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An economy on life support

By Lou Barnes, Friday, April 24, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/brykmantra/76765412/" target=blank>brykmantra</a>.

Another week of odd calm ... at its heart a void of information from government. The economy is on life support, but the intentions of the physicians are unclear.

In the data details, nothing new. Mortgage rates still rattle in a very narrow, high-four range, held so low only by the Fed's massive buying. The stock market has shown some buoyancy, holding its ranges: Dow 8,000 and S&P 850. more...

The illusion of economic stability

By Lou Barnes, Friday, April 17, 2009.

Flickr image by <a href="http://www.flickr.com/photos/dominicspics/3386180138/" target=blank>Dominic's pics</a>.

The Fed has succeeded in holding down Treasury and mortgage rates, but that is the only clear accomplishment by government so far this year.

A grand debate began last week between those who see Federal Reserve Chairman Ben Bernanke's "green shoots" and those who don't. The Fed's Beige Book summary described a "moderation in the pace of decline ... some sectors stabilizing at a low level." more...

Reality trumps Wall Street 'glee'

By Lou Barnes, Friday, April 10, 2009.

Flickr photo 'Antikamnia Nun' by Robot Zombie Monkey

This has been a strange week, marked by extreme divergence in evaluation of incoming economic data and disconnect between Main Street reality vs. Washington proclamation. Mortgage and Treasury rates were stable -- we no longer have markets, just the Fed (damned glad to have 'em, too).

The stock market began badly as solid, blue-collar bank analysts said the obvious: recession losses will soon overtake toxic dithering. Then wise assistance for life insurers gave support, and players turned on the stock-market horsefeathers machine. more...

Hope for a 'decline in the rate of decline'

By Lou Barnes, Friday, April 3, 2009.

The Fed's outright purchases of agency mortgage-backed securities -- bonds guaranteed by government-sponsored entities such as Fannie Mae or Freddie Mac -- are having the desired effect: Rates are down and staying down.

Even the Fed's immense power cannot force rates to 4.5 percent or lower (not quickly), but it has removed upside volatility. Mortgage rates should have run back way above 5 percent in a week like this -- a big bear-market stock rally and immense refinance demand -- and instead held near 4.75 percent. more...

'Do not underestimate the power of the Fed'

By Lou Barnes, Friday, March 27, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/dianaoctavius/3333902343/" target=blank>dianaoctavius</a>.

There will be many turning points in this first global recession of the modern era, but this week marks one of the good ones. The players: the Fed, the Obama administration, and maybe, just maybe ... the bankers.

The Fed is a central bank. All nations have one, each with one unique capability: the authority to print money. In normal times, central banks print money cautiously but routinely through the banking system -- draining in good times, increasing in recessions. more...

Economy demands full attention

By Lou Barnes, Friday, March 20, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/duchamp/4589838/" target=blank>Duchamp</a>.

The Fed's announcement of extraordinary intervention triggered ordinary responses in the markets: stocks had a nice moment; inflation mono-maniacs blew up gold and oil, and ran from the dollar; the 10-year Treasury note dropped from 2.95 percent to 2.52 percent in seconds; and briefly mortgages made it to 4.75 percent without fee.

All are reversing. The net mortgage gain: The plague of origination fees since December may give way, but rates are where they were, just under 5 percent, propped by unlimited demand. more...

Search for bottom offers peek into abyss

By Lou Barnes, Friday, March 13, 2009.

Flickr photo by <a href="http://www.flickr.com/photos/johnjoh/2822849966/">star5112</a>.

The Treasury this week effortlessly raked in $64 billion by selling long-term debt, and mortgage markets stayed about the same, just under 5 percent.

The outside world may choke on our paper someday, but not when its economies are failing faster than ours. German orders for manufactured goods in January fell 38 percent from the prior year, its exports down 21 percent. China is trying domestic stimulus but lives on exports, which are dropping at a 40 percent annual pace, its trade surplus down 87 percent. more...

Asset decline, but no 'Grapes of Wrath' rerun

By Lou Barnes, Friday, March 6, 2009.

Flickr photo by <a href="http://flickr.com/photos/tonythemisfit/2860050075/" target=blank>Tony the Misfit</a>.

General financial and economic deterioration has helped mortgage rates to fall close to their lows, still fee-heavy, but a "four" in front.

