Comments on: Honest Corruption http://www.traderslog.com/honest-corruption/ Online Trading Community for Stocks Futures and Forex Traders Tue, 27 Dec 2011 07:21:15 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: jonathan yates http://www.traderslog.com/honest-corruption/comment-page-1/#comment-2571 jonathan yates Sat, 27 Aug 2011 01:40:34 +0000 http://www.traderslog.com/?p=12650#comment-2571 This is an article that everyone should read. I believe that the Federal Reserve is maintaining a low interest rate policy, in large part, to protect the value of its $3 trillion balance sheet, which in large part consists of the mortgage backed securities discussed in this article. Where I disagree is that the program did not work. The housing market in the US is in shambles. Low interest rates are not that effective: the average home price is $220,000 so a 1% lower rate is not going to lower it that much (about $240). Would you take on the risk/expense of a house for $200 a month? I do not think so. The program has been a disaster as it has increased commodity prices and led to more M&A activity, which is counterproductive, as proved by studies. If the program had worked, home sales would be booming. They are not: according to a recent Morgan Stanley report, home ownership in the US is the lowest in more than 50 years. This is an article that everyone should read. I believe that the Federal Reserve is maintaining a low interest rate policy, in large part, to protect the value of its $3 trillion balance sheet, which in large part consists of the mortgage backed securities discussed in this article.

Where I disagree is that the program did not work. The housing market in the US is in shambles. Low interest rates are not that effective: the average home price is $220,000 so a 1% lower rate is not going to lower it that much (about $240). Would you take on the risk/expense of a house for $200 a month? I do not think so.

The program has been a disaster as it has increased commodity prices and led to more M&A activity, which is counterproductive, as proved by studies.

If the program had worked, home sales would be booming. They are not: according to a recent Morgan Stanley report, home ownership in the US is the lowest in more than 50 years.

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