QE3 or QE-Infinity? The Fed prints more money

680 WR KL good morning do you find organic feel a beautiful Friday were side it's Friday. Beautiful outside seniority starting your weekend you have to be Chester. You're only a single a walk the walk off my theory that the Obama over the over the mishandling of Libya. Well or some else to be concerned about the and that is QE3. Which is the the Federal Reserve announcing it's gonna dump more money into the economy to try to perk things up a little bit. This is over our heads so I think it's over most people's heads but it's not over -- our -- said so we thought we would bring his head in here very good morning usurped. Good morning good morning there can you explain to us what is this quantitative easing what will consist of and what we can expect from. Well the they're big addition in the big change in what they're doing is they're gonna start buying mortgage backed securities in the dollar amount I believe it's about forty billion dollars per month. And if you think mortgage rates are low now they're gonna get even lower as a result of this and you're gonna -- credit eased a little bit -- the banks are going to be of the make some money. By a lending money to out to folks who have credit ratings of say 620 to 608640. So you'd see a little bit of easing in credit ratings no way how did and -- the banks get more money. Well what they're gonna be able to do is there going to be able to loan the money out they're going to be of the borrow the money it from the Fed for zero and then they'll loan it out to your neighbor to. Awesome 3% so that's how the money enters the marketplace he gets given to the -- sold to the banks for freight. Yep and the banks can then loan it out why would the banks care at all their loaning it to -- credit is if they're getting the money for -- Well they still have to underwrite the standard alone and that's the it -- we have seen an improvement in underwriting standards over the last five years so. When you go to borrow money now -- you actually have to have a job you have to have assets you have to have income it's not relaxed like he was back in 2000 while I assume it's a whole -- It's the opposite of how it should be back when you can get alone simply for walking and assigning you name it should have been tough and now -- should be easy. And if you're -- easy now OK but anyways so they're funneling all this money into the banks in the banks won't make more loans and that will have what effect for us real people. Clue what they're hoping Todd is that they can inspire the housing market to get off the ground I mean the housing market is still the Achilles heel of the American economy wanna put something in perspective. 20% of American homeowners right now Todd are underwater on their mortgage so that means if you've got a mortgage. Eight at one out of every five Americans are underwater -- owe more on their home and with their home is worth. Which means they're frozen in place she can't move. You can't tell do anything financially because you're you to have that big asset that prided everybody the ability to. Borrow money to put their kids through college or what have you that's now a burden -- a liability it's not an asset rate. And now people are going to be able to use this program -- -- part of the program coming got a Bernanke will allow those people who were under water. You can be underwater as much as a 150%. Now Todd. And refinance your home. Into a 33 and a half percent rate mortgage so it's gonna help people authorities -- if you got Aussie Steve got to 6% mortgage and -- I ran into people all the time. They say to me Wahlberg -- got a -- six and a half and so why haven't you refinance. In -- sit well you know I don't have enough equity in my house -- you got to call the EU can now under the eight days it's called harp. HA RP yup that day and ended part of what Bernanke's doing his. You see he's got to get the housing market back on its feet no we've never had a recovery -- that taught. Without having a recovery in housing first and right now I told that number 20% homeowners are underwater you know. In healthy market it's 2% or so that tells you next. You know it's five years after the fact they should indicate to our listeners just how sick the housing market is it's still. On its knees it's still in really bad shape. But Barry -- -- says that all of this is proof that Obama's economic policies are working do you agree with that. Well no IBC here's the difference I know you guys are both hardcore Republicans and I respect that I'm not a Republican I'm an independent okay to -- and edges hard core independent hard -- independent. But the might might. Perspective on and he had the pol politics of this is I blame both parties being the Republican congress. This has demonstrated severe incompetence we don't know used to don't know cooks he doesn't know I don't know what my tax rates are gonna be on January 1. That's not Bernanke's fault that's Congress's fault that's the Senate's fault that's the president's fault. I mean you've got. -- this political system. That is just absolutely it blows my mind how incompetent and Americans should be just furious say I I tell everybody he should do -- vote against whoever the incumbent is because if they'd been in office there incompetent. And now what are the dangers that keeping interest rates at zero basically had -- down in value the Donald added value inflation while rare it's likely