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The Fed Has Officially "Spread" Itself Too Thin

Tyler Durden's picture




 

Recently there has been much speculation that the US government will do anything, anything, to rekindle the housing bubble. Even if that means providing Option ARMs at blue light special prices and hiring Angelo Mozillo as Mortgage Czar (we hope we are kidding about the latter). Yes, those very same Option ARMs which banks' balance sheets are still expecting to be neutron bombed by, courtesy of the long gone days when there was private sector mortgage origination risk. Now that all the mortgage exposure is borne by taxpayers, we decided to analyze how the ARM spread to the traditional 30 Year Mortgage has moved throughout the year. Somehow we were not surprised that the 30 Yr - 1 Yr ARM spread for Freddie Mac just hit a record wide this past week. The government is presumably actively encouraging borrowers to approach the GSEs, and using the same NINJA protocols, to ask, nay, demand, an Adjustable Rate Mortgage. Who cares what happens one year down the line? Certainly not the US government which has $3 trillion in T-Bills to roll by this time next year.

First, we present a chart of the Freddie 30 Year compared to the Freddie 1 Year ARM for 2009. The spread which was at 6 bps at the beginning of the year, after briefly crossing into negative territory in April, has ballooned to a record wide of 60 bps.

The situation in the 5/1 ARM camp is even more obscene: the absolute spread has collapsed from 5.49% at the beginning of the year to 4.37% (and at times being tighter than the corresponding 1 yr ARM spread): a 112 bps contraction! There is no point in charting this.

It is mighty obvious that reading between the lines, and courtesy of the near-vertical yield curve, Uncle Sam is pushing every deadbeat "homeowner" in foreclosure to go ahead and get a mortgage with FNM and FRE. And not just any mortgage, but a 1 or 5/1 ARM if possible. Did we learn anything from the subprime bubble and subsequent collapse in housing? Not a thing... except how to get the US taxpayer to pay for it all when it collapse the next time around.

Another observation is the spread tightening between the 10 Year TSY and the 30 Year Freddie Fixed as well as the 1 year ARM. What is notable is the near 1.000 R2 that lasted thru late May, followed by a very dramatic divergence in spreads at that time. Did the government have a closed door meeting in early June informing the GSEs they are now supposed to peddle ARM mortgages to anything with a pulse and a signature? That sure did not work out too well for New Century and all of its peers. 

As we progress into 2010 keep an eye out on this divergence. In its "all in" gamble to get every renter back to homeownership status, the ARM spread, both absolute and relative, will be the most indicative light of just how much money the Fed and the administration are willing to burn in order to extend and pretend until there is nothing left to either extend or pretend.

Last but not least, also keep an eye out on underlying core interest rates. While the move in the Treasury curve is a whole new topic altogether, from here on out near term rates can only blow out (zero is a hard bottom). This will likely wreak some major havoc on not only the current and future ARM contingent, but the fixed mortgage population. Observe that the 30 year Freddie has not budged since the beginning of the year: it started the year off at 5.01% and is now at 4.94%. This has occurred even as the 10 year has blown out from 2.21% on January 8 to 3.75$ today: a massive 154 basis points. It appears the 30 year Fixed (wholesale or otherwise) is the primary bastion behind which the mortgage vigilantes are fortified: if they can retain it, look for the next round of action to happen in the 1 Yr ARM and 5/1 ARM arena.

And for those who are interested in some of the regime change observations form a macro perspective, the chart below demonstrates just why it is that mortgage securitizations may not be all the lucrative or even interesting to securitizers going forward: the key take home from this chart is that while the Mortgage spread return as a percentage of total return has collapsed from 40 bps to sub 20 bps, so has securitization, and for a reason. Remember: securitization is merely a massively leveraged way to express an "off balance sheet" bet. If you assume that leverage multiple was between 20-40x, the potential return has been cut in half from 8-16% down to 4-8%. At these return expectations, investors are willing to put money into HY and other fixed income funds (and judging by mutual fund flows, are actively doing so). The Fed has singlehandedly eliminated the "risk" in the mortgage market, and as long as it continues intervening in it, will make the much needed resecuritization phenomenon impossible. Bernanke has created the biggest Catch 22 imaginable, guaranteeing that the longer the Fed continues in being the market in mortgages, the less likely it is that the private sector will ever get involved. 

