Post by jeffolie on Apr 25, 2010 13:51:36 GMT -6
corrupt US buys defaulted MBSs, maybe $Trillions
The lying, corrupt government is scamming the public like an illusionist with misdirection that gets one to watch the wrong hand. Govt. buys $100sB more MBS. Who knows how much, $trillions? They are hiding in plain sight the fact that cash is exchanged for DEFAULTED MBS.
"...[Fannie Mae & Freddie Mac] to start their buy back programs in March and April "..."they will be buying in $100rds of billions of MBS."...F/F will buy in defaulted mortgages and pay the holders of the MBS cash.
===============================================================
Twist figured on a quiet couple of days, but when she found Friday's ZeroHedge guest post "WSJ On Fed's Mortgage 'Assets' " she realized it was too important to wait until after the weekend.
I admit that I am an old cynic and generally assume the darkest motives. But the timing of [Fannie Mae & Freddie Mac] to start their buy back programs in March and April at precisely the same time that the Fed is “finished” with its business is no coincidence. It was planned and coordinated months ago. This is just more manipulation. Bernanke understands this and probably had a hand in the timing of the F/F buyback programs.
Presumably most Doomers have long since figured out that we're in the opening months of the long depression that must inevitably follow Ye Olde Panicke of 2008. Krasting is following the important articles by WSJ's Jon Hilsenrath, and in the process is sketching a picture as to how this circumstance will be hidden from the sheep until the 2012 Presidential election cycle is complete.
The outline of the strategy is now clear. Up until the end of last month the Fed was taking MBS (that is, the debris from the US subprime meltdown) and simply swelling its own balance sheet. Its capacity to absorb any more without destroying itself is now exhausted and there's still an enormous residuum of crap left in the financial system, so for the next 21 months we're going to force-feed said crap to Fannie and Freddie like they were a couple of French geese, hoping that their livers don't blow up until 1/1 '13, at which time, if the economy hasn't come roaring back, Treasury can "finance" those deferred losses through a gargantuan haircut to the lucky holders of Agency Debt.
… and that's when you'll see the (new) Administration get serious about GSE reform
housingdoom.com/2010/04/25/bruce-krasting-there-will-be-no-fed-selling-of-mbs-for-at-least-24-months/#more-8226
=======================================================
So the article leaves us with the inescapable conclusion that the Government effort to prop up the mortgage market is now completed and the next phase is going be a period of relative balance sheet stability followed by a plan to unwind the mess. That is peachy news and we should all be very happy, right?
Well I am not. Some facts here. The Fed dramatically (and predictably) slowed its purchases of MBS in March. They have made no new purchases since then. So they have lived up to the bargain, but the other arm of the federal financial puzzle started buying in MBS at just the time the Fed stopped. The Treasury department through Fannie and Freddie started a program that commenced in March and will continue for some time to come where they will be buying in $100rds of billions of MBS.
...F/F will buy in defaulted mortgages and pay the holders of the MBS cash. This will come to the investors in the form of a pre-pay of principal. It is very normal for a portion of the principal to be returned to the investors on a monthly basis. The F/F steps just accelerate the process. When the investors (big funds) get the principal back they (usually) turn right around and plow it back into new MBS issues.
The steps taken by F/F are completely different in form to the Fed’s purchases of MBS but in substance they have the same affect. It decreases the outstanding mortgages, and therefore influences mortgages spreads. Keep the game going for a bit longer.
....The fact that the government is continuing to impact mortgage rates was not mentioned in the JH article. In fairness, his piece was directed to just the Federal Reserve's role in the buy ins. But I don’t think we are getting the full story from the WSJ. We are getting what the Fed wants us to hear. The real story is that Washington simply can’t stop interfering in the mortgage market. If D.C. really did stop, we would have a problem. And they know it.
www.zerohedge.com/article/wsj-feds-mortgage-assets
The lying, corrupt government is scamming the public like an illusionist with misdirection that gets one to watch the wrong hand. Govt. buys $100sB more MBS. Who knows how much, $trillions? They are hiding in plain sight the fact that cash is exchanged for DEFAULTED MBS.
"...[Fannie Mae & Freddie Mac] to start their buy back programs in March and April "..."they will be buying in $100rds of billions of MBS."...F/F will buy in defaulted mortgages and pay the holders of the MBS cash.
===============================================================
Twist figured on a quiet couple of days, but when she found Friday's ZeroHedge guest post "WSJ On Fed's Mortgage 'Assets' " she realized it was too important to wait until after the weekend.
I admit that I am an old cynic and generally assume the darkest motives. But the timing of [Fannie Mae & Freddie Mac] to start their buy back programs in March and April at precisely the same time that the Fed is “finished” with its business is no coincidence. It was planned and coordinated months ago. This is just more manipulation. Bernanke understands this and probably had a hand in the timing of the F/F buyback programs.
Presumably most Doomers have long since figured out that we're in the opening months of the long depression that must inevitably follow Ye Olde Panicke of 2008. Krasting is following the important articles by WSJ's Jon Hilsenrath, and in the process is sketching a picture as to how this circumstance will be hidden from the sheep until the 2012 Presidential election cycle is complete.
The outline of the strategy is now clear. Up until the end of last month the Fed was taking MBS (that is, the debris from the US subprime meltdown) and simply swelling its own balance sheet. Its capacity to absorb any more without destroying itself is now exhausted and there's still an enormous residuum of crap left in the financial system, so for the next 21 months we're going to force-feed said crap to Fannie and Freddie like they were a couple of French geese, hoping that their livers don't blow up until 1/1 '13, at which time, if the economy hasn't come roaring back, Treasury can "finance" those deferred losses through a gargantuan haircut to the lucky holders of Agency Debt.
… and that's when you'll see the (new) Administration get serious about GSE reform
housingdoom.com/2010/04/25/bruce-krasting-there-will-be-no-fed-selling-of-mbs-for-at-least-24-months/#more-8226
=======================================================
So the article leaves us with the inescapable conclusion that the Government effort to prop up the mortgage market is now completed and the next phase is going be a period of relative balance sheet stability followed by a plan to unwind the mess. That is peachy news and we should all be very happy, right?
Well I am not. Some facts here. The Fed dramatically (and predictably) slowed its purchases of MBS in March. They have made no new purchases since then. So they have lived up to the bargain, but the other arm of the federal financial puzzle started buying in MBS at just the time the Fed stopped. The Treasury department through Fannie and Freddie started a program that commenced in March and will continue for some time to come where they will be buying in $100rds of billions of MBS.
...F/F will buy in defaulted mortgages and pay the holders of the MBS cash. This will come to the investors in the form of a pre-pay of principal. It is very normal for a portion of the principal to be returned to the investors on a monthly basis. The F/F steps just accelerate the process. When the investors (big funds) get the principal back they (usually) turn right around and plow it back into new MBS issues.
The steps taken by F/F are completely different in form to the Fed’s purchases of MBS but in substance they have the same affect. It decreases the outstanding mortgages, and therefore influences mortgages spreads. Keep the game going for a bit longer.
....The fact that the government is continuing to impact mortgage rates was not mentioned in the JH article. In fairness, his piece was directed to just the Federal Reserve's role in the buy ins. But I don’t think we are getting the full story from the WSJ. We are getting what the Fed wants us to hear. The real story is that Washington simply can’t stop interfering in the mortgage market. If D.C. really did stop, we would have a problem. And they know it.
www.zerohedge.com/article/wsj-feds-mortgage-assets