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cantab.
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October 9, 2009 at 2:31 PM #467177October 9, 2009 at 3:30 PM #466388
DWCAP
Participant[quote=HLS]90%+ of mortgage loans today are govt back. It IS frightening. It is nothing more than artificial manipulation that will continue for one reason, just imagine what will happen if they stop.
[/quote]I guess it is like a Ponzi scheme, once you start there isnt any way to stop.
[quote=HLS]Investors buying MBS today are buying 30 YR bonds with a yield of less than 5%. Bondholders dont service the loans. The net return is lower than the rate being paid. If/when interest rates go to 6%-7% the market value of the bonds will fall eroding the principal.
Everybody is great at “predicting the past”
very few people can predict the future.
[/quote]I keep wondering about this. Everyone knows rates will have to go up in the future. So all of todays bonds are gonna be losses for their owners if/when rates rise.
Isn’t the whole problem with the financial system the unrealized losses rotting on balance sheets, weither they be residental, commershal, or personal (cc, auto etc) loans? Even if Banks are not holding onto the loans, someone is, and they are not going to be able to do much buying in the future if they have to adjust for today’s built in losses. How is putting more guarenteed losses into the system gonna fix the system, when the problem is too many losses? I guess it props up the banks until the buyers stop buying, but then what? Perpetual Fed monitization? I suppose mark to market is never coming back.
October 9, 2009 at 3:30 PM #466574Participant[quote=HLS]90%+ of mortgage loans today are govt back. It IS frightening. It is nothing more than artificial manipulation that will continue for one reason, just imagine what will happen if they stop.
[/quote]I guess it is like a Ponzi scheme, once you start there isnt any way to stop.
[quote=HLS]Investors buying MBS today are buying 30 YR bonds with a yield of less than 5%. Bondholders dont service the loans. The net return is lower than the rate being paid. If/when interest rates go to 6%-7% the market value of the bonds will fall eroding the principal.
Everybody is great at “predicting the past”
very few people can predict the future.
[/quote]I keep wondering about this. Everyone knows rates will have to go up in the future. So all of todays bonds are gonna be losses for their owners if/when rates rise.
Isn’t the whole problem with the financial system the unrealized losses rotting on balance sheets, weither they be residental, commershal, or personal (cc, auto etc) loans? Even if Banks are not holding onto the loans, someone is, and they are not going to be able to do much buying in the future if they have to adjust for today’s built in losses. How is putting more guarenteed losses into the system gonna fix the system, when the problem is too many losses? I guess it props up the banks until the buyers stop buying, but then what? Perpetual Fed monitization? I suppose mark to market is never coming back.
October 9, 2009 at 3:30 PM #466923Participant[quote=HLS]90%+ of mortgage loans today are govt back. It IS frightening. It is nothing more than artificial manipulation that will continue for one reason, just imagine what will happen if they stop.
[/quote]I guess it is like a Ponzi scheme, once you start there isnt any way to stop.
[quote=HLS]Investors buying MBS today are buying 30 YR bonds with a yield of less than 5%. Bondholders dont service the loans. The net return is lower than the rate being paid. If/when interest rates go to 6%-7% the market value of the bonds will fall eroding the principal.
Everybody is great at “predicting the past”
very few people can predict the future.
[/quote]I keep wondering about this. Everyone knows rates will have to go up in the future. So all of todays bonds are gonna be losses for their owners if/when rates rise.
Isn’t the whole problem with the financial system the unrealized losses rotting on balance sheets, weither they be residental, commershal, or personal (cc, auto etc) loans? Even if Banks are not holding onto the loans, someone is, and they are not going to be able to do much buying in the future if they have to adjust for today’s built in losses. How is putting more guarenteed losses into the system gonna fix the system, when the problem is too many losses? I guess it props up the banks until the buyers stop buying, but then what? Perpetual Fed monitization? I suppose mark to market is never coming back.
October 9, 2009 at 3:30 PM #466994Participant[quote=HLS]90%+ of mortgage loans today are govt back. It IS frightening. It is nothing more than artificial manipulation that will continue for one reason, just imagine what will happen if they stop.
