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Old 03-12-2008, 02:35 AM   #20 (permalink)
host
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Quote:
Originally Posted by Ustwo
And I thank my own personal Jebus daily for that.

Controlled economy is to prosperity as Godzilla is to Tokyo.
You are naive....what do you think happened in the "markets" on tuesday?

http://news.google.com/news?hl=en&q=...-8&sa=N&tab=wn

The entire, rigged "casino" is coming apart. Nothing is as you post so faithfully that it is.

http://wallstreetexaminer.com/?p=2434

The "Fed" is taking in "manure" as collateral in a desperate attempt to INTERFERE to "save" the system it has ALLOWED to get "this way". It's almost over, Ustwo....the "American way of life"......
Quote:
http://globaleconomicanalysis.blogsp...swap-meet.html
.......What happens after 28 day is pretty clear. The swap will be rolled over and over and over until the mortgage backed security market stabilizes. This could be a year from now, or perhaps 10. <h3>That may sound ridiculous but it's essentially what happened in Japan.</h3> It's also part of the Zombification process I described in <a href="http://globaleconomicanalysis.blogspot.com/2008/03/great-pretender.html">The Great Pretender.</a>

Inquiring minds might be asking what happens if the value of the MBS drops. Will the Fed issue a margin call or just look the other way? One might think we just have to wait and see, but since the Fed will probably never say, it's more likely we have to wait and not see.

One thing is for sure: The more liberal the Fed is in valuing the MBS the more likely a margin call situation arises. However I strongly suspect the Fed will not disclose who is doing the swapping, in what size, or whether the swap ratio is 1:1 or not. The TAF does not abide by freedom of information so I would be amazed if this does. So much for transparency.

This may temporarily stop a further squeeze against dealers who are short treasuries and long MBS, but it is will not do much of anything to restore a bid in the MBS market. Nor will it cure the massive leverage problems at many of the primary dealers and banks.

Here's an interesting paragraph from the MarketWatch article reference earlier: <h3>"Counting the currency swaps with the foreign central banks, the Fed has now committed more than half of its combined securities and loan portfolio of $832 billion</h3>, Lou Crandall, chief economist for Wrightson ICAP noted. 'The Fed won't have run completely out of ammunition after these operations, but it is reaching deeper into its balance sheet than before."
Quote:
http://globaleconomicanalysis.blogsp...pretender.html
......The Great Pretender
There is a ton of pretending going on. The rating agencies are pretending the monolines are worthy of an AAA rating. This is nothing new. I have talked about this many times, most recently in California calls muni insurance waste of taxpayer money.

And in a bury your head in the sand move, MBIA is still pretending it has a rating to protect. Amazingly, late last week <a href="http://biz.yahoo.com/nytimes/080308/1194753592735.html?.v=5bject">MBIA asked Fitch to stop rating its debt.</a>

However, the above pretending takes second fiddle to the biggest pretending of all. I am talking about <h3>the Fed pretending that banks are well capitalized even as the Fed resorts to desperation tactics</h3> in the misappropriatly named Term Auction Facility (TAF) soon to become the Permanent Auction Facility (PAF).....

Last edited by host; 03-12-2008 at 02:51 AM..
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