Housing Doom Housing Bubble Blog

Foreign central banks were once again net buyers of US obligations in the week ending August 29th. However, they remained net sellers of treasuries, although at a much reduced pace from recent weeks. Reuters does not appear to have produced their usual Thursday summary this week, so Doom will endeavor to produce the usual numbers from the Fed report. Just for yucks, we’ll borrow the Reuters boiler plate from a recent number to make the Doom version a bit easier to find should anyone out there be googling. Their report was one of only a few weekly hits on the Google News search |"agency debt"|.

The Fed said its holdings of Treasury and agency debt kept for overseas central banks rose $3.355 billion in the week ended August 29, to stand at a total of $1.983 trillion.

The breakdown of custody holdings showed overseas central banks sold $3.064 billion in Treasury debt to stand at a total $1.207 trillion.

The foreign institutions bought securities from government-sponsored agencies like Fannie Mae and Freddie Mac, adding $6.419 billion to their holdings, to stand at a total $775.8 billion.

Once again, thanks twist for the updated chart and graph.

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These comments from Peter Schiff were too good to relegate to the sidebar:

The financial institutions that are calling most loudly for a bailout claim the Government must act to protect homeowners. However, the most severe losses will not be born by homeowners but by those who loaned them the money. Therefore any bailouts will ultimately go to lenders not borrowers. Homeowners who offered no down payment and who have no equity in their homes will in reality lose nothing in foreclosure, except perhaps a debt burden on an overpriced house. In addition, even those homeowners who made down payments likely extracted larger sums in subsequent refinancings or home equity loans. With plenty of available foreclosed homes on the market to rent it is unlikely that these former homeowners will become homeless.

As a result, the only losses for most homeowners will be psychological, as their dreams of real estate riches vanish. For some paper millionaires, the sudden realization that they are flat broke will be somewhat disheartening. Also for those who thought retirement was simply a function of living in a home and allowing it to appreciate, the sudden realization that they will now have to finance their retirement the old fashioned way, by saving up, will be quite an eye opener. However, even if misguided government bailouts enable more borrowers to keep their homes the equity they thought they had will still be gone.

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