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Treasury Quid To Banker Pro Quo: "You Can Raise Dividends If You Buy My Toxic Mortgages"
To all those wondering why the Treserve scrambled on Friday to allow banks to resume paying dividends (even something as downright hilarious as Citi's $0.01...Is that the lowest recorded dividend yield in history?) here is your answer. The Treasury just announced it would sell its $142 billion MBS portfolio, supposedly to the same banks who are now using their cash on the books to satisfy shareholders too. The Treserve will sell $10 billion per month depending on market conditions, meaning a downtick in the market will now crash not only that given day's POMO (a UST market operation), but also have a reflexive impact on the entire MBS trading complex. As usual we can't wait for Directive #1 which will make selling any share an act of treason.
From MarketWatch:
The Treasury Department said Monday that it will begin to sell its
portfolio of $142 billion in agency-guaranteed mortgage-backed
securities. A senior Treasury official said the department plans to sell
up to $10 billion in MBS per month subject to market conditions. The
sales could generate a profit for taxpayers of about $15-$20 billion as
market conditions have improved, the official said. Congress gave
Treasury the power to purchase the securities guaranteed by Fannie Mae
and Freddie Mac to provide stability to financial markets during the
financial crisis of 2008. The official said the sales were not related
to the looming debt ceiling.
As usual the only loser here is the taxpayer, as banks will very soon have dangerously low cash and capitalization levels, meaning the next downturn, which nobody will have seen coming, will result in another cool 10-20 trillion in pieces of linen thrown at it, and another 10-20% drop in the value of the former reserve currency.
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Not that this move by treasury has ANYTHING to do with the debt ceiling. ;)
really?
are repups more likely to continue caving on the debt ceiling, making token "fiscal responsibility" noises/gestures in the process or...?
"the next downturn, which nobody will have seen coming, will result in another cool 10-20 trillion in pieces of linen thrown at it"
Really? Isn't THAT the point the amerikan peeps go mubarak?
Threadjack
The banks must have forgot to make their payments to the Supreme Court members.
Because the SC just ruled that the FED has to release the list of banks that received emergency loans.
This is the biggest circle jerk ever.
Smash the title insurance companies. Check the docket below.
http://www.scribd.com/doc/50983614/Fight-Club-Lawyer-Redux
or a war on...er...IN...IN Libya.
Looks like the Treasury is now bailing out the FED.
I am all for that. Load them back up boys and get em while they are hot. Looks like the great unwind is about to commence and judging by the reverse repo experiments noted on ZH last year I am sure it is going to go Swimmingly.
Directive #1. I love it. Atlas Shrugged, anyone?
Calling John Galt.
Directive #2: You can't sue anyone over these MBS. Even if there's no mortgages backing the security
Low Volume Dead Cat Bounce! IMHO the LAST ONE!
Agreed. Shaka, when the walls fell!
"as banks will have dangerously low cash and capitalization levels"
Isnt our treasury{as reported by zerohedge a few days ago} already out of cash? Are we waiting on auctions this week? Anybody have a followup on that deal?
I thought the US Government was a non-profit organization? Oh wait a minute, now I get it. This is our share of the vig? I'm a little slow at first but I eventually catch up.
But wait a minute. Didn't it cost us like a Zillion Billion dollars to make that "profit"? Now I'm really confused.
Brother CD,
It would seem that your dissonance is coging you. Suggest you chuck back a handful of Pfizer products...it should straighten things out for you so that you can see the beauty of the Ponzi Fed more clearly.
The new American Marxist/Banker party asks that you quit sweating the details.
Federal Reserve marching orders. "Don't worry, be happy."
Roger that. Where's my morning dose of Valium?
Mmmmmmmmmmmmmm. Valium. Personal favorite.
Now that you are feeling better, get out there and buy some casual dining stocks! They look historically cheap, I'm tellin' ya...ripe for criminal syndicate Wall Street banker/Marxist upgrades.
forget valium and go straight for the 714s
I suspect it speaks volumes about me that I instantly knew that 714s meant Quaaludes. :>)
yes it does. and probably means we had the same foggy adolescence.
