Registered: Aug 2006
02-11-12 12:56 AM
Since when has BUBBLE ben bernanke become a housing expert, he completely missed the housing bubble and thought he could contain the sub prime mortgage meltdown and here he is relying on the housing market to turn around and fuel the economy....All he is doing is re-inflating the housing bubble by keeping prices propped up while they should be down another 40%.....Why is this fool relying on housing prices to stabilize before consumer spending can come back, he keeps talking about how the falling prices in housing have forced consumers to cut back sharply on spending... he is trying to create this same wealth effect in housing yet again, where people can go out and borrow against their houses...says consumers are spending less because they are underwater......the reason why we are in this crisis is because people borrowed trillions against their houses only to pour it back into economy and he is hoping to create that same story again.
He goes on to say this:
""It reduces financial flexibility: Homeowners who are underwater on their mortgages cannot tap home equity to pay for emergency health expenses or their children's college educations."
Does he really think people are "tapping" their home equity line for health expenses and college educations, he hasnt a fucking clue, how about they are tapping their home equity lines to build new 500SQF additions, how about to go on 2-3 exotic vacations a year, how about to get a third luxury car or to buy a 5th 62" flat screen TV...thats what their tapping their home equity lines of credit for...its a complete joke to hear this guy speak dribble, thats all it is, he is trying to put a floor in housing prices so people can start to feel comfortable about spending again, forget about saving here in america its all about spending. All he is doing is creating a bigger financial crisis and if you cant take notice of that you are one big fool.
Housing Still Hurting Consumers, Economy: Bernanke
Published: Friday, 10 Feb 2012 | 1:12 PM ET
Federal Reserve Chairman Ben Bernanke said declines in home prices have forced many Americans to cut back sharply on spending and warned that the trend could continue to weigh on the economy for years.
Bernanke drew the connection between home values and consumer spending, which fuels 70 percent of economic activity, on Friday during a speech to the National Association of Home Builders in Orlando.
Bernanke says the broader economy won't fully recover until the depressed housing market turns around. People are spending less because they are stuck in "underwater" homes, which are worth less than what is owed on the mortgage. And home values are falling because of foreclosures and tight credit — even in areas with lower unemployment.
"Recent declines in housing wealth may be reducing consumer spending between $200 billion and $375 billion per year. That reduction corresponds to lower living standards for many Americans," Bernanke said.
The Fed [cnbc explains] chairman said there's no "silver bullet" to rescue the housing market. Renting out foreclosed homes and reducing or modifying mortgages are among steps that could help.
"Low or negative equity creates additional problems for households," Bernanke said. "It reduces financial flexibility: Homeowners who are underwater on their mortgages cannot tap home equity to pay for emergency health expenses or their children's college educations.
There have been modest signs of improvement in recent months. Sales of previously occupied homes rose in the last three months. Homebuilders are more optimistic after seeing more people express interest in buying this year. And home construction picked up in the final quarter of last year, which helped housing contribute to broader economic growth.
Still, last year was the weakest for new-home sales on records dating back to 1963. Sales of previously occupied homes have also been at depressed levels. And home prices continue to fall.
The Fed issued a white paper last month that included a number of proposals to boost home sales. The paper sparked some criticism. Rep. Scott Garrett, R-N.J., told Bernanke last week during a congressional appearance that he was taken aback that the Fed would offer unsolicited advice to Congress, putting forward proposals which Garrett said mirrored in many ways ideas being pushed by the Obama administration.
Bernanke said the Fed only wanted to provide pros and cons on various approaches, and he said Fed officials remained concerned because the weak housing sector was holding back overall growth.
The central bank has tried to help by keeping its benchmark interest rate at a record low near zero. And the Fed recently signaled that it doesn't plan to raise the rate before late 2014. The Fed's action has led to lower mortgage rates, which normally would encourage more buying and refinancing
Still, the damage from the housing crisis has been so widespread that even the cheapest mortgage rates in history haven't been enough to lift home sales.
Bernanke's speech came a day after the government announced it had reached a landmark $25 billion deal with the nation's biggest mortgage lenders over foreclosure abuses that had occurred after the nation's housing bubble burst in the middle of the last decade.
That deal will require five of the largest banks to reduce loans for about 1 million households at risk of foreclosure. The lenders will also send checks of $2,000 to about 750,000 American who were improperly foreclosed on.