I caught the tale end of some commentary on the tube stating that some GSE paper was priced at 5 levels below AAA with some short term paper getting no bid ahead of Monday"s auction. if Monday's auction fails, it should reclench some cheeks at Treasury
Looks like you need some Remedial 101... Budget deficits aren't the concern. Inflation is. FED policy determines interest rates irregardless of deficit spending. The problem then, is money supply. Not deficits. Even if it were a deficit issue (which its not), inflation is a double-edged sword. This is the problem with arm-chair economists weighing in with a wikipedia understanding of Neoclassical Theory. Who cares if Zimbabwae can inflate away their debt if private savings are destroyed in the process?? Why do you suppose oil, commodities and the greenback, are where they are? What affect do you suppose this has on the aggregate economy; an economy whose GDP is 72% reliant on consumption??? Go ask your Prof and come back with the answers.
LOL! True enough. Is it just FNM, Fred and LEH? Who else is pining for life jackets?? And yea, you're right. I should preface my stuff with IMO. Duly noted, Good Sir.!
Now you're getting it. 500 Billion to 1 Trillion bailout. Yea, no big deal. Right?! Then why is Freddie Mac and Fannie May on the verge of bankruptcy if most of their business was low-risk, "PRIME loans", as you say?!! Thats a real head scratcher... LOLL
the market is getting way too anal over 5 trillion in GSE debt when there's 61 trillion is CDS exposure floating around somewhere out there. which is likely why Benito Bernanke looked like he was on the way to the dentist when appeared before Con-gress.
There isn't much dispute on counter-party default risk. Everyone knows the US Treasury will pay its outstanding obligations to bond holders. The issue is the VALUE OF THE CURRENCY T-bill owners will be paid back with come maturity. Thats why US bonds are sub AAA. Cause the dollar ain't worth squat. You gotta read between the lines, Grasshopper.
I always thought Goldman was ahead of the curve when it came to Investment Banks. They wrote and shorted CDO's during the runup..... Talk about criminality... LOL Oh sure, its great debt! Here, take all of it!! Its not funny. But its funny. Scum of the earth lol
FRE and FNM entered into swap agreements for the flypaper they issued. aside from the inventory of crap the Feds. told them to buy.
hahaha. I know. CDS is a nightmare. But I think it was designed that way. Instead of bailouts for Major Banks, now its investment houses, regionals, bond insurers, monolines, anyone with size that CDS'd their debt. It made the System hopelessly interconnected so that if our Super Tanker sprung a leak, the whole ship would disintegrate almost instantaneously. Of course, that can't happen. So now the FED is "forced" to bailout everyone to save us from financial ruin. Where were the Financial Regulators when CDS was invented and sold?? How come nobody stopped it?? Its so easy to see where it leads. And everyone turned a blind eye? Smells like more Corporate Fascism. Privatize profits. Socialize losses.
what i still cant understand is how CDSs were written for bonds that didn't exist. there's a trillion dollars of CDS paper for 250 billion in GM paper. I always though the bondholder swapped a guarantee of the bond principle for a fee to the swap underwriter. but to my surprise, a swap could be sold based on a blue smoke bond model. get ready for a 20 sigma event. an opinion of course