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Category: Lending (page 37 of 56)

May 15, 2009

The $1392.50 Appraisal Fee or How the Home Valuation Code of Conduct Rewards Inefficiency At the Expense of the Consumer

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Have you heard of the Home Valuation Code of Conduct?  New York Attorney General Cuomo forced Fannie Mae and Freddie Mac to adopt the measure, in what can only be described as a Machiavellian scheme.  Essentially, mortgage brokers are forbidden from direct contact with residential appraisers; all appraisals for agency loans (not FHA or VA) must be ordered by a lender-approved appraisal management company.

What’s an appraisal management company? Exactly.

The intended result is to keep all loan production personnel (broker or banker) from undue influence on the independent appraisers hired to perform the valuation report.  You see, rather than to cease doing business with rogue mortgage brokers or unscrupulous lenders, a minority of appraisers felt it necessary to encourage Attorney General Cuomo to “put the arm” on the lending industry to protect their past ethical trangressions.

Wholesale lenders, realizing that the appraisal would now be THEIR property, clamored to the idea.  This was just another chance to restrict the value proposition of mortgage brokers (portability) and lock up some business.

Big Banks 1 Consumers 0

Wait!  That’s not all!  If the assigned appraiser is backed up, tough crap!

You see where I’m going with this?  The lender pipelines are ALREADY clogged up because the volume has spiked and the employee count is down.  Soon, we’ll be adding loan applications from the Obama refinance/loan modification plan and a further drain will be put on the overloaded appraisers.  Can I choose to deal with appraisers who won’t do refinance transactions?  Nuthin’ doin.  Ya takes what ya gets under HVCC.

Big Banks 2 Consumers 0

Still, I persist like Mr. Magoo negotiates a maze.  I took a loan application last week, checked Zillow for the Zestimate, closed my eyes and ordered the appraisal from the selected lender.  I locked the rate for thirty days and uploaded the loan submission.  I expected 10 business days in underwriting; surely, the appraisal would be uploaded within a week.

As Meatloaf might say “Stop Right There!  Before we go any further…”

I received an e-mail from the lender instructing me to immediately extend the rate lock for another 15 days…at a .25% fee.  For this $417,000 Read more

May 13, 2009

FHA and the $8000 Tax Credit – what I know and what I don’t….

by

Mortgage Officer

Author website

It has amazed me how many people (mainly Realtors and lenders) are already out there proclaiming that you can now go back to the days of the “No money down” loans with FHA and you can do it right now.   Well, that’s not quite the whole story.    Let me explain:

What I know:

  • I know that FHA is now allowing a borrower who qualifies for the $8000 tax credit to use that tax credit as the downpayment for purchasing the house.
  • I know that they can’t get any cash back – if they need $7000, they can only get $7000.
  • Government agencies and non-profits can do second liens against the house for the downpayment.
  • The payments on that second lien need to be counted into qualifying rations.   In other words, if you are going to borrow the $8000 so you can use it for your down payment, you need to be able to pay that amount back.  Gee, there’s a novel concept.
  • FHA approved mortgagees can do a “bridge loan” against the tax credit.

What I don’t know:

  • I don’t know whether any FHA approved non-profits are going to be willing to do second liens in situations like that.
  • I don’t know whether any FHA mortgagees (such as my bank) are going to be willing to do a bridge loan against a tax credit.   Typically banks don’t like to do unsecured loans and I’m not sure how you can secure a loan against a tax credit.
  • I don’t know what fees and rates will be charged for such a bridge loan.

Personal feelings:

  • In today’s volatile market, if you aren’t able to come up with 3.5% for a downpayment on a house, maybe you should continue to rent for a while.
  • The “tightest” 12 to 18 months that a home buyer typically has is their first 12 to 18 months when they are getting used to the house payment.   Do we really want to add the cost of having to pay back a bridge loan on top of that? 

So I guess my recommendation is essentially this:

  • Take a deep breath.
  • Wait to give the financial institutions the time to sort this all out.
  • Once we Read more
May 7, 2009

Home Prices and “The Rest of the Story.”

by

Mortgage Officer

Author website

In case you haven’t been able to tell, I’ve been a little frustrated (okay a lot frustrated) with the markets lately.   Why?   Am I asking for bad news?

