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I like it. It's the only thing that has a prayer of stopping the meltdown. I know you don't like it MD, but you're a young guy. You don't want this to get as bad as it probably will if they can't stop this asset deflation. You can't punish everybody just because they were ignorant. These mortgages have to be written down to the values of the underlying or the implosion will take down everything. Furthermore, if they don't stop the deflationary spiral, there will never be a reason to own anything.

This plan won't help me directly,but Most of my neighbors will definately be saved if this passes, It will probably be the only thing that can save cities like vegas right now.Otherwise there is no hope if you owe 500k on a 200k house.

 

It would help me in the future by stabilizing prices by stopping most of the forclosures.

 

I actually wrote Senator Reid several times about exactly such a plan.I wonder If he actually listened to what i said.Of course,I'm talking my book on this issue since I don't want prices to drop any further.Still,i feel it's the only solution and probably the cheapest in the long run.

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Hot day here in Melbourne, Australia, a new record! <temperature in Celsius>

wr_fpp_sun2-300x368.jpg

 

has actually reached 46.4 in my suburb (Caulfield), that's 115.5 Farenheit Caulfield weather station

 

No air conditioning at my place, currently 34.5 Celsius inside (94F), cool change is due in the next few hours.

 

Can't complain, electricity is still on! unlike the previous heatwave the week before last

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FCBs, instead of picking up the slack, are slowing their pace of buying of Treasuries even as they continue to furiously dump their GSE holdings. It is not out of the question that they might even start selling their Treasuries as their cash needs balloon simultaneously.

can't they just borrow against 'em in multiple tranches and leverage up to pull 100x cash out?

then they could invest it all in RE and score big, it always goes up

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This plan won't help me directly,but Most of my neighbors will definately be saved if this passes, It will probably be the only thing that can save cities like vegas right now.Otherwise there is no hope if you owe 500k on a 200k house.

 

It would help me in the future by stabilizing prices by stopping most of the forclosures.

 

I actually wrote Senator Reid several times about exactly such a plan.I wonder If he actually listened to what i said.Of course,I'm talking my book on this issue since I don't want prices to drop any further.Still,i feel it's the only solution and probably the cheapest in the long run.

 

This is in everyone's interest in my view. But I have yet to come up with an idea of how they can get around the supply problem when it comes to Treasuries, and the future problem of paying for the debt at higher rates? I just don't know.

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The most bullish thing that could happen is the failure to pass a bill at all and if they fail to spend the rest of the TARP. Then there'd be a prayer that the stock market could have a significant rally. Otherwise, I don't think so. But there's always something I hadn't thought of.

 

I disagree. If the bill fails it's also bearish. It's bearish no matter what happens with the bill.

 

But I've said in my blog that in general I support infrastructure projects, however I have little illusion that every good project will be perfectly balanced by useless pork.

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I'm still thinking about it. I have two theories which I will talk about next week in the report. I've sort of alluded to them.

 

I'll be eagerly waiting.

 

I don't know much, but I think the real economy is cutting its credit needs as we speak. Look at the fed H8 form, just released. And I don't think the virtual economy can expand money if it's not based on the needs of the real economy.

 

Same for private debt. The outstanding mortgage debt is collapsing at increased speed.

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This is in everyone's interest in my view. But I have yet to come up with an idea of how they can get around the supply problem when it comes to Treasuries, and the future problem of paying for the debt at higher rates? I just don't know.

 

 

To me, the entire problem comes down to reasonable valuation of real assets. That's why the mortgage idea is a winner. It's also why the 'new banks' idea is a huge winner. It's why the revaluation of housing stock is a winner.

 

It's why suspending mark-to-market is a terrible, awful, loser.

 

Think about it. Every single one of the economic problems the US faces are to do with incorrect valuation of assets, including forward values.

 

Market flows being what they are, the *instant* that assets of any variety start smelling like they're correctly valued with a chance of bring about an economic returm, liquidity will POUR into that sector. You've already seen a whiff of this in tech and also (incorrectly IMO but still) in BAC.

 

This is why the dump-to-700-and-rocket-to-1100 scenario makes sense to me.

 

I am not a permabear. I think of the current crunch as the prequel to the greatest bull market of my lifetime. The interconnectedness of the world, the velocity of capital, the incredible productivity of emerging markets... everything is in place.

 

But the current tactics are delaying the patient's recovery. The fever needs to break. The moment it does, hold on to your hats.

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This is in everyone's interest in my view. But I have yet to come up with an idea of how they can get around the supply problem when it comes to Treasuries, and the future problem of paying for the debt at higher rates? I just don't know.

 

Only time is the cure.

 

In the late 40s the debt/gdp was way, way above current levels. Like twice or so. And it all went down.

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To me, the entire problem comes down to reasonable valuation of real assets. That's why the mortgage idea is a winner. It's also why the 'new banks' idea is a huge winner. It's why the revaluation of housing stock is a winner.

 

It's why suspending mark-to-market is a terrible, awful, loser.

 

Think about it. Every single one of the economic problems the US faces are to do with incorrect valuation of assets, including forward values.

 

Market flows being what they are, the *instant* that assets of any variety start smelling like they're correctly valued with a chance of bring about an economic returm, liquidity will POUR into that sector. You've already seen a whiff of this in tech and also (incorrectly IMO but still) in BAC.

 

This is why the dump-to-700-and-rocket-to-1100 scenario makes sense to me.

 

I am not a permabear. I think of the current crunch as the prequel to the greatest bull market of my lifetime. The interconnectedness of the world, the velocity of capital, the incredible productivity of emerging markets... everything is in place.

 

But the current tactics are delaying the patient's recovery. The fever needs to break. The moment it does, hold on to your hats.

 

Very interesting. Very.

 

Btw, you said "the incredible productivity of emerging markets". The productivity in USA is also great. Usually it falls during the recessions. Not this time. In that regard this recession is not so bad as several previous ones.

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Very interesting. Very.

 

Btw, you said "the incredible productivity of emerging markets". The productivity in USA is also great. Usually it falls during the recessions. Not this time. In that regard this recession is not so bad as several previous ones.

 

Sure. I'm in Canada but the same thing applies here. Productivity globally is potentially explosive. The current crack-up will darwinistically enable greater productivity down the line. Lots of realignments, lots of old, great names falling by the wayside. A terrifically exciting time.

 

I think the strength of tech is a clue. We worry about the price of AAPL and GOOG but we don't think they're going to zero. Lots of other people not going to zero. I think you are beginning to see discrimination.

 

I have also been thinking a lot about the incredible surge in index- and sector-based ETFs. The shit we all trade. The problem with them is they treat corporations as commodities. RIMM is the same as AAPL is the same as MS. The huge inflows of capital to these ETFs surely means that there are huge arbitrage plays to be made which discriminate between, say, MS and AAPL. For the humble investor as well as the hedgies.

 

I mean just plot MS against AAPL over the last 10 years and you see what I mean. When ETFs buy AAPl and MS equally, that's an arb opportunity right there.

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:rolleyes: sorry but I have to ask....How does one " sort of" make a indirect reference to them. :rolleyes:

 

would that be like" sort of" , sort of :blink:

 

Well, I think I mentioned an idea or two about why, but sometimes I think I've written something when I haven't. I write a couple hundred pages of research weekly and I don't remember everything clearly. I will write something on Monday. But it won't be anything profound, I can assure you of that. It's just speculation on my part.

 

Uh.... :blink: :huh: What was the question? :lol:

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