Friday, September 23, 2011
september in the rain
the fed came out 2 days ago and did 'operation-twist', which knowledgeable observors have been suggesting for 6 months would happen.
the fed also noted 'significant risk' to the economy sliding into another recession, blaming europe, etc.
the fed is going to take about 400 billion dollars and shove it from the short side of the curve(the fed owns a lot of short 6 months to a year paper.
they are going to sell that and buy 30 year paper instead with the idea of lowering long term mortgage rates so folks can 'better afford.' home mortgages.
they are also take the money they are making on the mortgages they already bought and buy more mortgages.
we already have a long term rate of about 3.1%. too high long term interest rates are NOT a problem with this economy.
fixing THAT problem wouldn't be high on my agenda.
you couldn't write fiction like this.
EVERYBODY knows that the mortgage problem is that people can't refinance because the lending rules have changed and housing values have dropped AND people haveincome problems.
it has NOTHING at all to do with the mortgage rate.
this is the wrong cure for the wrong problem.
are they doing it because they don't know what else to do?
the fed is going to buy 30 year treasury notes, sell them at 100, and rebuy them at 144.
i call that dysfunctional.
then they are going to buy more mortgages from banks(helping them out) that won't give loans to folks like you and me.
had the fed missed the boat this time?
i think they may have missed this boat.
one of the 2 finest new recordings is by the sardinian(italian) pianist august pirroda, the bassist with the beautiful technigue and tone, gary peacock , and the spellbinding american drummer, octogenarian paul motian.
the graceful magical rhythms and harmonies they develop are way beyond my capacity to fathom, but i love to hear and try to understand the ever changing patterns, and just enjoy the beauty of a magnificent piano trio.
hopefully, there will be a sequel.