[/quote]I guess it is like a Ponzi scheme, once you start there isnt any way to stop.
[quote=HLS]Investors buying MBS today are buying 30 YR bonds with a yield of less than 5%. Bondholders dont service the loans. The net return is lower than the rate being paid. If/when interest rates go to 6%-7% the market value of the bonds will fall eroding the principal.
Everybody is great at “predicting the past”
very few people can predict the future.
[/quote]I keep wondering about this. Everyone knows rates will have to go up in the future. So all of todays bonds are gonna be losses for their owners if/when rates rise.
Isn’t the whole problem with the financial system the unrealized losses rotting on balance sheets, weither they be residental, commershal, or personal (cc, auto etc) loans? Even if Banks are not holding onto the loans, someone is, and they are not going to be able to do much buying in the future if they have to adjust for today’s built in losses. How is putting more guarenteed losses into the system gonna fix the system, when the problem is too many losses? I guess it props up the banks until the buyers stop buying, but then what? Perpetual Fed monitization? I suppose mark to market is never coming back.
October 9, 2009 at 3:30 PM #467195Participant[quote=HLS]90%+ of mortgage loans today are govt back. It IS frightening. It is nothing more than artificial manipulation that will continue for one reason, just imagine what will happen if they stop.
[/quote]I guess it is like a Ponzi scheme, once you start there isnt any way to stop.
[quote=HLS]Investors buying MBS today are buying 30 YR bonds with a yield of less than 5%. Bondholders dont service the loans. The net return is lower than the rate being paid. If/when interest rates go to 6%-7% the market value of the bonds will fall eroding the principal.
Everybody is great at “predicting the past”
very few people can predict the future.
[/quote]I keep wondering about this. Everyone knows rates will have to go up in the future. So all of todays bonds are gonna be losses for their owners if/when rates rise.
Isn’t the whole problem with the financial system the unrealized losses rotting on balance sheets, weither they be residental, commershal, or personal (cc, auto etc) loans? Even if Banks are not holding onto the loans, someone is, and they are not going to be able to do much buying in the future if they have to adjust for today’s built in losses. How is putting more guarenteed losses into the system gonna fix the system, when the problem is too many losses? I guess it props up the banks until the buyers stop buying, but then what? Perpetual Fed monitization? I suppose mark to market is never coming back.
October 9, 2009 at 4:15 PM #466408HLS
ParticipantThink of debt as manure.. the more you spread it around over a wider and larger area, it smells the same to everybody who thinks that it’s the normal smell. A bad pile here or there doesn’t get anyone’s attention. It’s not all going bad at the same time. Just like a Madoff scheme, new money coming in covers up for old money..
There is so much manure(debt) out there that is traded around and swapped, it makes a 6 deck blackjack game in Vegas look tempting.
Some of this debt will never be paid back, ever.
Some will be paid off at par, another huge amount will be settled for less than what was originally borrowed..and part will get paid back with greatly inflated dollars.If there are enough profits from one side, it will offset the losses from the other. Creative accounting and Level 3 assets (off balance sheet)
will bamboozle their books forver.Fractional reserve system allows for around $10 in loans for $1 on the books. If 10% of the loans go 100% bad, in reality they are wiped out, but by not marking to market, give the illusion that they are solvent and all is well. A loan mod that continues to generate revenue is preferred to foreclosing and admitting to a $200,000 loss.
A $200,000 loss can indirectly affect $2,000,000 worth of loans.Illusion is comforting to tens of millions which restores confidence in the “system”
Hedge funds, Bear Stearns etc were leveraged 30 to 1. When 3% of their risk went 100% bad, they were wiped out, as were stockholders, employees, and bondholders.
Fiat money is created out of thin air. You pay back old debt with newly created inflationary money…OR you just default.
It’s going to get worse, before it gets worse…HLS
October 9, 2009 at 4:15 PM #466594ParticipantThink of debt as manure.. the more you spread it around over a wider and larger area, it smells the same to everybody who thinks that it’s the normal smell. A bad pile here or there doesn’t get anyone’s attention. It’s not all going bad at the same time. Just like a Madoff scheme, new money coming in covers up for old money..
