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Do you know where your MONEY is going? QE II - Quantitative Easing

 

printing press - quantitative easing 2No, it's not Christmas time, but I guess the government feels like it's time to spend again. Do you have a spot in line for your handout?  The economy is not growing quickly enough, so the economists and the Federal Reserve feel the need to spend more. Besides, there is good fear of deflation and the need for keeping prices higher. So what is Quantitative Easing?Quantitative Easing from wikipedia - And we have been through this before. when the government spent an initial $600 billion in November of 2008. Four months later, the Fed added another 1.8 trillion.

So the government is spending $600 billion more on U.S Treasury securities, after spending 2 trillion the first time around. But wait, the federal Reserve has announced that they will be spending another 250 to 300 billion on more U.S. Treasury securities. This other spending is from the proceeds of its mortgage portfolio. Great Scott Bat World... will this work?

 

From the Bloomberg article, many have said... "that the plan won’t boost growth, half said it will help avoid deflation. That may be more important to Bernanke because a general decline in prices makes consumers and businesses less willing to invest." More from Bloomberg.. "A total of 75 percent surveyed in the Bloomberg poll said the securities purchases will have little or no effect on joblessness."

 

I am sorry my fellow Americans, but wasn't a lot of what we were fed over and over, telling us why we were spending so much, was to create jobs? Yet more than70 percent are saying that this next spending won't have an effect on our unemployment situation? Yes, many jobs were created, but within the government. And don't these kinds of jobs cost us more money? Shouldn't we be focusing more on small businesses, more incentives so they can hire more. I know the government just started to talk about this prior to the elections, but my common sense tells me that this should have been talked about 1 1/2 years ago.

 

Hey, I am not a Harvard graduate with a MBA in Economics.  I know many of us don't like bad news. And I am hearing many reports that state that we are turning it around, that we came out of a recession back in the summer, yet we need to spend more money.  I just want us all to understand what is happening around us, and don't think just because it seems to be getting better, more so by the news, that we will end this soon. My prediction, a good three more years or more. Someone told me a few weeks ago that the NAR says 2011 will be the 4th best year in real estate in the last 15 years. Let's not forget people, just because you might be making more money, doesn't mean all of America is comfortable. How about the fact that we have more than doubled our national debt in the last 2 years.

 

Overall... you need to watch this video. Not only do I think it's spot on, but there was some humor to it, especially at the end.... enjoy...

 

 

 

I presume that this will be a hot topic this week and until the end of the year. I just read this by Leslie Ebersole - QE2 is not a cruise ship

How about the news when we were finally out of the recession - Yippie, we are out of a recession !!! - I wrote this on 9/24.

 

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Copyright © 2011 by Jeff Belonger of Infinity Home Mortgage Company, Inc

Comment balloon 28 commentsJeff Belonger • November 16 2010 11:18PM

Comments

The government rarely does anything right. Best Wishes, Adam
Posted by Adam R. Cohn, We actually get mortgages closed FAST! (STANDARD MORTGAGE CO.) over 8 years ago

Jeff - As usual, you are so much fun to read!   I love your posts - always spot on, and good information......  Thanks!!

Posted by Dagny Eason, Fairfield County CT, CDPE Homes For Sale and Condo (Dagny's Real Estate) over 8 years ago

Thanks for the information;  did you do the video?  It is freakin' brilliant...I cannot laughing, although I'm crying on the inside.

Posted by Susan Haughton, Susan & Mindy Team...Honesty. Integrity. Results. (Long and Foster REALTORS (703) 470-4545) over 8 years ago
Here's the deal on this Jeff. I was looking at the Wall Street Journal today. They said that the fed is now buying treasuries....not mortgage backed securities.... IN ORDER TO KEEP RATES DOWN! What, in fact we've seen is mortgage backed securities worsen by over 200 basis points, or in common english, about one - half point in rate. The reason, according to Wall Street is the investors who've been buying are now selling since the Fed is buying. So.....we're seeing the increase in rates. Remember...ever recession has ended through the real estate market. Makes me think of the movie, "Back to the Future." "Yo....McFly....lights on, but nobody's home!!!!!"
Posted by Larry Bettag, Vice-President of National Production (Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001) over 8 years ago

 

ADAM.. . well, they have proven that in the last 2 years or so...

DAGNY... . yea, but this subject is very boring... but thanks for the kind words and for the compliment..

SUSAN... . my pleasure and no, I didn't do the video.. I found it online.. and it should have mentioned at the end, who did it.. thanks and thanks for reblogging this..

LARRY... .  yes, ironic in a way.. for 1 1/2 yrs the Feds bought MBS's to keep rates down.. now they are buying treasury securities, but to keep deflation down... and yes, rates have gone up drastically... many of this knew that it was going to happen before the end of the year, higher rates that is.. but so hard to predict, because the gov't is all over the place.. thanks

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 8 years ago

I'm gonna go hide if Larry and Jeff start duking it out...maybe I need a nice trip somewhere.