Nope, I’m looking for straight talk and reality and I don’t believe we’re getting that right now.   I don’t believe that:

  1. That the government is telling us the whole story in terms of the health of the banking world.
  2. That the statistics that supposedly show the market is recovering are truly that.   Since when is a “slowing of the pace of decline” a sign of recovery?   Bad at a slower pace doesn’t mean it’s good.
  3. That the true story on the devastation that the bankruptcy of GM and Chrysler is going to mean to our economy is truly being acknowledged and prepared for.   Preparedness is essential and we’re missing the boat on that one.

I’ve spent 20 years trying to help people manage their money and their real estate investments wisely and it’s never been more challenging than it is now.

So, I’m going to keep preaching the world the way I see it.   It isn’t pretty and it isn’t nearly as pretty as the main stream media would like you to believe.

Ask yourself this, when it comes to analyzing and understanding the economy, who would you put more confidence in?   Brian Williams and Katie Couric or Paul Krugman and Nouriel Roubini?

I’ll be on Paul and Nouriel’s side every time.

Tom Vanderwell

U.S. Home Prices May Be Lost for a Generation: John F. Wasik – Bloomberg.com

We might be looking at a lost generation for U.S. home values.

Far too many analysts are calling a bottom to the housing market after home prices in 20 metropolitan areas declined at a slower pace in February, according to the Standard & Poor’s/Case-Shiller Index.

Don’t be blinded by the glint of optimism in headlines about rising consumer confidence and slowing price declines. Demographic and market realities tell a more sobering story.

You won’t see a widespread housing rebound in an economy in which 600,000 jobs a month are lost and foreclosures ravage the most overleveraged areas. These are just the visible barriers to a recovery.

Mortgage lending has Read more

May 2, 2009

Are you looking for a flinty-eyed steward to protect the value of real estate? Whatever you do, don’t turn to a banker!

by

Suburban Phoenix Real Estate Broker

Author website

This from my Arizona Republic real estate column (permanent link):

If there’s one thing we can say we’ve learned from the housing bust, it’s this: The worst conceivable stewards of financial assets are bankers.

At every step of the real estate market’s retrenchment, the bankers have been right there, on the spot, ready to make precisely the wrong decision — days, weeks or even months late.

Can’t make your payments? Put the home up for sale. Will the bank honor an offer short of the amount owed? Maybe. Maybe in six weeks, maybe in six months. Will the buyer still be there when the bank finally responds? With prices declining by thousands of dollars a month?

So the bank has to foreclose on the home — at an imputed value far lower than it could have had from the short sale. And then it must list that home for sale at a still lower price.

But don’t waste your time looking for evidence of prudence or even simple greed in a lender-owned listing. The home will be filthy, with fixtures and smoke alarms missing. The kitchen range will have been stolen, thus to assure that the home is not accidentally sold to an FHA or VA buyer.

If the bank inadvertently approves a purchase contract for the home, it will do everything it can to avoid recouping even a tiny fraction of its losses. First the bank will attempt to savage the deal by completely rewriting the contract. And everyone involved in the process will be insanely overworked, so that even the simplest question will occasion a two- to five-day delay.

Absolutely nothing will be done to address even deal-killing defects. But because the decision chain is so convoluted, negotiations over problems will drag on for weeks or even months. That way, when the deal falls apart, as many do, the bank will be able to relist the house at an even lower price.

I wish I were making this up. I want to deride bankers as being clowns, but that’s unfair to the clowns. They produce wealth, rather than destroying it — and they dress better for work, Read more

April 30, 2009

The Fed Translated….

by

Mortgage Officer

Author website

Yep, it’s that time again.    The Fed met yesterday and today and came out with their announcement this afternoon at 2:15 pm.   I promise that this one won’t be as long as the last Fed Translated was.

As usual, my comments are in bold and italics…..

April 29, 2009

For Immediate Release:

Information received since the Federal Open Market Committee met in March indicates that the economy has continued to contract, though the pace of contraction appears to be somewhat slower.  The downhill slope is less steep than it was.  Household spending has shown signs of stabilizing but remains constrained by ongoing job losses, lower housing wealth, and tight credit. Weak sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories, fixed investment, and staffing. Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time.  We aren’t going to see a substantial turn around in the economy soon.  A weak, ambivalent turn around, probably, but not a strong return to growth.  Nonetheless, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability. What else could they say but to say that they anticipate that what they are doing will eventually work?   Would the markets be happy if they said, “We don’t have a clue whether what we’re doing is going to work?”   Nope.

