What is to prevent the Fed (with possible help from Congress to pass any necessary laws) from offering to be the lendor that allows anyone who wants to refinance their house to do so at say 1% interest? Wouldn't doing something like this allow the housing bubble to re-inflate, putting us back to where we were a couple years ago? Not saying this would solve the problem, but it would resolve the immediate crisis. We know the Fed has been doing extraordinary interventions already. I'm sure Mr. Bush, as well as all the present presidential candidates - would support anything that "solved" the present problems, particularly in an election year. So is there any reason this could not happen?
How do your thoughts (or feeling as reflected in your post) translate into tangible trading thesis/idea/environment which you can apply on a given instrument ( stocks/futures/ETF/warrants/CFDs/FX e.t.c) within well defined risk parameters and profit if it happens ? Unless you are doing academic philosphical work about financial markets how do you intend to utilise the idea/s you have just posted ? Happy hunting !
I'm not saying this is what is absolutely going to happen. I'm just asking if there is any reason why it could not happen this way. If there is not, then it seems like this would be as good of an option as any other out there for "solving" the problem. This is to be more of a theoretical discussion. If it does turn out based on the discussion that this is a possible scenario, then we can have a separate discussion in the Trading forum on how to best trade it.
One challenge is that a lot of the homes in my area have decreased in value big time. So will the lender give $500k to refi if the current market value is only $390k.
Heck, Ben can refi it for a million. What does he care? He'll just print it up. I think the gov't should buy each one of us a million dollar house and that will end this whole realestate problem. He's already opened the vaults to garbage mortgage paper so lets just cut out the midleman and buy us all houses directly.
if the program allows to refi current debt to 50y loan at 1%, the crisis could be over in a flash. Since you can't even get 1% with a teaser rate.
"Isn't it Odd" Isn't it odd: "when banks screw up writing horse shit voo-doo economic loans on overinflated properties, we the taxpayers will pay for it." Isn't it odd: "when people buy homes they can't afford and sign falsified loan contracts they know they can't pay for, we the taxpayers will pay for it." Isn't it odd: "when Wall Street Guru's take these voo-doo loans, bundle these piles of shit into trading vehicle's and then sell them to the world, we the taxpayers will pay fot it." Isn't it odd: "that the Fed is dropping interest rates so low, that the eventual trickle down effect will create home buyers that will scoop up the beaten drop home prices, giving the banks additional revenues (besides our tax dollars from the bail-outs) and giving the Wall Street Guru's some new trading vehicle to get rich from (besides our tax dollars from the bail-out they just got).........and an entire new cycle of greed, blunder and bail-outs will repeat again. And guess who will pay for the next one?"