had. -- I I'm more cancer right and we -- to go hand in hand shall be your gonna have higher rates of inflation and the you're gonna have you know prices going up and then. You also have to think about. Senior citizens such senior citizens are getting killed in terms of their savings that they get nothing on the savings account the -- shopping around for CDs that pay. Point 8% to point 9%. It so if you're a saver if you keep money in the bank if you keep money in money market accounts and CDs which is the way a lot of senior citizens live right. The they've got to depleting asset they're taking 5% out and they're making 1% on the money if they can find. So a -- -- -- going to be until inflation hit it how bad quality. It's gonna be real bad. If I had to guess -- -- it's not gonna hit into EC the housing market straighten out the housing market looks even with that with the that is doing. Like it's gonna be three years out the Fed has committed to these low interest rates for at least -- in this is again and another pretty big surprise from yesterday. They're gonna keep interest rates low for at least another three years that's a long time it. He's so loyal about but it is and then that's designed to bring the housing market back. Yes and the and that will be the thing that spurs economic growth once again because that's the broken we all. On this bus right he can't -- he can't stimulate the things faster if it's got may have its -- entire reserve parts or whatever. That's right in -- thing to remember here too guys -- -- the foreclosure crisis started in 2008 that really the bulk of the foreclosures in the short sales are happening in the years 20092010. Well people who went through foreclosures and short sales in 20092000. -- Are eligible to start buying again they're gonna be able to go out and buying and and get financed again. Somewhere between three and five years after that event so somebody went through a short sale in 2010. In 2013. That's next year 201415. They are going to be able to get off the carpet and Columbine place and they're gonna have to do because they can't afford to pay rent -- are gone nuts if you talk to your friends that are renting apartments Dario tell you they they've had to move. They've had to move further out. They've they've had to buy when they didn't want to because rents are rising very rapid the other people on rental property are very happy instead -- all and end the out. In a talk about income disparity part of the problem we've got now is people who have money and people who have good credit are out they're buying investment properties like crazy. And then they're they're getting tremendous cash flow on those properties because they're able to rent them out -- exceedingly high rates tell it like you just mentioned aren't so QE3. Is the federal government dump or the Federal Reserve dumping money into the hands of banks. So they can loan it out. Yup they're in they're buying mortgage backed securities and we'll abide purchasing these mortgage backed securities. The idea is to keep interest rates low on mortgages and potentially make them even lower and to make credit available to people who. You know a year or two ago could not refinance or couldn't buy a house -- Perry are sharp financial exchange we will be listening nine to eleven today as every day here -- WRK a thank you Merritt thanks Gary. Very little clarification from a guy understands so I think we got a handle on it they're given money basically give money way to the banks to loan out. But those are the standards are still so tough on the banks that -- still only gonna give it to people are really good credit scores. And who were well positioned and 20% of the people still can't door refi or think they can't do refi because our underwater. The home values gunned down 20 but does a program that the harp program lets you dual refi even if you're underwater in your -- -- I just I have stellar credit and could get a mortgage the problem is the down payment because now they can insist on a 20% down payment on anything so if I found a little ramshackle shack up North Shore near the beach which is what I'm looking for. He is still have to come up with a 20% at least down payment I think it's even higher on as a. You don't even a ramshackle. Shack on the beach that's going to be a few hundred grand or at least is so that 20% of that is a big chunk of change right to nobody's buying. You got to write a really good book and get a really good advance I'm -- I have to pay I mean there's a buck and gets turned right enjoyable they let you go in you -- take that he get that option you know they've they've by the option on your book you run right down they've put the down payment. So be on the look -- for ramshackle shack by the beach or -- publisher who wants to give a nice advance an English or are now. -- we're gonna talk more about the whole Middle East situation North Africa okay people complained about the be inaccurate there. Each end. Is it -- a procedure it's not the bullets in the -- in the head and that's one of the stories out of Egypt that they told him don't put bullets a lot of Barney -- churning around offering defense of our embassies. Is that how it. You have feelings with a picture that's offensive about Mohammed if you don't back up for you can always pistol -- You could just a wet -- it's probably what they told the ice workers. Brian how I Friday guns news update 680 WRK OK we. Choose it how could.