 

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Wed, 12/23/2009 - 18:22 | 173128 bugs_
bugs_'s picture

Pardon me but would you happen to have any grey poop on?

Wed, 12/23/2009 - 18:25 | 173132 AnonymousMonetarist
AnonymousMonetarist's picture

Where is Franklin Raines?

Wed, 12/23/2009 - 23:04 | 173392 Master Bates
Master Bates's picture

Living on his yacht off the coast of Costa Rica.

Wed, 12/23/2009 - 18:28 | 173141 Apocalypse Now
Apocalypse Now's picture

Must See - Darth Vader Rings Opening Bell At NYSE

This is an omen, pretty sure Lloyd was in costume:

http://www.businessinsider.com/its-official-wall-street-really-is-run-by...

Wed, 12/23/2009 - 18:56 | 173165 AN0NYM0US
AN0NYM0US's picture

thanks for the link - I thought it was a joke video instead of yesterdays open

Thu, 12/24/2009 - 00:14 | 173452 Cursive
Cursive's picture

Apox, made my night, bro.  Wife loved it too and she's pretty hard to impress.  I think Ron Insana was in the R2D2.

Wed, 12/23/2009 - 18:54 | 173164 johngaltfla
johngaltfla's picture

Oh is Ben and the boys flirting with disaster. I'm with you Tyler; they are going to blow it up, watch the yields go to the moon then realize they've killed the real estate markets (Commercial and Residential) then crank QE up to an extreme we never imagined in an insane attempt to "save the system" or some other such nonsense. Pile that on top of the Obamanomics display of spend, spend, spend to get the Dems re-elected and all hell is going to break loose with our dollar.

Wed, 12/23/2009 - 19:04 | 173171 DaveyJones
DaveyJones's picture

Interesting Interview with Williams at shadowstats 

http://www.fairfieldweekly.com/article.cfm?aid=16014

Wed, 12/23/2009 - 19:09 | 173173 Ripped Chunk
Ripped Chunk's picture

No one knows how much unsold inventory there will be by next fall. 

What good is holding rates down going to do???  Oh right, the thousands that just bought believing the "market bottom" propaganda releases that will find themselves burned down in about 9 months. Served as sacrificial lambs for the "greater good" so that the machine could proclaim "houses are selling again, all is well".

Hey, at least the debt service is at 5%................

Wed, 12/23/2009 - 21:16 | 173296 Cindy_Dies_In_T...
Cindy_Dies_In_The_End's picture

Forget about Fall. Chase and BAM are dumping their inventory next month and into Spring.

Wed, 12/23/2009 - 23:11 | 173397 Edna R. Rider
Edna R. Rider's picture

says who?  supporting info?

Wed, 12/23/2009 - 19:25 | 173188 DaveyJones
DaveyJones's picture

"As a longtime Santa Claus at a suburban Chicago mall, Rod Riemersma used to jokingly tell children they would get socks for Christmas if they were naughty. This year, he stopped telling the joke. Too many children were asking for socks"

http://online.wsj.com/article/SB126074986920489905.html

 

Wed, 12/23/2009 - 19:25 | 173189 Anonymous
Anonymous's picture

the fed is insolvent with all of its mbs crap on its balance sheet marked to fantasy.....any and everything the fed has done this past year and going forward is masturbation which has caused blindness...

if i were not convinced of bernanke's satanic evil i would call him the most retarded man in the universe...

Thu, 12/24/2009 - 01:24 | 173490 Anonymous
Anonymous's picture

This comment would be just too funny IF only it weren't true.

sigh.................

Thu, 12/24/2009 - 10:56 | 173627 Yes We Can. But...
Yes We Can. But Lets Not.'s picture

Curious, isn't it.  Bernanke is a student of the Great Depression.  Probably dreams of saving the world from such a debacle.  So he becomes Fed Chair and suddenly GD II supposedly looms, and he acts accordingly, taking us all along for the ride.