Drugs 'r bad, mmmmkay?
"Better living through chemistry"
Not foggy. Thick as pea soup. :>)
i hear "some of these boondoggles are so big you can drive an Abrams through them."
http://www.youtube.com/watch?v=VCDnR6Px-co
Didn't it cost us like a Zillion Billion dollars to make that "profit"?
Don't worry, they'll make it up in volume.
Maybe it's my simple mind, but every time I see that phrase about how someone will turn a loss on each sale into a profit by way of volume, the absolute and shear absurdity of the entire proposition makes me laugh out loud. Yet the brilliance of the con is remarkable because people swallow the bullshit.
I prefer to call it our share of the viag
I wonder if the sales will be subject to the same taxpayer guarantees as the FDIC "loss share" program?
http://www.fdic.gov/bank/individual/failed/lossshare/
He who owns the Fed makes the rules. Everyone else lives by them. Time for a peaceful revolution.
Remember this...
http://www.zerohedge.com/article/guest-post-how-ny-fed-gifted-extra-157-million-wall-street-yesterday
The Fed giveth and the Fed maketh banks do whatever they want. Bought and paid for - by us sorry taxpayers of course.
I love a good old fashioned debt daisy chain.
This is fucking ridiculous.
Oh shit, the DOW is climbing like a tomahawk!!! Everyone in the deep end of the pool!!
Tomahawks eventually plow into something on the ground and explode creating a crater.
Not these. They simply go into orbit and continue on unabated into the unknown universe on inertia. They are the new and improved version.
The game will go on as long as it has to.
lol
Exactly. What's more is that they'll simply ramrod it harder as it gets worse, literally. Once it's not real then it's not real. There isn't anything to try to feign now, especially credibility. Everyone knows it's bullshit so why not just go for it.
Change "portfolio" to "heap".
Calling Tokyo. Come in Tokyo!
That's only interesting if you twisting on some chicks nipples while she puts her arms behind her head and swings back-and-forth like a radar dish....then, it gets interesting.
"domo arigato mr. bu-kka-ke...but we are busy with our own meltdowns"
In more standard daily news, the REITs are back to their moon shot trajectory. Good news, bad news, no news...fuck it, SPG deserves a triple digit multiple or more.
I thought the 'reinstitution' of the dividends in the financials would peel away a layer or two of the REITs. How fucking stupid of me.
The commercial REITS are suffocating at best. So that is your backgrownd?
Suffocating??? On what, their astronomical valuations and declining assets? IYR is right back to it's high.
Nothing can suppress the awesomeness that is CRE. NOTHING!
Thanks for being Honest!
That's my whole motto!
This shell game of toxic feces will not fool anyone, Geithner...
No, it won't. But it will cornhole the shorts, right?
Remember, it's not a lie if you believe it. Obviously, the equities markets are the one and only game in town. It doesn't have to represent anything, actually. Most people don't even know what equity is. They only know their 401(k) statement was larger.
Give credit where credit is due, they are subduing the masses quite well.
I like you but lose the 401k theory.
LOL, it's all about the 401(k)'s. I would say that 95% of people in 401(k)'s don't even know what they 'own'. It's just the system was provided to them and they were told to participate.
It's a way for the banks to recapitalize without congressional approval and to silence the masses while they do it. Yes, they'll be the eventual bag holders.
Try to have a logical discussion with Betty the admin assistant about why pushing up the equity markets is wrong. She'll immediately point to her 401(k) statement and have a deeply confused look on her face. Then, when the discussion gets complicated, dismiss you and say "well, it's up, that's all I know".
"it doesn't have to represent anything, actually"
at least it lives up to its expectations
I've found it to be very loosely based on nothing.
Works like a charm.
ps those fanny freddy (bitches) can eat shit!
Whats the market value of 124 billion of MBS?
Whatever their model says it is.
My cost. Ten cents would be respectful. The true bid 2.5
Any idea what that sudden bump up to the dollar was all about?
See here at 9:30 ish:
http://quotes.ino.com/chart/?s=NYBOT_DX&v=s
Do I need to answer the the reserve currency issue?
