Irvine Housing Blog

The Fed bought $9 Bil worth of treauries today at open market operations, ..., and the ten year yield went UP to 2.95%.  The is REacting, in the only way it knows how.  The Fed has created out of thin air more than $2 Tril and it has done nothing except inflate the equities and bond markets.  And now the Fed is further REacting by creating another $600 Bil to do more of the same thing that did not work with $2 Tril.

” ...and interest rates in general will almost certainly not increase significantly until that happens.”

Remember that you said this in a year or so and you will start to understand how little you understand.

I hate to think about the impacts but, you are correct.  Rates are likely to rise 2-5 points on a 30 year fixed over the next 10 years.  Remember rates on a 30 year fixed with 20% down and good credit was 7.25% in 1999.  We can easily go back to this and will likely overshoot. 

Every one point rise in rates reduces purchasing power by 10%.  Now you know whay I say if you buy now you better be prepared to ‘stay and pay’.  Because you are going to see a slow grinding in purchasing power and housing prices for at least the next decade.  It has lasted for 25 plus years in Japan…. 

This is a disaster… 

BD

Exactly how is it “governmental”?

Can you name one person on the Board of Governors who is accountable to any government agency?

Um…all of them?

(stolen from Wikipedia)

The seven-member Board of Governors is a federal agency and is the main governing body of the Federal Reserve System. It is charged with overseeing the 12 District Reserve Banks and setting national monetary policy. It also supervises and regulates the U.S. banking system in general.[60] Governors are appointed by the President of the United States and confirmed by the Senate for staggered 14-year terms.[37] The Board is required to make an annual report of operations to the Speaker of the U.S. House of Representatives.

The Chairman and Vice Chairman of the Board of Governors are appointed by the President from among the sitting Governors. They both serve a four year term and they can be renominated as many times as the President chooses, until their terms on the Board of Governors expire, but—regardless of whether either is reconfirmed for their chairmanship or vice chairmanship—he or she is free to complete their term on the Board of Governors.[61]

Oh, and I should have bolded the fact that it is a “federal agency” as well.

I did not ask who appoints them.  I asked who are they accountable to?  Who do they answer to?  and if you think it is the President or Senate, how and when do they do this?

Instead of parroting what you read, think.

How exactly is it a federal agency?  Who pays them?  Can anybody fire Ben Bernanke?  The president?  Does Ben Bernanke have to ask anybody approval for his actions?  What are the consequences if Congress asks the Fed for informaiton about their balance sheet and the Fed does not give it to them?

Think for just a second instead of just regurgitating what someone tells you.

“Basically, the Board of Governors is definitely a government agency…”

Correct me if I’m wrong, but the Board of Governors are appointed by the President and confirmed by the senate.  HOWEVER, the candidates for these positions are selected by the member banks!  So, the banks more or less choose who will be on the Board.

The Federal Open Market Committee (FOMC) is composed of the seven Board of Governors (selected by the member banks) and five member bank presidents.  They twelve FOMC members meet ALONG WITH the other member bank presidents IN SECRECY eight times per year.

You really think such a system is designed for the welfare of the taxpayer?!

The common sense answer is no.

I would suggest those of you that think the Federal Reserve is a government entity ? Watch this.
http://www.youtube.com/watch?v=_dmPchuXIXQ

The Federal Reserve is about as “Federal” as Federal Express. The Bankers are killing us slowly. They created themselves and we are being enslaved by them.

And Awgee is correct about the Bond Market and the Default Swaps. Or Derivatives as they are called. Be afraid. Be very afraid. Pay attention to Bill Gross and Pimco. They are the hand to watch.

So if I bold Quantitative Easing, it becomes something other than creating money out of thin air and giving it to the Treasury Dept.?  And revenue enhancement becomes something other than taxes because the government named it something else.

Dude, you have go to start thinking instead of memorizing.

Rhetorical question:  If the Fed’s mandate is the stabilization of the currency and full employment, how successful has it been?  Has the Federal Reserve benefited the banks or the US citizenry?  Who does the Fed really work for, (benefit)?  Forget what they say.  What is their behavior?  Results?

(hint) one FRN today will purchase the same as 4 cents in pre Federal Reserve currency in 1912.

I did not ask who appoints them.  I asked who are they accountable to?  Who do they answer to?  and if you think it is the President or Senate, how and when do they do this?

