Bailout doubters may want to read this

[SD Realtor]

The more articles I read like this, the more I believe our tax money will be used to bailout the mess… By the time it is all said and done I believe 12 figures.

Very interesting WSJ article.

http://online.wsj.com/article/SB120536045253831681.html?mod=yahoo_hs

[cashflow]

Best quote in this, ‘what’s unthinkable today may be seen the best of bad alternatives tomorrow’. Doesn’t that summerize the situation!

I think this is the biggest unknown in housing today; what is the government going to do and how will it impact the market? They will do everything they can to intervene in bank collapse or total market collapse (like the piggs on here are all predicting is possible). They have many more tools than they did in the depression era…so depression, just don’t see it…recession definitely. Implementing these type of bailout programs seems to be even trickier than inventing them. All I know is this type of rhetoric came too late for many many homeowners who have already been kicked out or are in the process…just doesn’t seem like they can implement anything fast enough (gov. isn’t known for it speed and agility to react).

[cashflow]

Best quote in this, ‘what’s unthinkable today may be seen the best of bad alternatives tomorrow’. Doesn’t that summerize the situation!

I think this is the biggest unknown in housing today; what is the government going to do and how will it impact the market? They will do everything they can to intervene in bank collapse or total market collapse (like the piggs on here are all predicting is possible). They have many more tools than they did in the depression era…so depression, just don’t see it…recession definitely. Implementing these type of bailout programs seems to be even trickier than inventing them. All I know is this type of rhetoric came too late for many many homeowners who have already been kicked out or are in the process…just doesn’t seem like they can implement anything fast enough (gov. isn’t known for it speed and agility to react).

[cashflow]

Best quote in this, ‘what’s unthinkable today may be seen the best of bad alternatives tomorrow’. Doesn’t that summerize the situation!

I think this is the biggest unknown in housing today; what is the government going to do and how will it impact the market? They will do everything they can to intervene in bank collapse or total market collapse (like the piggs on here are all predicting is possible). They have many more tools than they did in the depression era…so depression, just don’t see it…recession definitely. Implementing these type of bailout programs seems to be even trickier than inventing them. All I know is this type of rhetoric came too late for many many homeowners who have already been kicked out or are in the process…just doesn’t seem like they can implement anything fast enough (gov. isn’t known for it speed and agility to react).

[cashflow]

Best quote in this, ‘what’s unthinkable today may be seen the best of bad alternatives tomorrow’. Doesn’t that summerize the situation!

I think this is the biggest unknown in housing today; what is the government going to do and how will it impact the market? They will do everything they can to intervene in bank collapse or total market collapse (like the piggs on here are all predicting is possible). They have many more tools than they did in the depression era…so depression, just don’t see it…recession definitely. Implementing these type of bailout programs seems to be even trickier than inventing them. All I know is this type of rhetoric came too late for many many homeowners who have already been kicked out or are in the process…just doesn’t seem like they can implement anything fast enough (gov. isn’t known for it speed and agility to react).

[cashflow]

Best quote in this, ‘what’s unthinkable today may be seen the best of bad alternatives tomorrow’. Doesn’t that summerize the situation!

I think this is the biggest unknown in housing today; what is the government going to do and how will it impact the market? They will do everything they can to intervene in bank collapse or total market collapse (like the piggs on here are all predicting is possible). They have many more tools than they did in the depression era…so depression, just don’t see it…recession definitely. Implementing these type of bailout programs seems to be even trickier than inventing them. All I know is this type of rhetoric came too late for many many homeowners who have already been kicked out or are in the process…just doesn’t seem like they can implement anything fast enough (gov. isn’t known for it speed and agility to react).

[SD Realtor]

I pretty much share your assessment. It just bums me out for alot of reasons. I agree that this will not stop the cycle but it may indeed slow things down and it may provide an artificially induced floor. As someone who has been working hard to save alot of money this irritates me. Oh yeah and watching my tax money get split up between bailout wall street lenders, and FBS, well that is just a cherry on top of the sundae.

SD Realtor

[SD Realtor]

I pretty much share your assessment. It just bums me out for alot of reasons. I agree that this will not stop the cycle but it may indeed slow things down and it may provide an artificially induced floor. As someone who has been working hard to save alot of money this irritates me. Oh yeah and watching my tax money get split up between bailout wall street lenders, and FBS, well that is just a cherry on top of the sundae.

SD Realtor

[SD Realtor]

I pretty much share your assessment. It just bums me out for alot of reasons. I agree that this will not stop the cycle but it may indeed slow things down and it may provide an artificially induced floor. As someone who has been working hard to save alot of money this irritates me. Oh yeah and watching my tax money get split up between bailout wall street lenders, and FBS, well that is just a cherry on top of the sundae.

SD Realtor

[SD Realtor]

I pretty much share your assessment. It just bums me out for alot of reasons. I agree that this will not stop the cycle but it may indeed slow things down and it may provide an artificially induced floor. As someone who has been working hard to save alot of money this irritates me. Oh yeah and watching my tax money get split up between bailout wall street lenders, and FBS, well that is just a cherry on top of the sundae.

