Thoughts?
Are you saying they’re giving a speech on QE3 today? If so, I’ve heard nothing about it in the news.
Fed meeting at 2:15 EST. I’m asking if they may announce QE3.
Depends on how you define QE3. Operation Twist seems to be a certainty.
$400 B operation twist. As expected.
Weaksauce. We should have sped up this trainwreck.
The allocation to 20-30 year bonds is larger than expected. Also, all proceeds are now going into MBS (vs treasuries). Is the stage being set for a massive mortage refi program?
twist and shout! twist and shout!
http://www.businessinsider.com/what-the-fed-announcement-means-here-comes-the-mega-refi-for-homeowners-2011-9 note that this came out 3 mins after my original post 
mp3bu Wrote: ------------------------------------------------------- > The allocation to 20-30 year bonds is larger than > expected. Also, all proceeds are now going into > MBS (vs treasuries). Is the stage being set for a > massive mortage refi program? Perhaps there is. However,if you will refi mortgages which are currently under water who takes the hit in terms of losses? Will the bankstas ( of questionable solvency) go for it? Am I missing something?
Then the homeowner realizes the loss. The point is that, a third of the FED’s balance sheet is currently in MBS. On top of the that, they’ll now reinvest their proceeds in MBS. If Obama can successfully promote refi’s, that’s a LOT of cash coming to the FED, effectively becoming a QE3 without having to announce it. The FED takes the hit on the MBS, while the consumer gets a nice bump in disposable income…effectively a wealth transfer to the middle class at the dispense of MBS holders.
The homeowner is already underwater and thus has already taken the loss (paper). The only advantage if at all is the refi if the homeowner qualifies (my understanding) will be lower payments to the homeowner ( and would also help banks show title which they lack currently). Besides, what about the other costs with the refi. I understand the the HAMP program was precisely initiated for this but was a real disaster as the banks refused to renegotiate. What you are saying that the FED will buy the MBS from the banks thereby giving them 100c on the dollar only to take in their balance sheet and take the hit. Which effectively means that the tax payer is on the hook again (to bail out the banks) of course not directly! Perhaps you are right that this is a wealth transfer to the middle class. Only time will tell if the true design for this program (increase spending) actually follows.
The real reason they are doing this is to help bail out Europe, but you wont hear it talked about publicly because it would be a political nightmare. Europe is having a dollar funding crisis because they cant buy enough bills to use as collateral because all of the bills are on the Fed’s balance sheet. So dumping them into the open market solves some of their short-term issues. Hence the extra $100 Billion.