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- Freddie Mac cuts MBS purchases in half | 2013-10-25 | HousingWire
Freddie Mac cut its purchases of mortgage-backed securities by more than half in September, falling in line with the government's goal of reducing its global footprint in the secondary mortgage market.
So, who's picking up the slack, and is that good for the economy as a whole?
- From ashes of housing crisis, a new type of bond
CNBC's Diana Olick reports on Blackstone:
Much like a mortgage-backed security (MBS), it is a rental-backed security.
"We're really going to want to talk to management and hear their story," said Whalen [Bryan Whalen, managing director of U.S. fixed income at TCW]. "Some of these companies that have been rumored of coming to the market soon are successful financial companies, but this is a new business for them. ... So not only do we want to know how they're operating and how efficient they are, but we also want to understand their commitment to it."
While some have questioned the longevity of the single-family rental trade, given that home prices are rising and foreclosures are decreasing, homeownership is still sliding. Institutional investor purchases reached a new high in September, according to RealtyTrac, at 14 percent of all U.S. residential sales.
Source ... https://www.cnbc.com/id/101143966
- A Code Red World | The Big Picture
Is John Mauldin needlessly handwringing?
We like John Mauldin's writing and often insightful analysis, but does he misunderstand that the Fed's purchases really don't have to go anywhere, that there's no hurry or panic at the Fed having such a large balance sheet, that this generation at the Fed really has learned its lesson, and that John really shouldn't be echoing Alan Greenspan, who may not have really absorbed just how wrong he was all those decades?
We aren't saying that he has no points. We think the stock market is grossly overpriced for instance, but the austerity tendencies in John's writings just seem off. The Austerians (austerity from the Austrian School of Economics types) have not been right so far on anything post-crash, not even Latvia. However, Japan has finally started to budge. Let's hope they don't derail due to sales-tax increases.
The endgame for the current crisis is not difficult to foresee; in fact, it's already underway. Central banks think they can swell the size of their balance sheet, print money to finance government deficits, and keep rates at zero with no consequences. Bernanke and other bankers think they have the foresight to reverse their unconventional policies at the right time. They've been wrong in the past, and they will get the timing wrong in the future. They will keep interest rates too low for too long and cause inflation and bubbles in real estate, stock markets, and bonds. What they are doing will destroy savers who rely on interest payments and fixed coupons from their bonds. They will also harm lenders who have lent money and will never be repaid in devalued dollars, if they are repaid at all.
We come down somewhere between Yellen and Kenneth S. Rogoff, a Harvard economist, in this argument. How about you?
Rogoff says we should go to 6% inflation for a few years just to really heat the economy. Yellen probably falls at around 3-3.5%.
Please understand that if the economy were to pick up enough and if we were to then be careful not to repeat the deregulation/speculation/sub-prime fiasco, etc., we could lift the Cost-of-Living adjustments for all retirees on Social Security making up for them all losses due to inflation and then some.
- Giant investment funds fuel new boom in Pierce County real estate | Real Estate | The News Tribune
This is the most extensive article on the large all-cash buyers we've seen in months. It brings plenty of new insights on the issues surrounding their efforts too.
The institutional investors' plans for these homes long-term is an open question. If the companies ultimately plan to sell the properties, they seem to be making a bet that values will rise enough to allow them to recoup costs. In the meantime, some market trends support the idea of betting on rentals: First-time buyers face tighter requirements for a home loan. Overall rates of homeownership are not expected to hit the pre-recession peak.
Not everyone is convinced treating housing as a commodity is a good business plan.
- Millinocket selling tax-acquired properties for low, low prices — Penobscot — Bangor Daily News — BDN Maine
"It is just incredible to pull off a six-unit house for $13,000," Smith added. "The structures are sound, and they certainly were worth the investment."
- Abenomics Could Widen Japan's Income Gap - Businessweek
Tomoko Kawamura, 33, a pharmaceutical company worker in Tokyo, bought a Louis Garneau bicycle costing about 50,000 yen ($510) and a 100,000 yen MacBook Air laptop with proceeds from stock investments this year. She owns a one-bedroom apartment in Tokyo's well-heeled Meguro district. "I'm enjoying the benefits of Abenomics," says Kawamura.
Eight hundred kilometers (500 miles) away in Ehime prefecture, Miyoko Yamazaki, 81, struggles to cover the rising cost of gasoline for her regular hospital trips. "Prices are going up, making our lives tougher," says Yamazaki, a retired taxi driver who owns no stocks or property. "I don't really feel that the economy is booming."
In a recent speech in London about his mix of stimulus, loose monetary policy, deregulation, and tax hikes, Japanese Prime Minister Shinzo Abe evoked the late Margaret Thatcher when he repeated her slogan "there is no alternative." One of the possible byproducts of Abenomics: a Thatcherite division of wealth.