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FHFA Makes a Big Bet

Bruce Krasting's picture




 
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Sun, 10/04/2009 - 17:21 | 88379 Anonymous
Anonymous's picture

Bruce, another excellent post. As I have been saying for months, ignore the MBS market at your own peril.

The recidivism rate on HAMP mods will be much higher than 50pct, because the mods don't address the underlying problem - negative equity. Reducing monthly payments is only a solution if the payment levels are the problem. They are not.

At the limit, you could reduce the payment to zero, but that still gives the borrower any incentive to pay the bank to take back the house when the borrower is finished with it.

Reducing payments is just can kicking, in hopes prices will return to bubble levels so equity returns. That is the equivalent of hoping the Nasdaq returns to 5000. Not gonna happen.

To call HAMP mods "performing" is an illusion.

Sun, 10/04/2009 - 19:53 | 88433 Anonymous
Anonymous's picture

negative equity because the Ponzi finance pyramid retraced. Negative equity because the exponential growth necessary to keep greater exponential growth of interest service at bay, failed. Money supply and velocity began to contract. State sponsored fraud with quant aided modeling via regulator sanctioned opacity fed a galactic sized bubble. It was an open lie, extort, steal, defraud, game, gangland-as-govt falsehoodery. It was the open mockery of the American people, civilization, and future expectation. It was a conspiracy to grab all and abscond before the skyscraper built of iron/stone but without wisdom fell from ineptitude, indolence, inability.

Equities went to toast (before money printing made them whatever TPTB wanted them to be), Commodities ramped skyhigh and collapse like a supernova, bonds took the end of a whip for tutelage with the Fed printing/buying and undertabling with PDs to shill demand with sizeable reward for their duplicity, currency too went CAT 5 ocean waves as need to settle for resources in a reserve played oil with need to exit dollar obligation's water.

Everything in the arsenal of USA economy has been nationalized in everything but name. Every resource has been exploited to its greatest extent settling finally on open rampant speculation on the lands and structures of the nations, entwined with capacious fraud in every financial corner to produce a vacuity of potential to repay.

That people do not recognize the scale of want. That people don not sense the size of dishonesty. That people do not see the ramifications of failure in every corner, makes this tragedy exponentially worse.

This episode of history will be THE CHAPTER (should literacy persist) from which all others will be measured.

Sun, 10/04/2009 - 17:21 | 88378 Anonymous
Anonymous's picture

Bruce, another excellent post. As I have been saying for months, ignore the MBS market at your own peril.

The recidivism rate on HAMP mods will be much higher than 50pct, because the mods don't address the underlying problem - negative equity. Reducing monthly payments is only a solution if the payment levels are the problem. They are not.

At the limit, you could reduce the payment to zero, but that still gives the borrower any incentive to pay the bank to take back the house when the borrower is finished with it.

Reducing payments is just can kicking, in hopes prices will return to bubble levels so equity returns. That is the equivalent of hoping the Nasdaq returns to 5000. Not gonna happen.

To call HAMP mods "performing" is an illusion.

Sun, 10/04/2009 - 15:28 | 88328 Anonymous
Anonymous's picture

Anyone else as tortured as I because of the knowledge of what is truly going on? I for one am frightened at what I see is about to happen.

I try to explain this to some of my supposedly intelligent friends and nobody wants to hear it.

Sun, 10/04/2009 - 19:24 | 88367 Lou629
Lou629's picture

"I try to explain this to some of my supposedly intelligent friends and nobody wants to hear it."

In my experience most sheeple, even the smart ones, do not want to know or learn something bad, or even try to prepare for it in a lot of cases. 

It seems as though they prefer to think ( or hope ) that those types of things are what the border collie is there for. 

In their case,  their belief in the system, the rule of law, the police, the government, maybe even common sense banking, represents their protection, their border collie.

They don't seem to understand that no matter how fast or fearless the dog may be, it's no match for a pack of wolves.  Or an avalanche.  

 

Sun, 10/04/2009 - 14:18 | 88298 Thoreau
Thoreau's picture

bubble, bubble, toil & trouble...

Sun, 10/04/2009 - 12:48 | 88234 DaddyWarbucks
DaddyWarbucks's picture

This is a jewel Bruce. If you ever need a job you're just a lobotomy away from a first string MSM position.

Sun, 10/04/2009 - 12:33 | 88223 Lionhead
Lionhead's picture

Excellent post with great charts to depict the info. Thanks!! "The FHFA is blowing smoke at us." IMHO, they're blowing BS at us and they're "hoping" for a recovery that may not ultimately come. The same-o, same-o can kicking down the road. Ho-hum. We've heard this a million times before.

Sun, 10/04/2009 - 11:42 | 88198 AN0NYM0US
AN0NYM0US's picture

or put another way: Why is Madoff in jail?

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