If the Home page is set to be a static page like you have, I think that the posts page is supposed to be a different page. http://codex.wordpress.org/Settings_Reading_Screen
You can display your recent posts on front-page.php with WP Query, though: http://codex.wordpress.org/Class_Reference/WP_Query
Here’s a mostly inclusive starter code, followed by the loop. It’s copied from a sublime text helper I have. You probably won’t need most of the parameters for this instance. http://pastebin.com/tjeMW2Rf
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