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Y’all Down with OPM?
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What’s the best kind of money? It’s OPM. The president knows this. He’s down with OPM. In fact, he’s all about OPM.
What’s OPM? That’s Other People’s Money for you working stiffs.
What’s the best kind of OPM? QE money, baby. Quantitative Easing. Bernanke bread. Fed funny money. All ya gotta do is inhale. It’s ‘all good’ and it don’t cost nothin’. Not yet anyway. And OPM can buy you just about anything…even elections.
Given that the economy only created 163,000 jobs in July, and June jobs created were not 80,000 as thought, but only 64,000, the speculation now is whether there will be another round of quantitative easing. Why not? It's good stuff. Relax; everything's cool, man.
Why would there be another round, you ask?
That’s a good question. After several rounds already of free money, the U-6 unemployment number is around 15%, and even the U-3 number—that’s the lower number the administration prefers to use—is rising.
Quantitative easing work…just not for you
It has gone from 8.2% to 8.3%...or thereabouts. That’s with 2 rounds of quantitative easing and a couple of “twists” under our belts. That means QE doesn’t work.
How bad is the job creation in the country right now? The economy needs to create 250,000 jobs a month to begin to reverse the unemployment numbers. The bummer is that monthly job creation in this country has trended downward since January.
And, just to be clear, we are now in the month of August. And some people want to put Chik-Fil-A out of business? Priorities, I guess.
The bottom line is that our bottom line needs a diaper. Since that is the case even with all the money floating around already, why add more to it?
Who will another round of quantitative easing help? It will help the financial sector. Banks are how money flows into the economy (how much of the economy is another matter) so they will certainly benefit.
And of course, money has to go somewhere, doesn’t it? Let’s see…how about into the housing industry? Well…it looks like new homes sales are down 8.4% year over year. Doesn’t look like banks are lending on a lot of new homes nationwide, does it? Not a good bet from that point of view.
What about the stock market? As I said, the money has to go somewhere…
So it’s a good bet that the market will be kept afloat—all other things being equal—if QE 3, which is what it would be called, is put into effect. Not that it will help any other part of the economy, but hey, you do what you can, right?
But what if you could help another part of the economy with free money? How would you do that?
QE for mortgage relief?
Who could an extra $100 billion of newly created money help? Well, there’s been a lot of talk about homeowners being underwater on their mortgages…
And there’s also been a lot of scorn on Bush administration hold-over appointee Ed DeMarco for refusing to cut the amount owed on Fannie Mae and Freddie Mac mortgages for homeowners…
In fact, Moveon.org has a petition to dump DeMarco. It looks like this:
What would it take to save millions of homes and billions of dollars in taxpayer money? Replacing one man—Edward DeMarco, the acting head of the Federal Housing Finance Agency (FHFA). DeMarco, a Bush appointee to the FHFA, is refusing to do the one thing that could get the economy back on track: allowing homeowners to adjust their Fannie and Freddie mortgages to real home values.
The dump DeMarco movement is also spreading through the ranks of democrats in the House and Senate…
Imagine if funds from another round of quantitative easing were used to adjust underwater mortgages to current home values?
Why would you do that?
Well…there happens to be an election in a few months. The president certainly can’t run on the economy, can he? And the whole show me your taxes things will have gotten old by November. But a September surprise for millions of homeowners?
Think about how that would let the president slay the “Bush dragon” one more time. The president would not only get to fire Ed DeMarco in a very public and dramatic fashion…
But he would also get to play Obama the home giver, as he pays down millions of Americans’ mortgages, lowering their balances and their monthly mortgage payments with money that as of yet, doesn’t exist.
Now that would be really something to remind voters of in November.
Smells like political opportunism to me; what do you think?
Will it happen that way; or will it just be the same old same old? I don’t know; but I do know that another round of QE is more likely than not.
Why do I think this? Simple; what other card does the president have? And then, of course, there’s the Bernanke factor.
Surely Ben Bernanke, whose term at the Federal Reserve ends in January, unless he gets re-appointed, wouldn’t release even more debt upon the American people just to help the president get re-elected, would he?
I don’t for one second think that Bernanke has any interest in politics whatsoever…
But I do think that he likes his job at the Fed, and he knows that if Obama were defeated in November, his job would likely go to someone else…
Besides, Ben likes closure. He needs to finish the job he’s doing on the country…just like the president.
What does that mean?
For Bernanke, it means doing more of the same…and ultimately, using the IMF to bail out Europe. See this edition of The Gorrie Details: http://www.absolutewealth.com/us-bailout-of-europe-looks-more-likely/.
And for BHO? It’s all about remaking America in his own image…with OPM. And we can’t complain about Obama’s America, either. After all, we didn’t build it.
And those are…The Gorrie Details.