There is so much manure(debt) out there that is traded around and swapped, it makes a 6 deck blackjack game in Vegas look tempting.
Some of this debt will never be paid back, ever.
Some will be paid off at par, another huge amount will be settled for less than what was originally borrowed..and part will get paid back with greatly inflated dollars.If there are enough profits from one side, it will offset the losses from the other. Creative accounting and Level 3 assets (off balance sheet)
will bamboozle their books forver.Fractional reserve system allows for around $10 in loans for $1 on the books. If 10% of the loans go 100% bad, in reality they are wiped out, but by not marking to market, give the illusion that they are solvent and all is well. A loan mod that continues to generate revenue is preferred to foreclosing and admitting to a $200,000 loss.
A $200,000 loss can indirectly affect $2,000,000 worth of loans.Illusion is comforting to tens of millions which restores confidence in the “system”
Hedge funds, Bear Stearns etc were leveraged 30 to 1. When 3% of their risk went 100% bad, they were wiped out, as were stockholders, employees, and bondholders.
Fiat money is created out of thin air. You pay back old debt with newly created inflationary money…OR you just default.
It’s going to get worse, before it gets worse…HLS
October 9, 2009 at 4:15 PM #466943ParticipantThink of debt as manure.. the more you spread it around over a wider and larger area, it smells the same to everybody who thinks that it’s the normal smell. A bad pile here or there doesn’t get anyone’s attention. It’s not all going bad at the same time. Just like a Madoff scheme, new money coming in covers up for old money..
There is so much manure(debt) out there that is traded around and swapped, it makes a 6 deck blackjack game in Vegas look tempting.
Some of this debt will never be paid back, ever.
Some will be paid off at par, another huge amount will be settled for less than what was originally borrowed..and part will get paid back with greatly inflated dollars.If there are enough profits from one side, it will offset the losses from the other. Creative accounting and Level 3 assets (off balance sheet)
will bamboozle their books forver.Fractional reserve system allows for around $10 in loans for $1 on the books. If 10% of the loans go 100% bad, in reality they are wiped out, but by not marking to market, give the illusion that they are solvent and all is well. A loan mod that continues to generate revenue is preferred to foreclosing and admitting to a $200,000 loss.
A $200,000 loss can indirectly affect $2,000,000 worth of loans.Illusion is comforting to tens of millions which restores confidence in the “system”
Hedge funds, Bear Stearns etc were leveraged 30 to 1. When 3% of their risk went 100% bad, they were wiped out, as were stockholders, employees, and bondholders.
Fiat money is created out of thin air. You pay back old debt with newly created inflationary money…OR you just default.
It’s going to get worse, before it gets worse…HLS
October 9, 2009 at 4:15 PM #467014ParticipantThink of debt as manure.. the more you spread it around over a wider and larger area, it smells the same to everybody who thinks that it’s the normal smell. A bad pile here or there doesn’t get anyone’s attention. It’s not all going bad at the same time. Just like a Madoff scheme, new money coming in covers up for old money..
There is so much manure(debt) out there that is traded around and swapped, it makes a 6 deck blackjack game in Vegas look tempting.
Some of this debt will never be paid back, ever.
Some will be paid off at par, another huge amount will be settled for less than what was originally borrowed..and part will get paid back with greatly inflated dollars.If there are enough profits from one side, it will offset the losses from the other. Creative accounting and Level 3 assets (off balance sheet)
will bamboozle their books forver.Fractional reserve system allows for around $10 in loans for $1 on the books. If 10% of the loans go 100% bad, in reality they are wiped out, but by not marking to market, give the illusion that they are solvent and all is well. A loan mod that continues to generate revenue is preferred to foreclosing and admitting to a $200,000 loss.
A $200,000 loss can indirectly affect $2,000,000 worth of loans.Illusion is comforting to tens of millions which restores confidence in the “system”
Hedge funds, Bear Stearns etc were leveraged 30 to 1. When 3% of their risk went 100% bad, they were wiped out, as were stockholders, employees, and bondholders.