 

And then there is that other World Savior, doofus Algore.  His megalomaniacal fantasy to save mankind from the atmosphere enveloping Earth is a bit more difficult to arrange, since the weather is a bit less obtuse than economics...

Thu, 12/24/2009 - 18:04 | 173917 Anonymous
Anonymous's picture

That "doofus, Al gore" has made himself one of the wealthiest men on the planet with his "megalomaniacal fantasy". Who is the real doofus?

Wed, 12/23/2009 - 19:52 | 173212 deadhead
deadhead's picture

Well done and thank you for this piece TD.

We seem to be going from surreal to insane.

or is it the other way around?

good golly, we aren't even a step back from the abyss of over one year ago and we are just doing the same things but on steroids. 

Wed, 12/23/2009 - 21:43 | 173315 Howard_Beale
Howard_Beale's picture

You seem puzzled, my friend. Let me help you. We are just a step back from the abyss of over one year ago and we are doing the same things but on steroids. Ok? You got it right.

Wed, 12/23/2009 - 19:58 | 173216 AN0NYM0US
AN0NYM0US's picture

just before I shut off CNBS (for good) last winter I remember one of the brainless talking heads exclaiming how a reduction in housing starts was great news, as in less inventory.  I now read the esteemed Calculated Risk and he seems to be making a similar argument.

http://www.calculatedriskblog.com/2009/12/residential-investment-moving-...

 

What am I missing? 

Wed, 12/23/2009 - 20:03 | 173219 geopol
geopol's picture

SAN FRANCISCO (MarketWatch) -- This summer, John Moran picked up 100 ounces of gold from a locker run by the Comex exchange in New York.

The bars, which were light enough to carry in a backpack, marked the culmination of a $95,000 experiment by Passport Capital, a San Francisco-based hedge fund where Moran is director of business operations and strategy.

Passport, headed by John Burbank, wanted to find out how easy it would be to buy physical gold, rather than futures contracts or gold exchange-traded funds. The firm was also interested in testing conspiracy theories about the availability of the precious metal.

Moran used his own money because Passport didn't want to run the test with its investors' cash. Everything went smoothly. In July, Moran bought a futures contract on 100 ounces of gold at roughly $950 per ounce for delivery in August. When the contract expired, Comex sent him a notice saying the gold was available for collection in New York at a specific time and date.

With gold prices down from a recent record, Passport is poised to repeat the process on a bigger scale for investors in its $1.2 billion Global Strategy hedge fund.

Like several other hedge fund managers, Burbank sees inflation from trillions of dollars that have been pumped into the global economy by the Federal Reserve and other central banks in the wake of last year's financial crisis.

Gold may be a good hedge against this and physical gold could be an even better investment if the financial system runs into trouble again, Burbank reckons.

"A year and a few months after the crisis, there's no recognition that we have to change," he said in an interview. "Instead, the U.S. is borrowing and spending again, like a rogue trader doubling down."

"We're liable for another collapse of some sort," he added, noting that "physical gold could go to very high levels" in such a scenario.

Gains and losses

Unlike some leading hedge fund firms, Passport isn't a recent gold convert. Read about the New Gold Bugs.

The firm has invested in gold ETFs like the SPDR Gold Trust (NYSE:GLD) and gold mining companies since about 2002. However, it sold its gold ETF positions recently and has been waiting for prices to slide so it can buy physical gold, possibly before the end of 2009, Burbank said.

Burbank's research into gold and the modern financial system led him to a big bet against subprime mortgage securities. That generated returns of 220% for Passport's main hedge fund in 2007, according to a recent investor update obtained by MarketWatch.

However, Passport was particularly hard hit last year, when the mortgage meltdown grew into the worst global financial crisis since the Great Depression. Passport's Global Strategy fund lost 50.9% in 2008 and it has yet to recoup some of those losses, returning just over 17% this year, through October. Still, the fund has gained more than 24% a year since it started in 2000. Burbank declined to discuss performance.