Jeff, you have given us great perspective and interesting information to think about. Personally, I don't think it's boring, so please keep delivering your material.

Control of the money supply is one of the few tools the federal government can employ to manage the economy. I'm pretty convinced that the interest rates moving up or down is NOT affecting home purchase decisions -- despite the drum beating we've so fervently engaged in this year. Feeling secure and positive is what people want, then they think about something as crazy as buying a home.

Great post, and I'll suggest it a worthy exploration of the term QE2. Now can I go hide?

 

Posted by Leslie Ebersole, I help brokers build businesses they love. (Swanepoel T3 Group) over 8 years ago

Well, I couldn't watch all of the video.  I was getting dizzy going round and round. 

The economy is in a pit and the fed just deepened the pit. 

When, if ever, will they ever realize that the U.S. economy is not Wall Street, The Fed, The Treasury, The Government, the banks or anyone except the POWER OF THE AMERICAN CONSUMER, whom none of the actions of The Fed, The Treasury, The Government, the banks or anyone else in power has even noticed in the past two years. 

The perfidy of the government and the Wall Street gants over the past 2 years has taken about 25-30% of the consumers OUT OF THE ECONOMY.

Think they'll ever notice??? 

Posted by Lenn Harley, Real Estate Broker - Virginia & Maryland (Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate) over 8 years ago

Jeff, that is the funniest way I could imagine this being explained ( if it wasn't so scary). I will reblog

Posted by David O'Doherty, Clayton NC Homes, Raleigh, NC (Raleigh Realty Inc) over 8 years ago

Jeff, we're all in deep sh*t because our politicians would rather take bribes from Wall Street than work on behalf of Main Street. 

Number one reason nothing will change until we get rid of career politicians with TERM LIMITS.  Politicians can't serve the people when they're more concerned with getting re-elected.  Absolute power eventually corrupts absolutely and we're seeing that.

The great ship America is sinking and the Congressional band keeps playing like nothing is wrong.

Shame on Amercian citizens for not voting for enough change. 

Did anyone happen to see the voter turnout numbers during this time of crisis?

Message to Bernanke - it's a little late to be so worried about deflation when homeowners have already seen their biggest asset drastically deflate. 

Oh, silly me!  Bernanke's only worried about deflation on Wall Street, not Main Street.

Posted by Loan Survivor Real Estate Financing Expert (Purchases, First Time Buyers, Pre-Approvals, Refinance) over 8 years ago

Jeff, as you say ..joblessness is not improving and that is the key to people buying again and restoring us to some sort of positive growth in this economy...we're hurting badly in my state...NO your info is far from boring so keep chugging!  Yes, the video did give a chuckle...

Posted by Ginny Gorman, Homes for Sale in North Kingstown RI and beyond (RI Real Estate Services ~ 401-529-7849~ RI Waterfront Real Estate) over 8 years ago

Jeff, the video was so painful to watch and though neither of us are Harvard MBA's it's clear that something is completely out of whack! Not sure where this train wreck is headed but we are already off the rails!

Posted by Russell Lewis, Broker,CLHMS,GRI (Realty Austin, Austin Texas Real Estate) over 8 years ago

My point is that the Fed just came out and said that they'd purchase Treasuries to keep rates down.  Now that profit taking is occuring rates are actually going up.  I would think that there'd be a few smart people in the Fed who would have thought this through.  The exact opposite of their intent is occuring.  Simply amazing!

Posted by Larry Bettag, Vice-President of National Production (Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001) over 8 years ago

 

LESLIE.... . duking it out?  lol  What Larry is saying is that the Feds are all over the place. But there is a reason why they are buying Treasury Securities now.  The gov't is now trying to control deflation.. and some of us new that this was going to happen. And yes, I agree 100%, that interest rates up or down won't truly affect the home buying process. I read a comment by someone on your post, and they thought opposite. In my opinion, it comes down to those feeling secure about their jobs/income, who can save money in a tough economy, and a few other things. thanks

LENN.... . I agree 100% about the pit, yet I think you are being nice when using the word pit. I think we are so much deeper,especially now. The question, how much longer will it take us to now dig out?  aarrggghhhh... so much more needs to get better first. And your last few sentences, very powerful, that the gov't has taken so many consumers out of the economy. thanks for the input. ps.. if you can get back to the video and listen to the last 60 seconds and the very ending... scary yet funny. thanks

DAVID.... . yes, great explanation and funny, yet very scary. And thanks for reblogging this post.