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued. They don’t say for how long, but I’m going to say that I think we’ve got 12 to 18 months until we start seeing a rapid spike in inflation and a rapid jump in interest rates.  Moreover, the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.  Let’s look at that for a minute.   They think that inflation would Read more

April 20, 2009

“No Matter How Good You Get, You Can Always Get Better…

by

Database Marketing Expert

Author website

… and that’s the exciting part.”  End Quote.

That’s a peek into the mind of the man who arguably will go down as the most dominant athlete of all time – Tiger Woods.

For those of you who aren’t golf fans, let me rewind a few years.  Tiger Woods was firmly entrenched as the #1 player in golf.  And by firmly entrenched, let’s just say that the #2 player in the world couldn’t even carry Tiger’s bag.

Yet, at the height of his dominance, Woods shockingly fired his “swing coach” and re-engineered his entire mechanical approach to the game.  Virtually everyone in golf thought he was nuts.  And the results were far from immediate.  In fact, some players on the PGA Tour even began referring to Tiger as “beatable”.

We all know what happened next… he won last year’s US Open with what basically amounted to a broken leg.  Woods refers to this victory as his greatest ever.

Here’s the thing:  Tiger Woods doesn’t share his secrets of success with his peers.  Any golfer looking to supplant Tiger as the world’s greatest player is going to have to figure it out for himself.

But for some reason, the sharpest minds in the real estate industry are willing to share what makes them successful with the rest of us.  Here are some of the questions I asked myself before committing the time and money to attend Unchained:

  • Can you create your own website without any help from anyone?
  • If so, how long does it take you to publish something worth seeing?
  • Are you ranking for the keywords your prospects are Googling?
  • Are your systems outdated and archaic?
  • Is there someone in your market who’s about to catch and pass you because they know more than you do?

Here’s another Tiger Woods quote from early in his career:

“Second sucks.”

If you live within 500 miles of Phoenix and you’re not committed to attending Unchained, chances are good there’s someone down the street who will be nosing up alongside you very soon.

I’ll be honest with you – I get the feeling my competitors are crawling up in the fetal position right now… cutting costs and wondering where Read more

April 18, 2009

Mortgage Market Week in Review….

by

Mortgage Officer

Author website

Well it’s hard to believe, but another week has flown by.   Rather than spending a Saturday working on mortgage stuff and writing about mortgage stuff, I spent the day taking my 8 year old to a birthday party, cleaning out the garage and getting the pool ready for the season.  It was a good day for that.

But enough about me, it’s time to take a look at what’s happened in the financial markets this week.   Let’s look at a couple of key economic reports/financial news items:

Foreclosures – for the first three months of this year, many of the big banks and Fannie and Freddie had foreclosure moratoriums on.   What does that mean?   Basically that they stopped foreclosing on homes.  But, many of the big banks lifted the moratorium shortly after the 105% refi plan was announced and Fannie and Freddie lifted their ban on March 30.  The reports that I’ve read (and written about on Straight Talk About Mortgages ) show that foreclosures are spiking way up again.    What does that mean?  A couple of things: 1) Our inventory problems aren’t going to go away any time soon.   2) Bank earnings problems aren’t going to go away any time soon.

New Construction –Housing starts and permits both came in at pretty close to historical lows.   But frankly that’s not a horrible thing from a long term standpoint.   Let me explain: We have too much inventory.   In virtually all price ranges and virtually all markets, there are too many houses for sale.   So we don’t need builders building more houses right now because it adds to the inventory problems.    Also, we have a situation where in most markets, the number of foreclosures that are on the market is raising the discrepancy between the cost of existing homes and the cost of building a new home.  According to many of the developers who I’ve talked to, it’s almost impossible, in many markets, to sell a brand new home at a profit because of the pricing pressures.   So, until we can work through the inventory and also address the jobs issues Read more

April 16, 2009

FHA and VA Assumable Loans Offer an Exit Strategy For Today’s Buyers

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

How can an FHA mortgage or VA home loan sell a home faster?   When mortgage rates are 10% and the 5% government loan is assumable.

