monetary policy: 81 Bank Failures...And Surging - 08/23/09 09:16 AM
On July 3rd, more than half-way through the year, I wrote a post that the number oif bank failures had reached 52.  Now here we are, less than two months later and that number has exploded to 81.  We have had nearly 30 bank failures in less than two months.  That is a pace of nearly one every other day.
The most notable of the bank failures this weekend was Guaranty Bank, it was the third largest this year.
The systemic cause of these failures is falling asset prices, specifically residential and commercial real estate.  The problem is that despite aggressive monetary efforts by the government, asset values are … (5 comments)

monetary policy: Mortgage Rates, Existing Home Sales, And The $1.25 Trillion Dollar Question - 08/23/09 08:50 AM
With existing home sales rebounding this past month to the fastest pace since the financial crisis made land-fall in September, it begs the question, was the Fed's monetary policy of purchasing $1.25 trillion in mortgage backed securities worth the cost?
To put this Fed monetary intervention into perspective, it was nearly the size of the TARP and the stimulus package...combined.  And yet despite this, it has not received much attention.  Part of the reason may be because it is not "tax-payer" money, it is new money that the Fed has printed.
The implications of the Fed's $1.25 trillion monetary policy is that rates … (1 comments)

monetary policy: Taleb: "We're In The Middle Of A Crash" - 07/12/09 01:17 AM
Nassim Taleb, the author of "The Black Swan", said during a CNBC interview on July 2nd, "We're in the middle of a crash" when referring to the economy and banking system.  In other words, the crash is still happening and we have further to fall.
And while most reasonable people would come to the conclusion that the economy is still falling based on rising unemployment (yes, I know unemployment is a lagging indicator, but losing 467,000 in June tells you something) and the deterioration of the consumer credit markets and the housing market.
What Taleb did say that was interesting was that the government needs to, "stay … (15 comments)

monetary policy: Steve Forbes, The Fed, and Mortgage Backed Securities - 06/20/09 05:39 AM
Steve Forbes is the latest financial talking head to call for the Fed to continue to purchase mortgage backed securities in an effort to plunge rates further and get the housing market moving again.
During an interview on CNBC, Forbes said, "What the Fed should do is follow through on its promises of aggressively buying mortgage backed securities to get housing sales moving again."
Unfortunately, cheap monetary policy, the same policy that helped to create the housing bubble in the first place, is not the solution to the crisis, fiscal policy is, specifically repealing or reforming the Tax Reform Act of 1986 as it pertains to … (1 comments)

monetary policy: Mortgage Purchase Applications Hold Steady - 06/10/09 02:29 AM
According to the Mortgage Bankers Association and their weekly survey of applications, mortgage purchase applications are holding steady despite a recent surge in mortgage rates.
The purchase application index rose 1.1% from last week to 270.7 despite the 30-year fixed rate mortgage surging from 5.25% to 5.57%.
Not that anybody should be surprised by this "resilience" as there has been virtually no stimulative impact on demand for mortgage purchase applications or demand for real estate as rates plunged to historic lows.
Here is a comparison between NAR's seasonally adjusted existing home sales and Freddie Mac's 30-year fixed rate mortgage survey over the past several months:
Sep … (4 comments)

monetary policy: Bernanke's damaging admission - 12/01/08 09:12 AM
At a speech today in Austin, TX, Federal Reserve Chairman, Ben Bernanke said, "Although further reductions...are certainly feasible, at this point the scope for using conventional interest rate policies to support the economy is obviously limited."
In other words, monetary policy which the government has been relying upon to stimulate the economy and housing market is not going to be enough - which is something that I have been talking about for a while.
This is not an interest rate, mortgage rate, or money supply problem.  And while I would rather have lower interest rates, mortgage rates, and more money available for investment … (0 comments)

monetary policy: Monetary v. Fiscal Policy and The Housing Market - 10/15/08 02:47 AM
If you are wondering why despite all of the measures that the Fed and the Treasury have taken to stimulate the economy and the housing market are not working it is because they are all monetary policies.  And right now, the monetary system is broken.
The perfect example of this is what happened on Monday the 13th where the Treasury was finally put in a position where they needed to buy into equity positions into our banks.  An unprecidented course of action.
None of the other monetary policies were working.  Cutting the discount and the federal funds rate was not having … (0 comments)

Mark MacKenzie

Mark MacKenzie

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