Dennis' Mortgage Blog

Today Federal Reserve Chairman Ben Bernanke gave a speech to international bankers in Atlanta.  His comments have been highly anticipated given last week's news that the job market is stagnant and economic growth at an anemic 1.3%.

Would Bernanke announce QE3 to begin after the approximate $900 billion in spending from QE2? 

Would Bernanke acknowledge deep concern about the lack of job growth, the further decline of national home prices, economic growth that is close to falling back into recession?

Would Bernanke blame earthquakes and critics for our economic state?

Would Bernanke say all is well and we recovery is occurring?

No.

No.

Yes.

Yes.

Bernanke did not announce another round of pouring hundreds of billions of dollars into the economy, he feels the $600 billion in Treasury purchases from new money and $350 billion in Treasury purchases mortgage proceeds is enough for now.  Indicating that he felt job and economic growth would pick up steam in the second half of the year, Bernanke said, "Overall, the economic recovery appears to be continuing at a moderate pace." 

If this is "moderate" I do not want to know how he would label zero growth.

Bernanke spent about half his speech criticizing those who have criticized the Fed's easy money policy and Quantitative Easing programs for higher fuel and commodity prices.  Blaming the sudden and sharp increase in prices this year on increased global demand, Bernanke told skeptics that a cheap dollar was not the cause of this increase demand. 

Regarding what he characterized as a surprisingly weak economy so far this year Bernanke blamed the slow April to June quarter on the Japanese earthquake. 

My thoughts on the speech were that Bernanke has come across as a bit more defiant than he should be given the trillions spent by the Fed and the federal government over the past two and a half years with no indication any of the spending has resulted in anything but higher stock prices and higher costs for food, energy and raw materials.  Blaming the Japanese earthquake for a poor performing quarter in the United States rings hollow with me, we were headed for a bad quarter before the earthquake.

Stocks dropped almost 100 points on the S&P immediately following Bernanke's remarks, mostly on the news that the Fed would not be pumping more dollars into the economy to boost future stock prices.  Bonds and mortgages benefited from the stock sell off as Mortgage Backed Securities surged following Bernanke's speech.

Rates are great, don't miss out.

Mortgage rates continue to remain low for the time being. Call or email Dennis today to determine your purchasing power for a new home loan or monthly savings from a refinance. Direct dial 562-472-1118