No contracts

Despite a recovery this year in the stock market and the economy, Burbank sees a risk that contracts will be broken. This could happen to contracts between counterparties on either side of investments or between heavily indebted sovereign nations with lots of unfunded future liabilities and individuals or investors in those countries, he explained.

Owning physical gold is an insurance policy against such financial catastrophe because it involves no contracts. In contrast, gold futures and ETFs are just types of paper contracts that could be broken in a crisis, according to Burbank.

"If someone can't pay, an exchange closes or a counterparty goes bankrupt, you don't actually own gold in those situations," he said. "And that's when you want to own it most."

Delivery

Passport reckons physical gold prices could rise more than gold futures and ETFs as more investors demand physical delivery when futures contracts expire.

Indeed, the firm argued in a research note earlier this year that the price of gold futures has little connection to the actual metal because about 99% of contracts are settled in cash.

For most commodities, like copper, oil or corn, taking physical delivery and storing the stuff is tricky and expensive. But gold is much more portable and storable. All the gold ever mined would fit into a cube roughly 65 feet per side, Passport estimated.

"There could effectively be a global run to physical gold as people simultaneously converge on gold markets and demand delivery," the firm wrote.

That could trigger a surge in physical gold prices, a bit like a short squeeze which forces traders to close bearish bets by buying back shares they've borrowed and sold, Passport explained.

"For investors to profit from a short squeeze in gold they must be in a position to deliver physical metal," the firm added. "Having a paper substitute for gold may not necessarily provide the same results."

In February 2005, new Comex rules allowed delivery of gold-backed ETFs instead of physical gold to settle a futures contract, creating a "pressure release valve" in the even of a short squeeze, Passport noted.

Cheaper

Passport also favors physical gold because it's cheaper than investing in the metal through an ETF.

Owning physical gold through a bullion bank costs 5 to 30 basis points a year, while gold-backed ETFs charge roughly 40 basis points, Passport noted in its research report. (A basis point is one hundredth of a percentage point).

Even if investors follow Passport's experiment and take Comex futures contracts to delivery, then leave the gold bars with one of the exchange's depository institutions in New York, it will cost them less than 30 basis points a year, the firm added.

This may be the case even though Passport is planning to pay extra to have its bars "allocated." This means the gold is segregated from other investors' gold in vaults. The act of allocation moves the title of the metal from the bank to the investor.

In an unallocated account, investors have a general claim on the bullion bank for a certain amount of gold. Investors who own gold this way assume counterparty risk with the bank. If the institution goes bankrupt, these investors have to get in line with other creditors to get their gold, "or whatever is left of it," Passport explained.

Canada, Norway, Australia

Once Passport buys physical gold, the firm is planning to store it in countries like Canada, Norway or Australia, which are politically stable, resource rich and fiscally fitter than the U.S.

The firm has a big framed replica of Franklin D. Roosevelt's 1933 declaration banning private ownership of gold hanging by the bathrooms at its headquarters near the Transamerica building in downtown San Francisco.

Americans were ordered to turn in most of their gold to the government, which gave them almost $21 for each ounce of the metal.

Soon after, Roosevelt changed the conversion price to $35, "an act of taxation by inflation that effectively transferred 40% of the gold held by the Fed for American citizens to the U.S. government," Passport wrote in its research note earlier this year.

While another crisis may be resolved without governments resorting to such draconian measures, Burbank reckons investors should try to establish residency in politically stable countries with little debt, such as those in Scandinavia or New Zealand.

"People should establish residency in other places like this as a 'life hedge' if they can," Burbank advised.

Wed, 12/23/2009 - 20:17 | 173238 Anonymous
Anonymous's picture

@ "by geopol"

summary + link is great option :)

Thu, 12/24/2009 - 07:32 | 173570 mojine
mojine's picture

Not, necessarily. I appreciate being able to read the article (or not) without navigating away from the page on my phone, as it is a major pain to return and reload the current page and then find the place left off in the comments. Often will not follow a link for that reason. Scrolling past the containing comment is easy if one does not wish to read it all. My $.02.