DREW.... . please don't get me started about those politicians... and yes, they need to change these term limits, because some just knew they would get re-elected and seem not to care. Come on, some of these people are smart, with common sense. You would think & hope. But did you see the change in many of the platforms, the basic message that some running sent out? "I work for your"...  gee, look how long it took for some to at least get smart about this. Yes, the people are fed up with what has happened, but why did that take so long for us to rise up to this? And good message to Bernanke..  because in my opinion, he is just chasing his tail and has been doing this for a while now.. thanks

GINNY... . Unemployment should be the biggest concern, yet they seem to keep dumping billions of dollars into other areas. Sure, now they say that they will be buying treasury securities, but from whom? The video laid that part out very well. And what gets me is that some realtors are doing very well, and this makes them think that things are looking up, changing very well. I had one person comment about something disturbing in the post... TheHome Buyer Tax credit is back... comment # 17 by Ricky. Here is a person thinking that this kind of stuff is great, because he made more money. Yet he is missing the bigger picture in my opinion.

RUSSELL... . so many different predictions about this so-called train wreck. The one problem, our gov't seems to be listening to the wrong experts in many cases. Don't even get me started there. Overall, it is scary and in my opinion, that video was spot on.. thanks

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 8 years ago

OUT!

My money is going out!

So many of the billions the Government spends is going to buy votes or pay off old supporters.

Bill

Posted by William J. Archambault, Jr. (The Real Estate Investment Institute ) over 8 years ago

Great article Jeff. Really enjoyed the animated clip, as you said"it was spot on". I was laughing until I realized that I was mad!!!

Posted by Greg Miller, Florida Home Loans - Conventional,FHA,USDA,VA (Ruoff Home Mortgage ) over 8 years ago

Jeff: QEII is a band-aid. plain and simple. We would have been better off biting the bullet back in 2008 and letting the free market reign. Yes, it would have been worse to begin with but our recovery would perhaps be starting now. As it is, I expect the earliest we'll see signs of life is 2012. In the meantime, it's going to be a bumpy ride. Fasten your seatbelt. Thanks for the post!

Posted by Paul McFadden, Pest Control, Seattle, WA. (Paratex) over 8 years ago

Hi Jeff. QE2 is horrible though they are really putting on the propaganda!  You probably already saw this video by Peter Schiff http://www.youtube.com/watch?v=evNqcFiGDLQ It's not just the bond market that is eroding... the country is also slowly eroding. So frustrating.

Posted by Lana Robbins Realtor ® Licensed Real Estate Broker, Florida and Washington Real Estate (Aloha Kai Real Estate) over 8 years ago

You would think that they could find an economist with a clue around DC somewhere.  However, I think that this administration only considers Keynesians as valid. 

Posted by Lane Bailey, Realtor & Car Guy (Century 21 Results Realty) over 8 years ago

You may not like Keynesian economics but in certain times they do work, the problem today is that economists never have to be right. greenspan rarely got it right and much of what he proposed lead us into this mess. Americans love deregulation, but that is not always the way. Don't forget, governments sometimes do need to employ people to get things done, such as infrastructure re-building. There is such a rush to cut, cut, cut that many excellent projects are being thrown aside, like hi-speed rail, we are so far behind the rest of the work on this it is a joke. We should be leading the way.

Posted by Nick Vandekar, 610-203-4543, Tredyffrin Easttown Realtor, Philly Main Line (Long & Foster Real Estate Inc 610-225-7400) over 8 years ago

The economy is burning and the fire department is a bunch of pyromaniacs. 

 

Posted by J. Philip Faranda, Broker-Owner (J. Philip Faranda (J. Philip R.E. LLC) Westchester County NY) over 8 years ago

I love how they have dubbed this the sinking ship Q E 2:) Makes a lot of sense.

Posted by Bill Gassett, Metrowest Massachusetts Real Estate (RE/MAX Executive Realty) over 8 years ago

 

LARRY... . I couldn't agree more... and that is the part that I have always had a problem with.. does anyone ever think any of this through?

WILLIAM... . we definitely knew of that in the first stimulus package in 2008.... that is just a vicious cycle in itself. But even if this money went directly to where they say it goes, I can think of many better places to help out.. or just reduce the total monies. It's like we are grasping for straws.

GREG... . yes, the truth can make you laugh and cry at the same time.. or in this case, also make you angry. And thanks for the polite compliment.

PAUL... . that's been one of our main problems.. trying to solve many of these problems with that band aid theory... when will we ever learn?  thanks

LANA... . no, I haven't seen that video as of yet and I will take a look at it later today... thanks

 

LANE.... . I agree and I think those on staff are the ones that agree with the President.. I saw that as an issue when the first stimulus package was slammed down our throats and President Obama said this... "our top economists say that we must act NOW, as of today, not next week per se... any delay could cripple our economy". Not exactly that, but close enough.. How I read his statement.. "yea, there is a lot of fluff in the new stimulus package and you don't want anyone to have the time to read all 3,000 pages and or to digest it properly"...