Sure, "reserve currency" explains a brief intraday move. Thanks!
Do you work for The first in first out kids?
Sorry for the spellng. Do you have any concept of how wealth is moved! Hit the road ipod.
sounds like the Fed has some problems
Existing Homes data: a perfect hat trick of bad news: a miss on sales, declining prices in all regions, rising inventory. Prices fall 5% annualized.
Chicago Fed National: A miss at -0.04
The American "markets" open, stocks surge and the price of silver starts its downward slide. Rediculous. We need updated graphs showing the price action of silver when the American market is open and when it's closed. Manipulating bastards.
So...we buy up all the toxic debt MBS from the banks to save the financial system, then sell them back to the banks to save the Fed? I'm assuming in two more years when the MBS crash the banks again, the Fed will buy them back again for pennies on the dollar, and we can lather/rinse/repeat this cycle until the debts are essentially gone and the investors/taxpayers fully screwed?
If the toxic stuff begins to get real marks, OTTI will become a household acronym. More likely: banks collude on pricinig and make it up under clusterswap arrangements with each other. subspicies of the genus clusterflock.
/es up 20 points on nada.
no correlation with reality
Why does it need to be real? Aren't we way way past that point?
yes we are dealing with children. I stand corrected.
Yes, bump already fading.
I can hear the slide on the shotgun pump grip going backwards.
Summer 2007 all over again: dividends, buybacks, buyng crappy assets with 40:1 leverage.
Textbook short entry here with a stop at Feb Highs! A gift .. ride the back of the Swan like a baby.
A perfect trade from the technical side..entry on confirmed downtrend with stop
This is the ideal spot to lay out some shorts.
If we close higher by the bell, then the market is a lot stronger than I thought.
OMG.
RobotTrader says go short? Where are those pictures of crocodiles and wildebeest Robo?
you go on ahead robo, i'll watch to see what happens.
my point is they can blow it up 20 anytime they want. and wreck your account.
the very premise that its right at the dma is a wonderful place for them to shear you like a sheep.
Here you go...free of charge...
Hehe don't be ridiculous, Robo. There is no market.
+1,300
To try to continue to apply market analysis to something that isn't a market is...beyond stupid.
I say this every fucking day. This reply should be highlighted every day
Only way to stay sane and profitable
this sounds like a classic KITING scam.......back and forth back and forth
To be fair, it's more of a daisy chain. Kiting sounds worse...let's use daisy chain. It has a flower in it, which is nice.
Yes Robo Yes!
Existing homes data and all else missing from Google finance page. Big headline is ATT buying T-Mobile. What a farce.
http://www.google.com/finance?tab=we
Looks like 55dma is the area to watch.
Cool i"m looking at some serious work! Sorry for the double appostrophe. (sp)
I hate this flight. I usually hit Aukland first. 4 more hours.
FRBNY kicks off its Lieberty Street Economics blog today, six short months after signing up with TypePad:
http://libertystreeteconomics.newyorkfed.org/
Up next:
Everything You Wanted to Know About the Tri-Party Repo Market, But Didn't Know to Ask
where are all the creative avatars and sarcastic comments?
More Upcoming Posts: Why Two Negatives Make a Positive
two? more like "Apocalypse Now--BOTFD!"
I hate this flight. I usually hit Aukland first. 4 more hours.
"As usual the only loser here is the taxpayer, as banks will very soon have dangerously low cash and capitalization levels,"
Do you reckon this may impair their ability to pay dividends, buy back shares - and most importantly, increase banker bonus pools?
So the deal is the banks had MBS that were worth 20 cents of par. The Treasury buys them at par (they never gave the full details) now they are selling them back to the banks at 10 cents of par.
negative par plus .025 bitch.
You can say that again!
negative par plus .025 bitch.
Oh, you did.
guess none of you own homes
I empathize. The market is "celebrating" catastrophic news for homeowners. The comment from the NAHB was the recovery is choppy at best," if this is a recovery". !
Shocking for anybody in a high visibility position to say.
This is not an economy that will reward anything real. Only paper.