I’ve taken a few pokes at the contributors on Active Rain; John MacArthur isn’t one of them.  John is a Branch Manager with Long and Foster, in Olney, MD.  John points out that agents and originators are failing to highlight one of the best features of government loans:

You see, no one is focusing on one of the sweetest features of an FHA loan. Oh, they talk about the modest down payment and ease of underwriting. They talk about a certain comfort level that the loan will close. We don’t hear many folks mentioning the biggest asset about FHA loans.

They are assumable!

Stop for a minute and think about 3 years or 5 years or 10 years from now. What do you think mortgage rates might be in 2012 or 2014 or 2019? Do you really believe that in the face of increased government spending, increased inflation, increased devaluation of the dollar that rates will hold around 5%?

This is really good advice.  Professional agents can distinguish themselves from the also-rans through an understanding of mortgage financing.  Nervous first-time home buyers will appreciate that an agent is thinking about an exit strategy for them.  John does it here:

Oh, and why might the lad on the left sell sooner? His 5% mortgage rate is assumable. Now, the new buyer will have to get a “wrap around” mortage for the difference between what is still owned on the FHA loan and the sales price and yes, that loan will carry the going rate at that time. The seller on the left will have to try to move his home at time when money surely will cost a bit more. It doesn’t take an MIT grad to discern that 5% on the bulk of a loan is much more attractive and affordable than the 8%, 9% or 10% or more that will be the rate in five years.

I added a scenario, with hard numbers, on Mortgage Rates Report.

Here are a few Read more

April 14, 2009

California Proposes to Regulate REALTORS Alongside Pawn Shops, and Lenders, and Banks…Oh MY!

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Assemblyman Pedro Nava sponsored a bill (CA-AB33) to reorganize our state’s financial services’ regulators to be under one umbrella, the newly created Department of Financial Services.  The idea is to save a bunch of money for the State.

Of course, CAR is going nuts.  Amy Steele reports via ActiveRain.com:

AB 33 (Nava), which C.A.R. opposes, was approved yesterday in the Assembly Banking Committee. This bill would abolish the Department of Real Estate, the Department of Corporations, the Department of Financial Institutions, and the Office of Real Estate Appraisers. AB 33 proposes to transfer the powers, duties, purposes, jurisdiction and responsibilities those departments to the Department of Financial Services, which would be a newly created overarching department. C.A.R. opposes AB 33 because the function of a real estate licensee is not to provide financial services, but to list and show houses for sale, sell or manage investment properties and raw land, and manage and oversee residential rental properties. Real estate licensees, regulated by the DRE, should not be blended in with the banks, credit unions, consumer finance lenders, residential mortgage lenders and pawnbrokers because, unlike these other licensees, real estate licensees are individually licensed agents that have a fiduciary agency relationship with their clients.

Pawnshops and lenders and banks, Oh MY! Pawnshops and lenders and banks, Oh MY!  Pawnshops and lenders and banks, Oh MY!

What CAR (and Amy) conveniently left out is the subsequent bill (also sponsored by Nava); AB 34- Licensing of Individual Loan Originators:

Requires all mortgage loan originators to be individually licensed.  Also requires all loan originators to register with a national database and submit criminal history background checks.

CAR has been calling for a bill like AB34 for a number of years but only if it fell under the Department of Real Estate.  California was one of the first states to license individual originators, under the California Department of Real Estate.  Let me re-highlight a key phrase to the opposition of AB 33:

Real estate licensees, regulated by the DRE, should not be blended in with the banks, credit unions, consumer finance lenders, residential mortgage lenders and pawnbrokers because, unlike these Read more

March 31, 2009

Don’t Discount Points As A Strategy To Lower Mortgage Costs

by

Commercial Real Estate Finance Expert
Structured Debt and Equity
Licensed Real Estate Broker in AL, CA, and FL

Author website

Discount fees (sometimes called “points”) are considered pre-paid interest.  Points are generally tax-deductible and are used to lower a buyer’s mortgage rate.  Most real estate agents have been taught that “points” are “padded profit” to a lender or loan originator and should be avoided at all costs.  Jeff Belonger debunked that myth yesterday; I was surprised to see the misinformed opinions being offered by the real estate agents and mortgage originators.