 

Thanks, geopol

Thu, 12/24/2009 - 09:37 | 173605 geopol
geopol's picture

Hi Anon,

I'm not a big fan of whole article posts either, but as mojine outlines it is a pain on the phone app. This was pointed out to me a while back, and I opted for the long version..I have oil for your mouse wheel. :)

 

Wed, 12/23/2009 - 20:18 | 173240 Kayman
Kayman's picture

Hey Tyler-

Eric Sprott is suggesting the Fed has bought around $420 billion more Treasuries (for a total of $700 billion) than what Geithner is telling the public, via a mysterious and rapidly ballooning "Household Sector" category.

If this is true, how can future debt continue to be financed ? Won't all other bondholders want out ?  Is this another reason the Fed doesn't want the public to see the truth about its "assets" ? Is this why Bill Gross is heading to the exits ?

Just asking.

Wed, 12/23/2009 - 23:25 | 173411 Anonymous
Anonymous's picture

1. They wont be financed
2. YES, and YES--

Thu, 12/24/2009 - 11:10 | 173628 Oso
Oso's picture

wait wait wait, that is NOT what Sprott is suggesting.  The only conclusion that Sprott comes to is that the traditional buyers of Treasuries are not buying.

Suggesting further than that is becoming CNBC, just in the opposite direction.

Wed, 12/23/2009 - 20:21 | 173244 Anonymous
Anonymous's picture

We are on "Full suck now".

Check out this cartoon

http://newsbusters.org/blogs/glenn-foden/2009/12/23/milk-dudes

Wed, 12/23/2009 - 20:27 | 173249 B9K9
B9K9's picture

At the risk of repeating myself, you guys are just too emotionally involved. During this Xmas break, please take the opportunity to step back, smoke a joint and/or have a drink (or two+), and consider the large, macro perspective.

To wit, our entire global economy is, and has been for quite some time been, based on nothing more than credit driven asset inflation. That's it; no mystery, no games, just simple mathematics.

Now, in order for us (by that, I mean the world) to return to "economic growth", we need to collectively be able to add yet another layer of debt on top of our existing pyramid of promissory notes & derivatives to fuel investment, production & consumption.

There's only one hitch: we need to have sufficient productive output in which to service the additional financing costs of these incremental loans. So the question then becomes one of how are we to achieve greater energy optimization and/or economic efficiencies to fulfill the required output gains, or is this even physically possible in a closed system (ie the Earth)?

Any accurate modeling of potential outcomes would conclude that we have a relatively straight-forward set of binary alternatives: we either pull it off, or we don't. If we pull it off, then all the extra-Constitutional activities undertaken by this and previous administrations, which incidentally comprise the key nutrients for blog sustenance, will soon be forgotten. However, if we don't, then a long cascade of defaults and bankruptcy proceedings will accompany the great debt deflation of the 10s.

So there it is in a nutshell: the entire game comes down to technology & productivity. If we don't see something emerging fairly quickly, then these little parlor game debates will become quaint memories as we (re)discover our inner-savage.

Wed, 12/23/2009 - 21:52 | 173328 perchprism
perchprism's picture

 

I've saved your comment to file as "problem stated".   Sounds right to me.

Wed, 12/23/2009 - 22:32 | 173365 rawsienna
rawsienna's picture

Well said ....  Regarding the mortgage piece, based on the current level of rates, there is little if any fixed to arm refi activity and fixed to fixed refi activity is severely constrained bt LTV issues.  Obama suggested that 5mm ltv constrained but otherwise good borrowers would be able to refi under the HAMP (fn/fh guaranteedmtgs only) by lifting the non cash out refi ltv to 125%.  The FED has bought over 1 trillion mtgs to bring down 30 yr mtg rates and so far we have seen only about 100,000 HAMP refi's.  This is a disaster in that the GSE's have the credit risk already and lowering peoples rates improves their credit position.  There are many reasons for the failure but maybe someone should ask the GSE why they are charging up to 2 points to refi these people - especially because they are owned by the people.  Perhaps Barney Frank can ask em.  I can go on and on about how inefficient the MBS purchase program has been but I do not think anyone really cares.

