret meetings and draft policy like they were the only ones with any financial knowledge, it appears much like “nero fiddles, as Rome burns”.
It appears that the blame for our slowing economy and tough real estate market has been placed right on the backs of the sub-prime lenders and the homeowners.
Many lenders are going broke, and homeowners are defaulting on their home loans, or will be defaulting in the next 2 years as their adjustable rate mortgages contain accelerated payoffs and higher payments. Adjustable rate mortgages are tied to the various indexes on which they were based when the loans were made. The interest rates are increased or decreased by the factors that are agreed to at the time the loans are taken out. Most of them are tied to the federal funds rate set by the federal reserve. The increased home payments as a result of the mortgage interest being adjusted upwards is a direct response of the federal reserve increasing the fed funds rate to the banks. They promoted and induced the program of leveraged lending many years ago. The excuse that the fed doesn’t want inflation to take over and therefore raises rates is weak. Our economy in the last few years of real estate prosperity has been on the steady increase as measured by our growth in GDP, and has not showed great signs of inflation to justify the rate increases that have triggered the syb-prime financial crisis. The U.S. dollar is currently trading at an historical lows against most foreign money. The federal reserve has said publicly that the financial crisis is no fault of the fed. They have said that the sub-prime market will just have to learn the lesson the hard way.The new fed chief, or perhaps a more appropriate political moniker, “the new fed czar”, has determined that tough love is what the U.S. sub-prime borrowers and lenders need. Now that is just weak. The apple never falls far from the tree.
Many homeowners are facing financial ruin and the loss of their homes. The federal reserve hype was sold to the
american public as the business of funding our society through making cash available for lending through the banks via the federal reserve.
We need to return to the gold standard and start making our dollars strong again. The banks are allowed to create debt without any backing for the debt. They can continue to borrow deflated, leveraged dollars and hold only 10% of actual money in reserve to cover those debts.
That is the main reason the rest of the world currencys are doing better than ours. Funny money printed by the fed and spread around to give the impression of real productive activity.
The federal reserve was created by J.P. Morgan, the most powerful banker of his time, for the benefit of leveraging and growing his banking empire. The federal reserve was never created or designed as a tool for protection of the public, as the hype goes. Our standard of living has been devalued by the federal reserve, and the funny money that it keeps printing, along with the lack of real backing for it, and the constant manipulation of the money supply and interest rates. When a banking market fails, the fed just prints more money or bonds. It is like a poker player who never has to leave the game because someone is always printing more chips for him. He never really pays back the house debt at the old standard eigther. If it is paid back at all, it is paid back in new devalued dollars. In the case of world monetary country to country debt, it is never paid back in most cases. The debt is used as a power play to get what is desired of the debtor. An inducement for further compliance and services between countries. The induced payback is also calculated in devalued currency. The world is hip to this leveraged money scam we call the federal reserve. China holds the most treasury bonds, so we do nothing about the way their money exchange rate is calculated and constructed, even though everyone knows it is unfair to the U.S. trade balance calculation. No one dares to confront them. They might trigger a sell off in U.S. treasury bonds causing the value of the U.S. treasury bond to plummet.The economy is the federal reserves’ brain child when times go good, and the brain child of those mis-guided ignorant consumers spending funny money when it goes bad.
This appears to be the position from the top looking down,according the federal reserve. Look back to the creation of the federal reserve, and you will see the beginning of a lowered lifestyle. It now takes two incomes to support a home, and no one is around to raise the kids.
The majority of homeowners are not speculators as the fed chairman wants us to believe. The majority are young homeowners trying to live the American dream, and own a home. They are even paying the highest prices in history for these homes. The buyers election to use an adjustable rate mortgage was hyped and encouraged by the banking industry and the federal reserve. The fed created the concept of leverage and developed it as a money concept to create more debt for banks. Now money is not even backed by gold. Debt that is created by asset backed real estate securities is called commercial paper. The world market has stopped buying it because of this scenario. The actual debt created is calculated in dollars loaned, but the dollars are actually backed at the bank by 10% deflated funny dollars in reserve, not gold. The fed just creates the dollars out of thin air. They just print more without accounting to anyone what or how much they produced, or when it wlll be produced. The fed abandons its’ people, and claims devine right while they sit at the top of the monetary throne selling us out to the financial institutions and other countries that actually make the money profits up front on this scam, while our dollar keeps losing value.
The federal reserves’ practices are at the root of this sub-prime lending problem. The world wide sour taste investors have to purchase U.S. commercial paper has started a spiral downward in investor confidence, and financial confidence of our dollar as well. You can throw out the hype of the federal reserve crystal ball and get down to the facts. Without confidence by the rest of the global market in the way our dollars are created and backed, our dollars have little interest to serious investors looking for stability. A gold standard gives stability, and that is what we had prior to the government printing funny money to fight leveraged wars and induce political and economic change in other world governments. Banks failures won’t actually happen however. They will be consumed by other banks with funny money from the fed, or the fed will just print more funny money and inject more liquidity into the banks with the prime rate, giving little to nothing to the consumers. Weak government, weak markets, weak dollar.
We need to get rid of the federal reserve all together, and go back to the gold standard that created the worlds largest and most productive industrial manufacturing system. This is how it was prior to F.D.R. and the “new deal”. Yeh, such as deal. The deal was for the banking industry, not the public.
The concept of reduction of gold backing for the dollar, and the federal reserve organization was created by the banking czars of that time for the banking industry, and sold to F.D.R. the president of that time. Many of us were not around to see the beginning of the federal reserve and the first efforts to reduce the backing of the dollar by gold. When we were on the gold standard, the government couldn’t just invent more money. Our standard of living was the highest in the world, and mothers stayed home to raise the kids. It only required one income to buy a home.
The world financial markets do not feel the federal reserve has it together. World wide buyers of dollars and commercial paper are bailing big time. The fed chairman says he will not be there to bail out wall street every time there is a crisis of confidence, even if created by the fed itself. We do not need a secret society of pundits making funny money and padding their buddies pockets at our expense.
If the wall street crowd does not see large reductions in the federal funds rate, the rate that determines what consumers pay for money from the banks, there will be a steep and continued sell off on the stock market as well, stripping even more value from our equity markets, and a further plunge in the value of the dollar and real estate values. The fed manipulates it up and down, whenever they want. We no longer have a free market economy.
The federal reserve must reduce interest rates now, and significantly. The fed must let the world markets get confidence back in our securities and our dollar. This in not likely to happen as long as we live with leveraged money backed by nothing. It was Richard Nixon who actually abandoned the gold standard. Not that far back folks. The amount of gold backing had been decreased since the federal reserve was created under F.D.R., but Nixon actually turned us away from the concept of backing our dollars with gold all together.It was only backed by about 40% gold when discontinued by Nixon. The slide had been going on since F.D.R., and was created by the banking industries’ need to create more debt through leverage, with less backing in gold at first, and eventually no gold at all, and now with 10% reserves in funny money dollars.
If China, the largest buyer of U.S. treasury bonds, stops buying our treasury bonds as a result of currency devaluations and a world wide lack of confidence in our monetary policies, the dollar will further decline in value. The U.S. economy is showing the signs of being tired allright. Tired of the same old game of spending what you do not have, and then picking a scapegoat every time the system crashes. Like the sub-prime real estate market for example.