Today’s low interest rate environment combined with low expectation of immediate home price appreciation offers a perfect opportunity for buyers to secure a low mortgage rate by employing a strategy of “buying the rate down” through a discount fee.

Let’s look at an example, from today’s rate sheet-$400,000 purchase price, $100,000 downpayment, for a 720 credit score borrower with adequate income documentation:

RATE               DISCOUNT FEE     NET BORROWER COST

5.00%                            0                          $0

4.75%                            1%                     $3000

4.5%                              1.5%                  $4,500

The proper way to perform this analysis is to determine the expected minimum hold time for the mortgage.  Most real estate agents will agree that in this environment, transaction costs combined with low expected appreciation rates suggest that five years is the absolute minimum to hold the property.  Buyers may elect to move (and rent) the property but few agents would be so bold as to suggest that the buyer could make a profit in less than the five year time frame.

It is my opinion that refinancing the mortgage loan will be difficult and unprofitable, during those same five years because:

  • low price appreciation will limit buyers ability to “harvest home equity“
  • interest rates are at a 35-year low.
  • rapid inflation seems likely due to massive government borrowing and the Federal Reserve’s “printing money” policy of the past 8-12 months.  Inflation leads to higher mortgage rates.

Five years will be our minimum hold time for the mortgage loan then. This amortization schedule helps us determines what the lowest total costs are over five years.  Simply add the cumulative interest (at month 60) plus the discount fee to determine the total costs:

RATE      CUM. INT.   Read more

March 24, 2009

By applying CDSs to CDOs, did AIG go MIA? Or could the SEC, the OTS and one unhired CFO have kept it from turning up DOA?

by

Suburban Phoenix Real Estate Broker

Author website

A totally killer run down of the Wall Street mess from — you’ll never guess it — Rolling Stone magazine:

There are plenty of people who have noticed, in recent years, that when they lost their homes to foreclosure or were forced into bankruptcy because of crippling credit-card debt, no one in the government was there to rescue them. But when Goldman Sachs — a company whose average employee still made more than $350,000 last year, even in the midst of a depression — was suddenly faced with the possibility of losing money on the unregulated insurance deals it bought for its insane housing bets, the government was there in an instant to patch the hole. That’s the essence of the bailout: rich bankers bailing out rich bankers, using the taxpayers’ credit card.

The people who have spent their lives cloistered in this Wall Street community aren’t much for sharing information with the great unwashed. Because all of this shit is complicated, because most of us mortals don’t know what the hell LIBOR is or how a REIT works or how to use the word “zero coupon bond” in a sentence without sounding stupid — well, then, the people who do speak this idiotic language cannot under any circumstances be bothered to explain it to us and instead spend a lot of time rolling their eyes and asking us to trust them.

That roll of the eyes is a key part of the psychology of Paulsonism. The state is now being asked not just to call off its regulators or give tax breaks or funnel a few contracts to connected companies; it is intervening directly in the economy, for the sole purpose of preserving the influence of the megafirms. In essence, Paulson used the bailout to transform the government into a giant bureaucracy of entitled assholedom, one that would socialize “toxic” risks but keep both the profits and the management of the bailed-out firms in private hands. Moreover, this whole process would be done in secret, away from the prying eyes of NASCAR dads, broke-ass liberals who read translations of French novels, subprime mortgage Read more

March 23, 2009

The “Bad Bank” Plan…..(complete with music and video)

by

Mortgage Officer

Author website

I’ve copied the announcement from the Treasury that sent the markets on a moonrocket today and thought that I would “walk you through it” so that we can get a better feel for whether this is a relief rally or something sustainable (and therefore what it means for mortgage rates).   So, here goes.  As usual, my comments are in bold and italics…..

The Financial Stability Plan – Progress So Far:

Over the past six weeks, the Treasury Department has implemented a series of initiatives as part of its Financial Stability Plan that – alongside the American Recovery and Reinvestment Act – lay the foundations for economic recovery: and spend about how many trillions?  I’ve lost count.

* Efforts to Improve Affordability for Responsible Homeowners: Treasury has implemented programs to allow families to save on their mortgage payments by refinancing I’m glad that they didn’t characterize Fannie and Freddie’s 105% plan as a foreclosure prevention step because only one of the borrowers I’m doing that type of a refi for is anywhere near close to “at risk”, assist responsible homeowners in avoiding foreclosure through a loan modification plan, and, alongside the Federal Reserve, help bring mortgage interest rates down to near historic lows. This past month, the 30% increase in mortgage refinancing demonstrated that working families are benefiting from the savings due to these lower rates.

