Illiquid,nightmare of a market

[MrHanky]

Bulls still bringing higher lows and higher highs,but it's crazy out there...

[MrHanky]

Love that tape paint in the last 20 seconds....almost 4 ES points in 20 seconds

 

Nothing to see here

[capitall]

Look at this: Swiss government bonds. The Swiss have people paying to lend them money. The yields are not just slightly negative. They are negative by a full 1%. Now that's a good way to keep a balanced budget. Nice situation if you can get it. All other governments are jealous of the Swiss.

 

http://online.wsj.com/article/SB10001424053111904199404576540601403370190.html

[Trader Joe]

Dear TJ.What do you think about NLY (Annaly Capital Management Inc)???they pay 15% dividend or sth like that.TIA

 

I own their red headed step child CIM

 

Run the same way, only with more equity rather than leverage using debt like many do -- debt financing has tendency to become dear in a crisis -- equity (crapcommon) not so much as it is "one and done" with regards to financing. Also NLY does more of the GSE paper, CIM get's into the private label toilet paper

 

So NLY is OK by me, as are MFA, ARR and CIM

 

Of the aforementioned, I own all except for NLY, but have owned it in the past

 

Doing a long dated buy/write will bump up the yield too

[Trader Joe]

Looks like they put Mandy on a diet

 

She be lookin' fine

[capitall]

http://brucekrasting.blogspot.com/

 

This guy thinks " the Administration is working on a plan to Re-Fi residential mortgages on a massive scale."

 

Here's the NYT article about it.

 

http://www.nytimes.com/2011/08/25/business/economy/us-may-back-mortgage-refinancing-for-millions.html?pagewanted=a

[capitall]

http://brucekrasting.blogspot.com/

 

This guy thinks " the Administration is working on a plan to Re-Fi residential mortgages on a massive scale."

 

Here's the NYT article about it.

 

http://www.nytimes.com/2011/08/25/business/economy/us-may-back-mortgage-refinancing-for-millions.html?pagewanted=a

 

TJ, or anyone who knows, if this happens, how will it affect companies that invest in GSE's? Like NLY and the companies you listed above.

[DrStool]

http://brucekrasting.blogspot.com/

 

This guy thinks " the Administration is working on a plan to Re-Fi residential mortgages on a massive scale."

 

Here's the NYT article about it.

 

http://www.nytimes.c...ml?pagewanted=a

 

That would wipe out a lot of fictitious capitals, forcing mortgage banks, banks, Fannie, and Freddie to recognize their massive unrealized losses. The government's ownership of Fannie and Freddie means that either the taxpayers would be forced to fund a couple trillion in losses, or the government would renege, leaving investors, including FCBs and the Fed, with massive losses. The capital of the TBTF banks would be wiped out. It would trigger absolute financial collapse. Would force recognition of trillions in depositor losses.

 

In short. Not gonna happen.

[DrStool]

There is only one game in town. Extend and pretend. That's the only option. The alternative is Armageddon.

[DrStool]

The reason the GSEs and banks oppose it is because there are still millions of underwater mortgages that are still current, allowing the holders to pretend that the collateral backing is good and that the security is good. If you force cramdowns, game over.

 

The thing these mainstream farticles always leave out is that for every weiner there's an equal, opposite, or greater looser.

 

It's like the Fed pretending that zero interest rates have only positive effect, ignoring the trillions in lost interest income to investors, from small savers and retirees, to big institutions, including pension funds and insurers.

 

Friggin joke. The Fed is in the pocket of the big debtors- criminal enterprise corporate America. The criminal dons stuff their pockets with billions at the expense of the innocent aided and abetted by Don Bernanke, consigliere to the world's most powerful criminal gangs.

[JonLaw]

There is only one game in town. Extend and pretend. That's the only option. The alternative is Armageddon.

 

Yep.

 

And it's going to go on as long as it can go on.

 

0% interest rates as far as the eye can see...

[capitall]

The reason the GSEs and banks oppose it is because there are still millions of underwater mortgages that are still current, allowing the holders to pretend that the collateral backing is good and that the security is good. If you force cramdowns, game over.

 

Thanks for your comments about this, Doc. You have accumulated a lot more knowledge than most of us have about all this, and so you are able to bring issues to light that were not clear before, from just those articles I posted the links to.

[Jorma]

http://brucekrasting.blogspot.com/

 

This guy thinks " the Administration is working on a plan to Re-Fi residential mortgages on a massive scale."

 

Here's the NYT article about it.

 

http://www.nytimes.com/2011/08/25/business/economy/us-may-back-mortgage-refinancing-for-millions.html?pagewanted=a

 

Ass'uming there actually was a massive refi boom and assuming it happened quickly, neither likely, then it is still just a circle jerk. No net expansion of credit. So they talk about $85 billion in consumers pockets. Hell, the Treasury is borrowing near that much this week and spending that borrowed money over the next 2 or 3. Have you noticed a boom out there?

 

It would allow the replacement of dodgy GSE paper with new and perceived less dodgy GSE paper, all we can presume then on the GSE's books. The Fed could buy more Treasuries to replace the GSE paper and other bagholders could pass the bag along. All a sort of short term liquidity plus but net net zilch.

 

PS, and what Lee said.

 

PPS the whole idea is based on muddy concepts.

[Jetlag]

Look at this: Swiss government bonds. The Swiss have people paying to lend them money. The yields are not just slightly negative. They are negative by a full 1%. Now that's a good way to keep a balanced budget. Nice situation if you can get it. All other governments are jealous of the Swiss.

 

http://online.wsj.com/article/SB10001424053111904199404576540601403370190.html

 

I've been joking about this possibility in Trashuries for years, maybe it'll actually happen?

[Trader Joe]

That would wipe out a lot of fictitious capitals, forcing mortgage banks, banks, Fannie, and Freddie to recognize their massive unrealized losses. The government's ownership of Fannie and Freddie means that either the taxpayers would be forced to fund a couple trillion in losses, or the government would renege, leaving investors, including FCBs and the Fed, with massive losses. The capital of the TBTF banks would be wiped out. It would trigger absolute financial collapse. Would force recognition of trillions in depositor losses.

 

In short. Not gonna happen.

 

I couldn't disagree more (cramdowns excluded)

 

But I'm not havin' another Hurricane Smackdown debate here

 

So I'll leave it at that