Let me get this strait: we ( the US gov't) buys FNMA and FRMAC....and then the FED keeps lowering the prime rate in an effort to get mortgages lower??? We bail out all the banks and buy their stock and forgive their loans yet the Fed Keeps lowering rates to try and get them to give loans? OK...how about this scenario: Since mortgage rates have stayed steady despite the Fed going to just about zero, and since these banks are on life support from us how about a simple solution : 1) If you recieved TARP money, you must offer 4.5 fixed rates to buyers who meet certain qualifications...if you don;t want to do that> F-you, no money for you and your bankrupt 2) why not use FANNIE and FREDDIe to offer the 4.5 mortgage rate you want to be at? line them up , get em done and all these banks that are hoarding cash will be out of the loop??? please feel free to tell me my idea is crazy....I am crazy right? We give CITI 300 bill but they don;t want to loan $$???
No...the rate is getting lowered because we started down a deflationary spiral. We are trying to cause inflation before we go down that death spiral of deflation. Government does not care about housing or mortgages anymore. Damage has been done with that. If we dont start inflating, then there is nothing that the fed can do once interest rate is 0. Its basically game over, suck it up and hope for the best then.
Hmm...guess that would mean my house goes up 22% in value, Gas will cost 22% more (it costs about 1.50 per gallon now, so lets just say it will be an even 2 bucks), Dow goes up 22% I get a 22% raise(i wish!) Not really much of a downside to 22% inflation at the moment and to be honest, i really dont think your average joe would notice, in fact to most people, it would just look like the economy is getting better if it started to inflate. If we did start to inflate like that, then we raise interest rates. Be nice to buy some 12% t-bills again. Either way, i think most of on here will figure out a way to make money on it.
WRONG....your house can;t go up unless people can get a loan right? Gas? that makes sense...except ....no growth means no demand...hence..STAGFLATION..