Bernanke’s reboot of housing bubble comes full circle

Ever since former Fed Chairman Alan Greenspan started the central bank down a path of Keynesian madness, the entire economy has been based on a series of bubbles, crashes, and more bubbles.  And most notable and recent of these bubbles was the one involving housing that not only popped in early 2007, but led the Credit Crisis that changed banking and monetary policy forever.
Seven years later, Greenspan’s successor proved to be little more than a parrot, where underneath Bernanke’s erudite rhetoric about using Quantitative Easing (QE) to recover the general economy, the reality was that the fraudulent Fed head sought to rebuild the very industry that had nearly brought down the global financial system in 2008.  And in a new announcement on Dec. 5 by the nation’s largest mortgage underwriter, the new housing bubble has finally come full circle, and the clock is now ticking for its inevitable bursting.

Don’t have income?  Don’t have a good enough credit score?  That’s ok!  As long as the renters you intend to have live in the house do!

“It could be a credit problem, it could be an income problem, it could be an employment history problem, it could be a debt-ratio problem. There are a number of things that can affect a person’s situation,” said Chris O’Connell, a licensed mortgage loan officer with Nations Reliable Lending in Edina.

Mortgage giant Fannie Mae recognizes these hardships, and in response will soon offer a new kind of mortgage with new rules designed to add flexibility for borrowers.

“They’ve recognized that households have changed and our guidelines need to change with it,” said O’Connell.

HomeReady will consider incomes from others planning to live in the house without being a borrower on the loan.

This means, if you live with parents, siblings, working children or maybe a roommate, as long as they make 30 percent of the household income, Fannie will include their money to help you qualify for a loan.

These are being called “non-borrowers” by Fannie. – Fannie Mae

In 2006/07 it was sub-prime mortgages and their paper to fuel mortgage backed securities (MBS) that led to the industry’s crash and subsequent Credit Crisis.  Now sub-prime has returned in a bizarre modified form where the one signing the mortgage can claim the income of anyone who actually will reside in the home to be eligible for a loan.

(Perhaps parents can leech off their millennial children after all)

Housing-Bubble
Housing-Bubble

The bottom line is that the banks no longer have any assets to invest their cheap borrowed money into, and without a growth in the velocity of money on Wall Street the deflation our economy is seeing now will shatter the financial system as current assets lose value, and the banks have no way of paying off their debt obligations.  And perhaps it is ironic as well that earlier this week the Fed passed a new law shutting off the Emergency Window for the banks in what appears to be an acknowledgement of a coming crisis, only this time both the Fed and the banks have no more aces in the hole, and only desperation to get the public on the hook one last time.

Fool me twice.  Shame on me.

7 comments

  1. Ken my friend, I don’t think you fully understand the brilliant minds at work in the halls of stupidity in both DC & on Wall Street (kidding of course). Actually the stupid ones are us the sheeple, for allowing this ‘bs’…..!
    From the above analysis:

    Now sub-prime has returned in a bizarre modified form where the one signing the mortgage can claim the income of anyone who actually will reside in the home to be eligible for a loan.

    And, why shouldn’t it be counted, after all, they count “Taxes on the UCA” (Unaffordable Care Act) as part of the GDP (now the biggest part btw). These guys & gals are wizards of business & finance. Meanwhile the real money train continues forward in a positive direction, while fiat magic continues to go backwards.

    We in the USSA are on the wrong team.

    Upside down maybe, stupid definitely, to us locals doomed eventually, definitely!

    Wolf Gray

  2. This repeat of what led to the 2008 crisis is why I think its less of an ‘accident’ and a ‘mistake’ and more proof of deliberate criminal planning.
    All these are the distraction from the fact the entire system is made of AIDS and Fail and set up on purpose to be that way to keep human civilization on the hamster wheel, surviving to pay off the costs of living, suffering from the lack of financial education that people like Robert Kiyosaki have been screaming from the rooftops about since his ‘Rich Dad Poor Dad’ came out, although he does seem to have a blind spot when it comes to acknowledging this is not an accident and the ‘Cabal’ are made up of highly evil psychopaths who know what they are doing.

    1 million dead Iraqis and deformed Iraqi kids from depleted uranium poisoning is just part of business to them. They will lose in the end because their actions go against Creation, but not before they are done leaving enough death and destruction in their wake.

    Crisis like the coming Financial Reset have their silver linings. I bumped into a guy here in Singapore whose in his 70s who lost his savings to Lehman Brothers collapse. Now he’s a follower of independent media like Infowars and knows about the difference between hard assets and paper magic money and a little more open minded. Its a sad fact of the human individual that crap must hit the fan in a direct way for that person’s arse and sofa to part company.

    Nowadays the only motivation for telling people the uncomfortable Truth is so they can’t accuse me of not warning them when it does happen.

    1. SOF,I agree, they know darn well what they are doing. You’d have to be a moron not to and I don’t think they are as much stupid as they are evil.

  3. Madness ! How can I share this with family and friends without upsetting the RM contributors ? I could cut and paste it but I and others pay for this insight and it is much appreciated. But this madness has to stop before our civilization is destroyed. Suggestions ?

    1. Since I just contribute here to the site, I can’t talk on V’s policies regarding your suggestion here… so hopefully he might shed some guidance for you on passing this information on to family.

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