SD Realtor

[SD Realtor]

I pretty much share your assessment. It just bums me out for alot of reasons. I agree that this will not stop the cycle but it may indeed slow things down and it may provide an artificially induced floor. As someone who has been working hard to save alot of money this irritates me. Oh yeah and watching my tax money get split up between bailout wall street lenders, and FBS, well that is just a cherry on top of the sundae.

SD Realtor

[capeman]

This won't happen…

 

There are two very relevant statements in there that contradict the argument and put a nail in the idea.

1) The Fed is trading some U.S. Treasurys for mortgage-backed securities to arrest the decline in prices that is pushing up mortgage-interest rates.

These are only temporary trades or swaps. The Fed cannot permanently trade U.S. Treasuries representing it's own assets for junk securities. The bond market would make them pay dearly for this. The swap occurs since the U.S. Treasuries need to be traded back to the Fed at maturity and then the Fed can reinitiate the trade again (likely accepting securities backed by assets of even less value).

2) One big caveat: This works only if assets truly are worth more tomorrow than they'll fetch today.

Who at this point thinks that any lending banks assets will be worth more in the near future than they are today? (Hint: That's why the S&P and Banking Index have been doing so well over the last year!) An even bigger and easier question at this point… Who thinks that the assets backing all of this paper being passed around will be worth more tomorrow than currently? Anyone looking at an ABX, CMBX or CDO spread chart or Case/Schiller HPI can answer this… actually I don't think anyone even has to look anymore!!

The Fed and the Govt' cannot bailout the housing and credit markets at this point without BKing both entities and causing post WWI German-style inflation. Not going to happen! 😉

 

 

[capeman]

This won't happen…

 

There are two very relevant statements in there that contradict the argument and put a nail in the idea.

1) The Fed is trading some U.S. Treasurys for mortgage-backed securities to arrest the decline in prices that is pushing up mortgage-interest rates.

These are only temporary trades or swaps. The Fed cannot permanently trade U.S. Treasuries representing it's own assets for junk securities. The bond market would make them pay dearly for this. The swap occurs since the U.S. Treasuries need to be traded back to the Fed at maturity and then the Fed can reinitiate the trade again (likely accepting securities backed by assets of even less value).

2) One big caveat: This works only if assets truly are worth more tomorrow than they'll fetch today.

Who at this point thinks that any lending banks assets will be worth more in the near future than they are today? (Hint: That's why the S&P and Banking Index have been doing so well over the last year!) An even bigger and easier question at this point… Who thinks that the assets backing all of this paper being passed around will be worth more tomorrow than currently? Anyone looking at an ABX, CMBX or CDO spread chart or Case/Schiller HPI can answer this… actually I don't think anyone even has to look anymore!!

The Fed and the Govt' cannot bailout the housing and credit markets at this point without BKing both entities and causing post WWI German-style inflation. Not going to happen! 😉

 

 

[capeman]

This won't happen…

 

There are two very relevant statements in there that contradict the argument and put a nail in the idea.

1) The Fed is trading some U.S. Treasurys for mortgage-backed securities to arrest the decline in prices that is pushing up mortgage-interest rates.

These are only temporary trades or swaps. The Fed cannot permanently trade U.S. Treasuries representing it's own assets for junk securities. The bond market would make them pay dearly for this. The swap occurs since the U.S. Treasuries need to be traded back to the Fed at maturity and then the Fed can reinitiate the trade again (likely accepting securities backed by assets of even less value).

2) One big caveat: This works only if assets truly are worth more tomorrow than they'll fetch today.

Who at this point thinks that any lending banks assets will be worth more in the near future than they are today? (Hint: That's why the S&P and Banking Index have been doing so well over the last year!) An even bigger and easier question at this point… Who thinks that the assets backing all of this paper being passed around will be worth more tomorrow than currently? Anyone looking at an ABX, CMBX or CDO spread chart or Case/Schiller HPI can answer this… actually I don't think anyone even has to look anymore!!

The Fed and the Govt' cannot bailout the housing and credit markets at this point without BKing both entities and causing post WWI German-style inflation. Not going to happen! 😉

 

 

[capeman]

This won't happen…

 

There are two very relevant statements in there that contradict the argument and put a nail in the idea.

1) The Fed is trading some U.S. Treasurys for mortgage-backed securities to arrest the decline in prices that is pushing up mortgage-interest rates.

These are only temporary trades or swaps. The Fed cannot permanently trade U.S. Treasuries representing it's own assets for junk securities. The bond market would make them pay dearly for this. The swap occurs since the U.S. Treasuries need to be traded back to the Fed at maturity and then the Fed can reinitiate the trade again (likely accepting securities backed by assets of even less value).

2) One big caveat: This works only if assets truly are worth more tomorrow than they'll fetch today.

Who at this point thinks that any lending banks assets will be worth more in the near future than they are today? (Hint: That's why the S&P and Banking Index have been doing so well over the last year!) An even bigger and easier question at this point… Who thinks that the assets backing all of this paper being passed around will be worth more tomorrow than currently? Anyone looking at an ABX, CMBX or CDO spread chart or Case/Schiller HPI can answer this… actually I don't think anyone even has to look anymore!!

The Fed and the Govt' cannot bailout the housing and credit markets at this point without BKing both entities and causing post WWI German-style inflation. Not going to happen! 😉

 

 

[Author]

Posts