Fiat money is created out of thin air. You pay back old debt with newly created inflationary money…OR you just default.
It’s going to get worse, before it gets worse…HLS
October 9, 2009 at 4:15 PM #467215ParticipantThink of debt as manure.. the more you spread it around over a wider and larger area, it smells the same to everybody who thinks that it’s the normal smell. A bad pile here or there doesn’t get anyone’s attention. It’s not all going bad at the same time. Just like a Madoff scheme, new money coming in covers up for old money..
There is so much manure(debt) out there that is traded around and swapped, it makes a 6 deck blackjack game in Vegas look tempting.
Some of this debt will never be paid back, ever.
Some will be paid off at par, another huge amount will be settled for less than what was originally borrowed..and part will get paid back with greatly inflated dollars.If there are enough profits from one side, it will offset the losses from the other. Creative accounting and Level 3 assets (off balance sheet)
will bamboozle their books forver.Fractional reserve system allows for around $10 in loans for $1 on the books. If 10% of the loans go 100% bad, in reality they are wiped out, but by not marking to market, give the illusion that they are solvent and all is well. A loan mod that continues to generate revenue is preferred to foreclosing and admitting to a $200,000 loss.
A $200,000 loss can indirectly affect $2,000,000 worth of loans.Illusion is comforting to tens of millions which restores confidence in the “system”
Hedge funds, Bear Stearns etc were leveraged 30 to 1. When 3% of their risk went 100% bad, they were wiped out, as were stockholders, employees, and bondholders.
Fiat money is created out of thin air. You pay back old debt with newly created inflationary money…OR you just default.
It’s going to get worse, before it gets worse…HLS
October 9, 2009 at 10:01 PM #466655cantab
ParticipantHLS is wrong about cash-for-clunkers being taxable.
From http://www.cars.gov/faq#category-06Is the credit subject to being taxed as income to the consumers that participate in the program?
NO. The CARS Act expressly provides that the credit is not income for the consumer.
Do I have to pay State or local sales tax on the amount of the CARS program credit?
MAYBE. The question of whether a consumer must pay State or local sales tax on the amount of the CARS program credit depends on the sales tax law of each State or locality. Consumers should review the law of their respective States or consult a tax advisor to answer this question.
October 9, 2009 at 10:01 PM #466838ParticipantHLS is wrong about cash-for-clunkers being taxable.
From http://www.cars.gov/faq#category-06Is the credit subject to being taxed as income to the consumers that participate in the program?
NO. The CARS Act expressly provides that the credit is not income for the consumer.
Do I have to pay State or local sales tax on the amount of the CARS program credit?
MAYBE. The question of whether a consumer must pay State or local sales tax on the amount of the CARS program credit depends on the sales tax law of each State or locality. Consumers should review the law of their respective States or consult a tax advisor to answer this question.
October 9, 2009 at 10:01 PM #467184ParticipantHLS is wrong about cash-for-clunkers being taxable.
From http://www.cars.gov/faq#category-06Is the credit subject to being taxed as income to the consumers that participate in the program?
NO. The CARS Act expressly provides that the credit is not income for the consumer.
Do I have to pay State or local sales tax on the amount of the CARS program credit?
MAYBE. The question of whether a consumer must pay State or local sales tax on the amount of the CARS program credit depends on the sales tax law of each State or locality. Consumers should review the law of their respective States or consult a tax advisor to answer this question.
October 9, 2009 at 10:01 PM #467254ParticipantHLS is wrong about cash-for-clunkers being taxable.
From http://www.cars.gov/faq#category-06Is the credit subject to being taxed as income to the consumers that participate in the program?
NO. The CARS Act expressly provides that the credit is not income for the consumer.
Do I have to pay State or local sales tax on the amount of the CARS program credit?
MAYBE. The question of whether a consumer must pay State or local sales tax on the amount of the CARS program credit depends on the sales tax law of each State or locality. Consumers should review the law of their respective States or consult a tax advisor to answer this question.
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