The decline in all long-term interest rates is no mean achievement, days before the Treasury will auction $63 billion in longer-term paper -- the cash volume the Treasury will need every two weeks this year. more...

Budget plan strands financial stability

By Lou Barnes, Friday, February 27, 2009.

Flickr photo by <a href="http://flickr.com/photos/orinrobertjohn/3012838083/" target=blank>Orin Optiglot</a>.

A strange week, with some encouraging and some not-so-encouraging moments -- on balance, more uncertainty at the end than the beginning.

Mortgage rates rose to just above 5 percent, but we have made that trip up several times after a high-four bottom and then dipped again. The Treasury market was more worrisome: The 10-year jumped to 3 percent upon confusion in the financial rescue and release of President Obama's budget. more...

Credit flow hinges on big-bank 'stress-test'

By Lou Barnes, Friday, February 20, 2009.

Flickr photo by <a href="http://flickr.com/photos/chewie/3034903278/" target=blank>Vibragiel</a>.

Weakness overseas has overtaken the U.S. economy as the chief worry in financial markets -- knocking the knees from under the stock market -- but in perverse benefit has made it easier for the Treasury to borrow and held mortgages below 5 percent.

That shift in fear center this week has created the misimpression that markets actively dislike Obama's financial rescue plans. more...

Treasury launches Normandy-like bank rescue

By Lou Barnes, Friday, February 13, 2009.

Tim Geithner's inaugural speech fell flatter than an egg in Kansas, but the problem lies in the audience, not in the speaker or the content.

The gripes were unanimous, if varied: Geithner was part of the problem and can't be the solution -- no details, no plan at all, no engagement with the crisis, the Obama administration is all dance and no delivery, the White House never should have allowed high expectations for the speech ... on and on -- and that was from the Democrats. more...

Borrowing our way out of trouble

By Lou Barnes, Friday, February 6, 2009.

Flickr photo by <a href="http://flickr.com/photos/65439930@N00/3020135979/" target=blank>geocam20000</a>.

A big week ahead will bring the best chance to touch mortgage lows just under 5 percent, and also the best chance for chaos during the last 20-months' falling-apart.

On Monday, Treasury Secretary Timothy Geithner will tell us what sort of financial system we may look forward to, if any. The details are secret, hence no idea how markets will react. On Tuesday, Federal Reserve Chairman Ben Bernanke will begin two-day testimony to Congress. (I don't know who I would least like to be: Bernanke, a senator, or out here watching.) more...

No sign of 'weapons of mass inflation'

By Lou Barnes, Friday, January 30, 2009.

Flickr photo by <a href="http://flickr.com/photos/jenrab/3062850686/" target=blank>jen_rab</a>.

Long-term Treasury yields blew up this week, along with mortgage rates. In two weeks, the 10-year Treasury-note has jumped from 2.25 percent to 2.85 percent, and mortgages from sub-5 percent to 5.5 percent (even that costs a 1 percent fee today), shutting down refinances altogether. Not even the all-time lows had created demand for purchase loans.

There are good odds that this move is temporary; even so, why did it happen? more...

An economic Manhattan Project

By Lou Barnes, Friday, January 23, 2009.

Image courtesy <a href="http://nuclearweaponarchive.org/Usa/Tests/GadgetC640c10.jpg" target=blank>nuclearweaponarchive.org</a>.

Long-term rates rose this week, mortgages up to 5.25 percent even with a 1 percent origination fee. Refinance demand, fear of massive sales of Treasury bonds ahead, and a new banking freeze combined to do the damage.

Refinance demand is big, but not comparable to 2003. Yes, the industry is 75 percent smaller, but this time only the very best applicants have access to good rates. more...

Judgment day for 'imperial' CEOs

By Lou Barnes, Friday, January 16, 2009.

Flickr photo by <a href="http://flickr.com/photos/midweekpost/152179693/" target=blank>midweekpost</a>.

Mortgage rates popped up today, but not far. A 1 percent origination fee still buys a "four" in front. The rise came partly in normal protective selling in advance of a four-day weekend, including MLK and inauguration.

However, other upward pressures may be more durable. Refinance demand is overwhelming. Also, flight-to-quality buying of bonds abated when the stock market reinforced its November low, and upon signs of effective banking-system rescue by the "Obamanauts." more...

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