Is there anyone who can take the activities of the Federal Reserve quantitative easing policies and correlate it directly to the so-called housing recovery?
The American Enterprise Institute knows there is, and his name is Christopher Whalen, an investment banker at Carrington Investment Services.
In a talk at the institute Whalen disputes the benefits of quantitative easing, citing a saturation of Keynesian ideologies with a quickly diffusing power of federal cash flow.
In short, Whalen says QE3 is costing the American taxpayer big time, and not doing much else.
The following MUST WATCH video (Whalen comes in after an hour or so, with a slide show presentation) is filled with some particularly Whalen-esque gems in regards to lending and investments.
For example, QE3 keeps costs low for banks, but what about the knock-on benefits to potential homeowners?
"While we have reduced the cost of funds for the banking sector, it has not translated into credit growth," Whalen says at 01:11:14. "This is a really remarkable thing."
And are investors prepared for when the Fed leaves out of QE3?
"Investors are not mentally or professionally in a place where they are ready to underwrite the credit risks for mortgages," he adds.
But by keeping quantitative easing up, won't those markets eventually get more support?
"We are not seeing an indication of any greater propensity on the part of banks to loan, in fact, it's quite the opposite," Whalen said.
Whalen concludes that the end result of all this will eventually be a much smaller homeownership market and that the trend to support rentals homes will continue well into the future.