They answer to the President and Senate, else they won’t be reappointed in 14 years time.

Look, Supreme Court justices are apppointed by the President and confirmed by the Senate (in a very similiar manner), and nobody argues that the Supreme Court isn’t part of the government-and they get the job for life, so once appointed they “answer to” nobody.

Accountability?  The president AND Senate have complete control over who is running the fed every 4 and 14 years.

The Fed had about as much accoutability as your local congress servant.

It’s not conspiracy theory, it’s flat dumb.

Great point.  The Supreme court is defined by the The Constitution as part of the judicial branch of the government.  Where in the Constitution is the Federal Reserve defined and of which branch is it?

When you see how the Federal Reserve was formed, was it defined at part of the government or a private corporation?  Branches of the government are not owned by private corporations.  The Federal Reserve is WHOLLY OWNED by other private corporations.  Where in The Constitution or anywhere does it say that the Federal Reserve is a government agency?  In its charter?  In the law that formed it?

Both the charter and the law say it is a private corporation.

Just because the federal reserve is not written in the constitution means nothing - the DMV is also not in the constitution, should we therefore do away with driver’s licenses?  I think quoting the constitution to make your argument here makes no sense.  If you’re going to make an argument, then please use some solid logic.

The DMV is a branch of the government of the State of California.  Under what branch of the government is the Federal Reserve.  Either it was created by the Constitution as a branch of the government or it is under the jurisdiction of an existing branch.

It was created by legislation and that legislation created it as a private corporation owned wholly by other private corporations.  How exactly is it a quasi-government organization when it is a private corporation, wholly owned by other private corporations, and accountable to no one in the government.

The President appoints the Chairman and governors from a list provided by the member banks which are private corporations.

Those who think that the Fed is somehow a government agency, do you know who wrote the legislation that created the Fed and how it was passed and what Woodrow Wilson said upon signing the legislation?

Clagewag - I pointed out to Geo that the Fed is accountable to no one and can not be fired.  Geo responded that the members of the Supreme Court are appointed by the prez and approved by the Senate, yet no one would argue that the Supreme Court is not part of the government.

The Supreme Court is created by the Constitution and was created as a branch of the government.

The Fed was neither.

It was not created by the Constitution which defines branches of the government not answerable to other branches.  Any other federal government agencies are a division or agency of one of the existing branches created by the Constitution.  Legislation can not create another branch of the Federal Government.  Only an ammendment may do that.

The Federal Reserve was created by legislation, as a private corporation, without agency to any branch of the Federal Government, and is not accountable to any branch of the Federal Government.

It is fallacy that is it is a branch or agency of the government or a quasi-government agency.

And the difference is important.  A wholly private corporation owned wholly by private banks has the authority and ability to print as much money as it wants and direct it as it sees fit.  The Fed has created out of thin air, trillions of dollars in the last couple of years and to where did they direct that currency?  They could have paid off every mortgage in the US with the currency it created and yet the Fed directed that money to the banks that own it.  What does that tell you?

The Fed is now buying US treasuries, not directly from the US treasury, but from the primary dealers, who also happen to be the banks that own the Fed.  The primary dealers buy treasuries from the US Treasury and they a week or so later sell them to the Federal Reserve for a profit.  It is more free money for the banks.

Does the Fed really sound like a government agency created and run for the benefit of the citizenry?

@Darth:

No… I was re-visiting my point that IR did not respond to. I asked why there was such high demand in Irvine if prices were not lower and his response that there is not high demand in Irvine based on some sales number he was looking at.

I asked him if that includes new sales. I got crickets.

The reference to Vegas is to get further data regarding Summerlin’s 2010 sales vs. Irvine’s. I’m still waiting.

re: your “questions”

See my post below. It covers all of the points you brought up.

iho: “I asked ... I got crickets.”

IR knows when to stop feeding the trolls.

-Darth

@Darth:

No… my response to your post shows that it doesn’t cover all the points I brought up. In fact, ,yours is almost a different point altogether.

As for your “troll” remark… first you need to show me that my posts have no merit. Maybe you don’t see it but again… you probably have a different perspective than those of us who do want to know these things.

Mote in your eye.

“those of us in the trenches”

That is a very accurate description of the Irvine home market. I’d recommend that you stop digging, but to each his own.

-Darth