 

Thu, 12/24/2009 - 12:47 | 173693 Assetman
Assetman's picture

I'm going to smoke my stash with you, my friend.

Wed, 12/23/2009 - 20:34 | 173258 mrmortgage
mrmortgage's picture

Daily read here guys but lots of mistake of facts in this piece:

"Somehow we were not surprised that the 30 Yr - 1 Yr ARM spread for Freddie Mac just hit a record wide this past week. The government is presumably actively encouraging borrowers to approach the GSEs, and using the same NINJA protocols, to ask, nay, demand, an Adjustable Rate Mortgage. Who cares what happens one year down the line? Certainly not the US government which has $3 trillion in T-Bills to roll by this time next year."

Here are the charts and releases from the mortgage bankers association blowing up much of these piece.

http://thegreatloanblog.blogspot.com/2009/12/fix-it-forget-it.html

 

contact mrmortgage at thegreatloan.com next time you need the straight dope. We're dialed in to mortgage central command.

Cheers and Merry Christmas.

Wed, 12/23/2009 - 20:54 | 173274 deadhead
deadhead's picture

Now that I have stopped laughing uncontrollably for a moment, let me make sure that I get it correctly: I should believe the Mortgage Banker's Association?  That's pretty funny.  And yes, I am VERY familiar with who they are.  I remember lots about them throughout the period from 2001 through 2008. 

Wed, 12/23/2009 - 21:12 | 173290 Anonymous
Anonymous's picture

Thanks DH, as a regular (10x daily) reader here you stand out as a neutral poster with something worthwhile to add.

Wed, 12/23/2009 - 21:05 | 173282 Anonymous
Anonymous's picture

Is the 3 three trillion in T-Bills to be "rolled over in a year" accurate or just an expression? Who in the f*&$ is going to buy that along with trillions yet to be issued to pay for the health plan, two wars, cap & trade and who knows what other socialist agenda items yet to be sprung on the populace.

Wed, 12/23/2009 - 21:25 | 173303 Kayman
Kayman's picture

Dear B9K9

Thanks for the tautological narrative.  I feel so much calmer now- not ! Now go back to smoking your Doobee or licking your balls on the couch.

Wed, 12/23/2009 - 22:00 | 173336 Anonymous
Anonymous's picture

Your just jealous. You know why a Dog licks his balls?
Cause he can.

Thu, 12/24/2009 - 00:31 | 173466 Kayman
Kayman's picture

Hey Anon Einstein #173336.  Heard that school kid joke in Grade 5 and it is you're not your.. 

Thu, 12/24/2009 - 00:58 | 173479 Anonymous
Anonymous's picture

Hey not so grand Kayman, its Doobie not Doobee Einstein-not.

Thu, 12/24/2009 - 01:02 | 173482 Anonymous
Anonymous's picture

Oh you mean you only heard it last year?

Wed, 12/23/2009 - 22:01 | 173338 Oracle of Kypseli
Oracle of Kypseli's picture

Ο?δ?πους Τ?ραννος

No Virginia. Not "Oedipus Rex" "Obama Wrecks" 

Death by a quintillion dollars

Wed, 12/23/2009 - 22:13 | 173352 max2205
max2205's picture

Easy, buy all the mortages and the fed controls the market.... Period. They should have paid off all mortgages under 500k, it would have been cleaner but no.

Public motgagers are and will be feeders to the fed and GSE s till we are all dead to prevent collapse

nice article but wrong point.

Wed, 12/23/2009 - 22:36 | 173368 Anonymous
Anonymous's picture

what do you expect?
clowns run a clown organization

Wed, 12/23/2009 - 23:09 | 173390 lizzy36
lizzy36's picture

We live in surreal times......

The Federal Housing Finance Agency approved multimillion-dollar pay packages for Fannie Mae Chief Executive Michael Williams and Freddie Mac CEO Charles Haldeman Jr., and those packages are expected to be in a range of $4 million to $6 million, people familiar with the matter said..