"guess none of you own homes"
Please elaborate on your definition of "own". Do I own a home? Yes. Do I have a mortgage? No. That is my definition of "owning" a home.
Once you "own" your home, you tend not to be so concerned about being underwater or not. I don't treat any of my properties as an investment (or ATM with cash-out refi). They are a necessity, like food and water. Gotta have shelter.
given the level of property taxes, none of us own our own homes
Sure, you own the home. You just never own the dirt under it.
Treasurreal FEDserve
I'm increasing my holdings in lead and lead delivery systems!
Time for some heavy metal
Fed bailout the banks.......
Treasury bailout the FED.......
taxpayers bailout the Treasury.......default imminent.
This circle jerk must stop.......at any cost....
When everyone knows that the market is rigged, is anyone fooled that the new oil slick in the gulf is not making any news. Is it possible that it is NOT time for oil to spike higher?
There really is no point in applying any logic or even trying to. It's nothing more than a script at this point.
Look at IYR, clearly, there's a 'goal' today as every sell is met with another stronger buy. $59 is in the books. Tomorrow it's $60.
The 'person' buying is confidential. So, all I can to get pissed off. The equities market is truly the perfect scam. You're either in on it or your fucked or, at best, simply fucking gambling.
This is Instagdeflationary right?
Not when you simply print even more to overcome it.
When you have Shit for brains,FRN's seem to be appropriate for cleaning up the mess.
treserve...
two heads are beter than one unless it manages public monies or is a japanese fish.
libya cant possibly last long, wtf are we doing? are the wheels coming off the bus in these hours.
japan is leveled with concurrent radiation emanation and we have time, money, and people to go fight for libyan whothefuckknowswhat? this is really the official story?
witness the degeneration of the highest life form ravaging what remains of itself to patheticlly accumulate resources enabling itself to ravage more of itself.
do we know no negative feedback?
first, as we have evolved and are here, assure yourself that mans intellect exceeds (and warrants) his agression. but it will not be pretty.
ddon't know if it related to the Treasury MBS sell off, but last week's FED balance sheet had an interesting turn. Bank reserves fell by $44bn (after growing $300 bn in the prior 5 weeks). The Treasury's checking account at the FED increased by a corresponding amount (plus $25 bn more as the FED paid off more of the SFP).
So, are bank reserves now going to be transferred to the Treasury on a sustained basis. Put into the Treasury's checking account, the Treasury could then write plenty more checks to cover the cost of govt. operations.
Of course, the FED would have to have the wherewithal to cover those checks. Which they have done recently by borrowing money from the banks in the form of a data punch entry increasing the amount of bank reserves.
No wonder Bernanke says he's so 100% confident - he's discovered a perpetual motion machine.
We should just be happy we live in the land of the Free Lunch.
"The sales could generate a profit for taxpayers of about $15-$20 billion as market conditions have improved"
Another motive for them to keep the interest rates low...
Treasury sounds much like my degenerate gambling uncle who always bragged about his casino wins but dare not speak of his losses. Of course when added up the losses outpaced the wins by a large margin and the poor fellow went completely bust.
Treasury sold its final share of Citigroup common stock, locking in a profit of more than $12 billion on that TARP investment. General Motors’ (GM) recent initial public offering cut Treasury’s common stock stake in that company nearly in half and brought in a total of $13.5 billion for taxpayers. Additionally, Treasury recently received $9.6 billion in TARP repayments through the sale of its Ally Financial trust preferred securities holdings and AIG’s sale of its MetLife equity stake.
Perhaps a never ending series of financial crises is the new growth industry?
No offense, but you damn well know that 99% of the populace won't go past the headline. They'll take it for gospel and move on.
Yep, the US Treas is locking-in profits like crazy - and yet, the current account deficit continues to climb.
Methinks they're lying like a old, cheap, worn-out rug.
"...we can't wait for Directive #1 which will make selling any share an act of treason.."
No kidding??? . . . . these sick delusional human toilets (politicians) will rape/drag everything and everyone down the toilet with them to save their own snake skins right up to the last minute
Title SHOULD read: Here's some Life Boats, now, let's Scuttle this fucking Ship.