As far as the Keynesians theory... that is a whole other topic....  If you look into this, it was more about the the public sector and the gov't controlling the economy per se. I think this leaves out a lot of growth because without the private sector, the small businesses and how they create so many jobs, we would certainly be worse off. The gov't needs to help these small businesses... I see that Nick below you brought up the Keynesians theory... so more below...

 

NICK & TRUDY... . I would slightly agree about the Keynesians theory, that in some cases, it has worked. But the problem that I see with this is that it has been stated that this was a success when used during at the end of the great depression and War Wolrd II... well, if I have some of my history facts correct, no matter what you called it, in my opinion...what helped was War World I and II.. even if you want to call this the public sector or gov't, both of these wars created thousands of jobs all over. I am not an expert in this field, but my common sense would tell me that if it wasn't for War World I & II, we might not be around today... no telling where our economy would be right now... if we would have become like what Russia is today... but back then... 

You bring up a good example of our rail system... yes, that would cost money, but wouldn't that also create good honest jobs... in which those people would be taxed...  yet we spend billions on unemployment... I do believe in cutting spending, but I think the gov't looks at the wrong places...  I came across this the other day... I haven't tried it out... but give it a whirl... you can play gov't and cut spending..

Budget Puzzle... You fix the budget   I will be writing a post about this today, and including this puzzle

 

PHILIP.... . funny... yet sad.. thanks

BILL... . it makes a tone of sense from where I am sitting... thanks

 

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 8 years ago

"Quantitative Easing?" What a creative and lofty way to label wasteful spending.

Posted by Dawn Maloney, 330-990-4236 Hudson & Northeastern Ohio (RE/MAX Trinity Northeast Ohio Real Estate Specialist) over 8 years ago

It's amazing to me how I'm seeing a lot of spin on how inflation is now a good thing.  Wouldn't it be great if a dollar today could buy the same stuff 20 years from now?   Then I could save that dollar in the bank and just have to get a small amount of interest.  Then the bank could lend it out at a low rate because they knew that the dollar in 20 years from now would still but the same amount of stuff. 

I see a lot of deflation in computer prices.  Is that stopping people from buying computers?  Maybe I have to go to Harvard to learn the complexities of economics.

Posted by Tim Maitski, Truth, Excellence and a Good Deal (Atlanta Communities Real Estate Brokerage) over 8 years ago

Jeff, I believe unless we create a pool of tax payers through new jobs, we may have a very long road ahead, the video made me laugh and cry.

Posted by Paul Chadwick (Baird and Warner) over 8 years ago

I'm with Dawn--what a great way to cover up the REAL term:  WASTEFUL!  Love the video--so true, AMEN!

Posted by Debe Maxwell, CRS, Charlotte Homes for Sale - Charlotte Neighborhoods (www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310) over 8 years ago

Doubled our national debt in two years.  That's insane!  Why can they possibly think that's a good idea?  The cartoons make a little too much sense.

 

@J. Philip - LOL, sadly.

Posted by Christine Donovan, Broker/Attorney 714-319-9751 DRE01267479 - Costa M (Donovan Blatt Realty) over 8 years ago

DAWN.... . so true.... maybe we can rename it then...

TIM.... . I think no matter what happens, good or bad, the gov't and the Feds will put any kind of spin or lame/weak answer out there, that might or could sound good/right... just because they need consumer confidence to rise, which helps spending. That's how I look at a lot of it... because as human beings, when we hear positive news, don't we usualy just run with it and feel good? I read one realtors statement in a post, saying that things are getting better in the economy.... aaarrgghh... my rebutal... just because you are making more money and or business is getting better, doesn't mean the economy is getting better. thanks for your input.

ERICA.... . yes, very scary... my mom couldn't have agreed more. I sent it to her also..

PAUL.... . bingo... that has been my biggest argument all along... and I think it is going to be a long road ahead of us. Read my comment above to Tim, in regards to what this other realtor stated in her post.

DEBE... . I agree also.....as Tim M. above stated, just another spin. I am getting tired of this crap.

CHRISTINE... . in all honesty, I think it's been tripled, but I put doubled to be safe. ;o) Think of good ideas? here is my take on this.... some of the high up politicians are sitty pretty. Some of millionnaires.. som married into a wealthy family... some have assets, land, or businesses, but not truly in their names... and or play by the same tax rules and such.. hence becoming richer. yet many of their decisions in regards to our economy, making money, saving our money... make it seem like they don't care. I am talking about extremely smart/intelligent people... yet they make stupid decisions... not of common sense. How can this be? hhhmmm... because no matter what happens to us, they are well off.. safe and or protected... that's how I am starting to look at it all.

Posted by Jeff Belonger, The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans ( Social Media - Infinity Home Mortgage Company, Inc) over 8 years ago

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