Quantative easing - good time to have a mortgage?

setmefree2

purch wrote: »

Does anyone know why you are typing in Big Black Bold letters ??

Sorry - that's just what happened when I copied in the links and I didn't have the time to change it:o. Thanks for your response.

Generali

setmefree2 wrote: »

Fed aims to buy $500 billion in MBS by mid-year


RBS to tap state funding scheme with new £14bn securitisation

Bank bosses discuss mortgage plan



Click the above for links to articles.

Does anyone know if the fed are buying up the same amount of MBSs as before the credit crunch? If not - roughly what is the difference in what the Fed is buying now and what the shadow banking system was buying before?

Has anyone any idea or seen any articles on when the Shadow Banking system will be back up and running - if ever?

Does anyone have a clue any much MBS the BOE have got on their books?

The Fed doesn't normally accept anything other than AAA Government debt at the discount window so prior to the credit crunch the Fed would have bought $0 worth of RMBS.

The banking system will get back on it's feet I believe. When? Nobody knows. It took 10 years and a world war for the US banking system to recover from 1929-31. It took a year or so for the UK to shake off the secondary banking crisis of the 1970s. What exactly do you mean by the shadow banking system? Do you mean commercial and investment banks?

I don't think the BoE publish the figure. The statistics area of the Bank of England website is here:

http://www.bankofengland.co.uk/statistics/index.htm

I couldn't find anything.

Radiantsoul

Generali wrote: »

Well IMO the money being added to the money supply is only inflationary if it is spent. If it is just parked in banks' reserves then it can't be used to bid up the prices of assets or goods.

I suspect this is right. The velocity of circulation has fallen rapidly and it is unlikely the increase in physical quantites of cash have offset this. Once money begins to flow again the government will have to take some of it out of the economy, but I don't see that being a major problem.

Generali

Radiantsoul wrote: »

the government will have to take some of it out of the economy, but I don't see that being a major problem.

I see this as being the hardest bit of all as it means the Government running big surpluses and then just burning the surplus cash it takes in. Unless you can see another way to reduce the money stock back down again that I've not thought of (perfectly possible).

purch

The Fed doesn't normally accept anything other than AAA Government debt at the discount window so prior to the credit crunch the Fed would have bought $0 worth of RMBS

Not exactly correct. The Fed's Discount Window has always allowed a wide range of Securities to be pledged in return for $$

The last significant change was in 1999.

Acceptable collateral at the Discount Window includes such items as Investment Grade CD's and AAA-rated Commercial MBS's, U.S. Treasury Securities, State and Local Government Securities, AAA rated Collateralized Mortgage Obligations, plus some other Loan types.

They fiddled about with the Discount Window again in 2003 but I think that had more to do with the criteria Banks had to meet to use the window, rather than the collateral types.

Generali

purch wrote: »

Not exactly correct, since the changes in 1999.

Acceptable collateral at the Discount Window includes such items as Investment Grade CD's and AAA-rated Commercial MBS's, U.S. Treasury Securities, State and Local Government Securities, AAA rated Collateralized Mortgage Obligations, plus some other Loan types.

They fiddled about with the Discount Window again in 2003 but I think that had more to do with the criteria Banks had to meet to use the window, rather than the collateral types.

Oh well, I'm only 10 years out of date!

Thanks.

zarazara

pawnbrokers are doing well.

purch

I've just found this list of acceptable collateral and the margins

http://www.frbdiscountwindow.org/discountmargins.xls

Brady Bonds...............I forgot about those, yet another debacle.

No mention of RESIDENTIAL MBS's on the list so the amount certainly was $ 0.00 before now.

purch

I see this as being the hardest bit of all as it means the Government running big surpluses

Yep, I agree it will be at the very least a 'major' problem, but not an impossible one.

They will no doubt try to 'flog' whatever they have left after this debacle, which will remove some of the ££, but it is what they do with the surpluses they accumulate that will decide the fate.

Generali

purch wrote: »

Yep, I agree it will be at the very least a 'major' problem, but not an impossible one.

They will no doubt try to 'flog' whatever they have left after this debacle, which will remove some of the ££, but it is what they do with the surpluses they accumulate that will decide the fate.

The chances of it happening are nil, IMO. Who is going to vote for 10s or 100s of billions of quid in taxes to be taken and the money destroyed?