* Consumer and Business Lending Initiative to Unlock Frozen Credit Markets: Treasury and the Federal Reserve are expanding the TALF in conjunction with the Federal Reserve to jumpstart the secondary markets that support consumer and business lending. Last week, Treasury announced its plans to purchase up to $15 billion in securities backed by Small Business Administration loans.  The fact that the Fed and the Treasury are buying these “packages” of consumer and business loans doesn’t mean that 1) Consumers and businesses are going to start, en masse, living on borrowed money again and 2) That the banks are going to find consumers and businesses who are credit worthy enough to write loans to.

* Capital Assistance Program: Read more

March 21, 2009

A Few Thoughts About Mortgages…..

by

Mortgage Officer

Author website

Since I already sent an update out earlier in the week outlining what the Fed did and how it can/will impact the economy and the mortgage markets, I’m going to focus on a couple of other topics this time.

First I’m going to talk about the four most important things to know about mortgage rates. Then, in the lower section, we’ll take a look at a good strategy to consider when thinking about when to lock in an interest rate.

The four most important things to know about mortgage rates:
What influences them – contrary to popular opinion, mortgage rates are not tied to the 10 year Treasuries any more. For years they used to be and that made predicting short term market movements easy. Now they don’t and it’s much harder. So what does impact them? A couple of quick thoughts about that: 1) Market sentiment – is the market feeling good about things or bad? 2) Political manipulation – does the market feel that Washington is trying to run over Wall Street or is it the other way around? 3) Expectations vs. reality – it’s not so much that the news is bad as it is a question of whether it’s worse or better than it was expected. 4.) Inflation/Deflation and the value of the dollar. 5) Investor appetite for mortgage backed securities (aka how good are loans performing?


Why mortgage rates won’t go down to 4%. According to what I heard and saw, there were experts on places like the Today Show and Good Morning America who were proclaiming that mortgage rates were going to go down to 4.0%, probably by Monday. There are a couple of reasons why that won’t happen: 1) The Law of Supply and Demand – the government is literally flooding the market with additional debt. If there is more debt “chasing”fewer investors, that’s going to push rates upward. 2) The Value of the Dollar – the dollar has taken a beating in the last few days and as the dollar gets cheaper compared to other currencies, interest rates have to go up. 3) Falling House Prices Read more

March 18, 2009

The Fed Translated…..

by

Mortgage Officer

Author website

Well, it’s time to do a little Fed translating again.   This one was a big one, so settle in and let’s translate it.    As usual, my comments are in bold and italics.

Release Date: March 18, 2009

For immediate release

Information received since the Federal Open Market Committee met in January indicates that the economy continues to contract.  The economy continues to contract – no surprise there.  But ask yourself, if the economy continues to contract, then why is the stock market rallying?

Job losses, 651,000 jobs lost in February,  declining equity and housing wealth over 20% of the homeowners with mortgages are underwater, and tight credit conditions not only in mortgages, but home equity loans, credit cards, car loans etc., have weighed on consumer sentiment and spending.  Weaker sales prospects and difficulties in obtaining credit businesses are having a harder time getting credit too. have led businesses to cut back on inventories and fixed investment.  U.S. exports have slumped as a number of major trading partners have also fallen into recession. This isn’t just a US recession, it’s pretty much all across the country.  Although the near-term economic outlook is weak gee, that’s an optimistic outlook of things, don’t you think?, the Committee anticipates anticipates?  Is that sort of like I anticipate that I’ll become a millionaire by the time I’m 45? that policy actions to stabilize financial markets and institutions translated – more bailouts, together with fiscal and monetary stimulus translated – the Fed’s printing press will be working overtime!, will contribute to a gradual resumption meaning we really don’t know when things are going to turn around of sustainable economic growth.

In light of increasing economic slack here and abroad, the Committee expects that inflation will remain subdued but they don’t say for how long inflation will stay subdued.  My estimate is that we’re looking at 12 to 18 months before the economy recovers enough for inflation to become an issue.   Moreover, the Committee sees some risk that inflation could persist for a time below rates that Read more

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