Separately, the Obama administration, in the next few days, is expected to announce a new financial commitment by the federal government to both Fannie and Freddie as a signal to the markets that the government stands by both the companies

http://online.wsj.com/article/SB126161634214403629.html

 

Thu, 12/24/2009 - 00:10 | 173448 heatbarrier
heatbarrier's picture

Bottomless pits the GSEs. Large banks are now de facto GSEs.

Fannie and Freddie have already drawn $112bn between them. Barclays Capital estimates Fannie will ultimately need $130bn and Freddie $100bn. But in a stress scenario Fannie would need about $180bn –close to the $200bn limit.

http://www.ft.com/cms/s/0/426919d2-ef34-11de-86c4-00144feab49a.html

Thu, 12/24/2009 - 03:49 | 173532 rawsienna
rawsienna's picture

It is a signal that the situation has gotten much worse for the 2 agencies and that we are screwed.   They have known for months but swept it under the rug so they can pass health care. Just wait until you see the losses that are being under-reported by the FHA.  Bottom line is that the administration is setting up to forgive up to 800bb in consumer mortgage debt - they need for good borrowers who are upside down on their mortgage to stay put and not walkaway - this debt 

Wed, 12/23/2009 - 23:03 | 173391 Apocalypse Now
Apocalypse Now's picture

The bailouts cost in excess of 13 trillion.  For 11 trillion we could have paid off every credit card and every mortgage in the United States of America.

Someone needs to put those figures up for discussion.

Wed, 12/23/2009 - 23:32 | 173417 Anonymous
Anonymous's picture

Amen Apocolypse!

I stand firm on saying that absolutely NO serious change will take place until people are storming the streets around 85 Broad, and our nation's capital--

Some serious civil un-rest is needed to get their attention!! Nothing less will do---

Wed, 12/23/2009 - 23:45 | 173427 Anonymous
Anonymous's picture

This is true. The problem is , nobody wants somebody else to get something for nothing. The correct play in that situation would have been to run out in 2005 and 80/20 no money down cash back at signing 5*450k homes. Then, when the guv decided to pay off all mortgages and cc loans, all would be well.

Or would it. Many would cry spilt milk that they hadn't seen the Great Jubilee coming. These would take pitchfork in hand and burn down the entire thing.

This way, the human appetite for mutual suffering remains intact.

-MobBarley

Calmunisim? what's that?

Wed, 12/23/2009 - 23:59 | 173442 Anonymous
Anonymous's picture

Something not brought up is the Child Support fraud that will bring social unrest when the unemployment runs out for the payer and effects the payee!

Thu, 12/24/2009 - 09:38 | 173606 Anonymous
Anonymous's picture

"Even if that means providing Option ARMs at blue light special prices and hiring Angelo Mozillo as Mortgage Czar (we hope we are kidding about the latter). Yes, those very same Option ARMs which banks' balance sheets are still expecting to be neutron bombed by, courtesy of the long gone days when there was private sector mortgage origination risk. Now that all the mortgage exposure is borne by taxpayers, we decided to analyze how the ARM spread to the traditional 30 Year Mortgage"

No, Fannie and Freddie aren't guaranteeing Option ARMs, they're guaranteeing ARMs. Tyler, is your misstatement intentional because you know Option ARM is a loaded term and a product much more toxic than a regular ARM, or do you not know the difference between the two?

The actual facts are bad enough Tyler. Why do you feel the need to constantly embellish?

Thu, 12/24/2009 - 09:45 | 173607 Anonymous
Anonymous's picture

Geithner promises 'no double dip'; but he put his whole mouth into this one:

I'm Sorry Timmy! "It's Like Putting Your Whole Mouth Into The Dip"

Thu, 12/24/2009 - 09:51 | 173608 fader107
fader107's picture

Wait, they could have paid off my credit card bill and my mortgage with the friggin bail out money??  Great news!

Oh wait, I dont have CC bills or a mortgage.  Not so great news...

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