Mortgage Credit News by Louis S Barnes - January 15, 2021

First the economy, then the fun.
The Fed made clear several things this week. Markets wander off into suppositions and sales pitches, and the Fed tends to raise its voice when the gap widens between its actual policy and markets, also corking its own officials who are off-message. Just in case somebody might miss the message, the chair gave extended Q&A, the vice-chair Clarida a technical but thundering speech, supported by the brightest of the rest, Lael Brainerd.
These short speeches are infinitely more worthwhile than anything published by Wall Street houses or other investment advisors or analysts. While a significant chunk of the American people today are lost in imaginary worlds and anger (both left and right but at the moment more on the right), senior Fed officials engage in the toughest of all intellectual work. They second-guess themselves, each other, their data past-present-future in a constant state of skepticism and recalculation, searching for the impossible: the center of objective reality.
The Powell Fed has rejected prior doctrine which fought inflation even when there was none, and has flipped properly to concern for deflation. Clarida in the most blunt manner possible: we will not raise the cost of money until after a year or more of inflation demonstrably above 2%. Which he knows could be a hell of a lot longer than he hopes. Powell dismissed any thought of tighter policy. The Fed will continue to buy $80 billion in Treasurys monthly, open ended. Also $40 billion in MBS -- $40 billion net of payoffs from sales or refis, which can result in gross purchases over $100 billion monthly.
I suspect the Fed has had a hand in the rise in the yield of 10-year T-notes from 0.50% in August to 1.10% two weeks ago, as well as the stabilization near 1.10%, and effect of a slight rise in mortgage rates. The Fed does not want a housing bubble, and mortgage rates near or under 3.00% are plenty low.
Why all of this bond-buying, QE4? To hold rates down, sure, but just as in QE1-2-3, 2008-2013 to inject credit directly into the economy. The Fed’s H.8, total bank credit shows that last summer bank credit did not expand at all, the result of residual damage to banks and lasting fear from the crisis in March.
Economic data... Really, not worth the bother. Big headlines, still this nonsense about “recovery stalling” when there is neither a recovery nor a stall. We are stuck until new Covid cases collapse, and nobody knows at what point or slope we will put down our fear and resume normal consumption.
Fannie and Freddie are safe for this presidential term. There will be no plug-pulling privatization. New Treasury Secretary Yellen certainly wishes for safe operations, but their direct regulator, the infernal Mark Calabria will be fired as soon as legally permissible.
Biden stimulus... The new package is better than prior ones, targeting payments to those in need and including state and local government assistance. But $1.9 trillion too big to make it -- an appropriate balloon to float, but half of that is more likely, especially as the vaccines and spring may produce a happy surprise. We used to watch Republican senators at the moderate edge; now watch moderate Democrats. This is still a divided government. Bernie Sanders now chairs the Senate Budget Committee, but others in his party would like to be re-elected.
Trump’s last gift to the nation... sometime between now and Wednesday morning, the pardons.
Returning to sanity, and not... Republican rookie Rep. Boebert elected by Colorado’s 3rd District, our conservative west, this week encountered a metal detector at the Capitol which bleated at her purse pistol. Boebert announced that it was her right to carry a concealed firearm wherever and whenever she wishes. The Second Amendment: “A well regulated Militia, being necessary to the security of a free State, the right of the people to keep and bear Arms, shall not be infringed.” Boebert is not regulated, and channels Sarah Palin, but without Palin’s sharp intellect.
Free speech... From the Second Amendment to the First... Another excellent result from the failed coup will be revised understanding of free speech on social media and especially anti-social media.
Free speech has never included the right to force the NYT or WSJ to print your letter. We have the right to yell, to picket, to burn flags and distribute leaflets (so long as not littering), and to self-publish. But we do not have the right to force others to distribute for us. Robocalls are illegal.
The US president can call a press conference and will receive wide coverage every time. Shutting down a Twitter account limits objectionable speech, but it was not free in the first place. Mr. Trump stepped on his tweeter and broke it, hardly the fault of the medium.
“Objectionable”? Legalisms aside (1969 Brandenburg v. Ohio, speech is not free "... If directed to inciting or producing imminent lawless action and is likely to incite or produce such action"), we are rediscovering the hazards of magnified speech. Radio gave power to exceptional voices: FDR, Father Coughlin, and Hitler, for a few. We acted on our wise fear of television, with rules for equal time, but misplaced all except truth in advertising.
Social media make it far too easy to spread and to concentrate bad ideas. We reject teenagers destruction of each other’s reputations, but allow adults to say things they never would on the way to church, or in other face-to-face gatherings. Worse, social media help dangerous people to find each other and to cult-up.
Very old newspaper culture involves political slant, but always editors enforcing the quality of content. Television also had standards for content, with greater vigor than papers until the advent of Fox, but speakers do not remotely have a right to broadcast. Editors are expensive and require great institutional effort to decide on consistent and even-handed policy for content. Best of luck to dweebs profiteering on social harm.
Impeached, again? In Western movies, the mob shouts, “Git a rope an’ string him up!!” And then a responsible if prissy citizen says, “But we haven’t had a trial.” The mob replies, “Okay, we’ll have a trial and then hang him!”
Aside from the two-time loser and post-departure aspects, this case is truly unique. Those who object to speed, such as proceeding directly to a vote and hanging might consider that the prosecutors -- impeachers -- are the 435 House members, all of whom were witnesses to the crimes (sedition and inciting assault), half were targets of the crimes, and about one-third were accomplices before and after. All of the 100 Senators who will sit as jury were also witnesses, and half were targets, although only nine were accomplices.
Vaccination progress? At my vast age I qualify for the round following care providers and responders. Our governor, who has done well through all of this told CO NPR this morning to sign up on covid.19@colorado.gov . Yep, the hospital where my rarely seen vet has his office topped the county list. Click here.
“There are 9,700 qualifiers in our database, and we will select you at random and notify you. Do not contact us.”
Warp speed. No elbowing.