Friday, August 26, 2011

No QE3

As there was NOT an ocean liner named Queen Elizabeth III, so there should not be a Quantitative Easing III.

Why?

There is no need for it.  The economy now has all the monetary base it needs to grow and interest rates (short and long term) are low enough.  Low interest rates are not preventing any profitable investments.

What Needs to Be Done?

The problems are now all policy.  Loan growth is low because there are massive new, tighter restrictions on getting a loan.  Mortgage refinancings are far below what should be occurring because good quality borrowers are prevent from obtaining a new loan, by either over restrictive credit policies or by their existing loan being "underwater".  FDIC rules for management of banks causes real loans to be examined much harder than speculations in securities.

In sum, the problems are ALL now policy problems under the purview of Obama.  And he is doing nothing ... need I refer to the old fable about Nero fiddling while Rome burns?

Partial Solutions.

1.  FNMA and Freddie Mac should lower credit standards to permit refinancings of ANY loan currently not in default.  I mean ANY loan, regardless of credit score or low-to-value ratio.  After all, the government ALREADY has that risk, and the loan gets better IF the debt service payments fall.

2.  Force banks to make real loans and not speculate in securities.  The banking system does NOT exist to faciliate the speculation in securities or derivatives or any similar thing.  It exists to make LOANS:  old-fashioned commercial and industrial LOANS.

All this is rather obvious.  One wonders why these have not been done.  After all, it's 2011, not 2009.  Policymakers have had two years to "study" the problems.  They have failed.  Maybe those people should have their pay and benefits cut for "failure to achieve objectives".

Word of the Day

"Fugacious" - adjective [$10] literary
Fugacious means fleeting, evanescent, hard to capture or keep.
Sentence:  Fat fees and fugacious fame of hedge fund managers is a fraud on the foolish rich.  Example:  John Pauson's flagship fund is down 38% this year.  So much for his "genius".  He and most of those knaves just roll the dice with OPM, get lucky one year and the next year loses.  Sigh ...

14 comments:

Spin-em said...

who knows what BATTLESHIP BEN says but..Bunk Germany down to Aug 2010 levels...do we need to go there also??...about 10k?...or is today the start of liftoff like last year??.....what does your machine tell you...it's been quite lately...

Bud said...

aaaah the sweet smell of victory........Bman surrenders at the Appomattox Courthouse


vinidicated again

Bunkerman said...

surrender? I claimed a valid victory and moved on to the next battle.

a la Sherman at Atlanta.

"Atlanta is ours, and fairly won"

Bunkerman said...

Krypto is sleeping on the couch. Has now new orders. Waiting ...

Bunkerman said...

If Obama would read my blog again, he's know what to do.

NOW: It's the policies, stupid.

Ben has pummeled and pounded the beach to smithereens - Obama, grab a rifle and get moving!!!

Bunkerman said...

Saw that movie, Battle of Los Angeles, last night - Marines vs. Aliens - very good & fun.

Bunkerman said...

At least Ben reads this blog ... and obeys

:)

Spin-em said...

lool,,,maybe he'll watch Battle of Los Angeles tonight

Frosty said...

Ben F-

Bud said...

Ben A+

Spin-em said...

Jin DePorre..85% "since inception" F

Spin-em said...

lets be honest jim.. that # was made the first year...if you count the monthly vig for 8 years..its more like 46%...but who am I??

Spin-em said...

cold roast beast..horse radish lil lettuce red wine dressing and off to the course...thanks bro...you "truly" are the best....tip of the cap to you Bunk...have a fine weekend

Bunkerman said...

mmm sounds good, Spin.

I need an idea for weekend dinners ...

Maybe some kind of BBQ?