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WH and Fed sleeping together
For me, the most significant development from the Fed’s announcement is a change in policy where the Fed will re-invest proceeds of maturing MBS securities in new issues of Agency MBS paper. Prior to today, the Fed re-invested principal repayments in Treasury bonds.
I wrote about the possibility of a mega mortgage ReFi by Fannie and Freddie (here and here). I (and many readers) pointed to an obvious flaw in the ReFi story. If a Trillion or so of mortgages were rapidly prepaid, then who would buy all of the new (much lower coupon) mortgage paper?
Now we have the answer. The Fed will put the new MBS paper back on its Balance Sheet, $ for $. There will still be many bondholders outside of the Fed who will get prepaid much faster than they had assumed. Most of that is in pension/bond funds. No one cares about them.
I think that Treasury will announce the plans for a Mega Refi in the not too distant future. It could come this weekend or next week. Obama will wait just enough time after the complex Fed decision so that 99% of all people don’t connect these two dots.
In that 1% will be Republicans. They are going to be mad as hens tonight that Bernanke ignored their last minute plea not to play more monetary games. The authors of that letter, McConnell, Boehner, Kyle and Cantor are really going to be peeved. Not only did the Fed step further on the gas, they greased the skids for an Administration's plan to ReFi mortgages.
It’s not at all clear that the Fed’s latest move are going to accomplish a thing. I’m not sure that the Big ReFi is going to be such a success either. But that doesn’t matter.
What’s important about this is that the Republicans will respond. They will not give Obama another leg up with his one-year stimulus program. Any chance of that went up in smoke with the Fed’s VERY political decision on MBS today. Can you say, "Collusion"?
This is a real circus now. In this one the bears aren't dancing. They’re fighting. The claws are out and it’s going to get bloody.
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Off with thier heads. NO, NO, I didn't mean that. I don't know where in my head that came from.
We have to get rid of this one first.
Ben is working n that ;)
Yesterday's sheeple were very Hopeful even as the marched naked into the gas chambers.
Today's sheeple appear to be Hopeful the 2012 elections will bring about Change.
How else do you explain it?
.
Dear Drudge
Please link to this article
A "real circus" is right. Btw, it almost sounds like you've drunk the dimpublican koolade, Bruce.
EDIT: Should I have said "Rimocrat koolade" or is this an unusally partisan red-blue crowd?
"McConnell, Boehner, Kyle and Cantor are really going to be peeved."
Oh shit, now you've done it.
not much new here
http://covert3.wordpress.com
Bruce, who is usually lucid, has gone off the tracks. If sharing a middle of the road old time liberal republican disposition is a fault, it is only a fault for being a rare disposition these days. Sharing a political/economic view is hardly tantamount to collusion. The word collusion is used here to infer something nefarious - more stupid, conspiracy theory feeding, yellow journalism.
Timing is everything. If I'm right this comes by the end of the month. If that happens it will be your evidence of collusion.
We shall see. Keep in mind that the WH COULD NOT do a significant mortgage ReFi WITHOUT the Fed co-operating. Trust me on this one. Something is coming.
the Yellow Journalist
Bernanke says "significant risks in the economy"/ MarketWatch says; "Ben Spanks Stocks" / first time in my life I ever heard of a re-election campaign that involved putting the stock market in the toilet !
At the last meeting The Bernanke beat up on WH and congress regarding fiscal policy. Today we don't juice the market even though election is a year away. Clearly there is more than the usual struggle between WH and fed.
Bernanke doesn't like Obama, but he does like to think he is the most powerful man in the universe, so you can be certain more asset purchases are coming.
Take this opportunity over the next week to sell more fiat paper and save gold.
By the way, Tyler D. just reported that the Republicans defeated the Continuing Resolution just now.
This was a "surprise" that just happened to take place this afternoon. This was the first round of payback.
Not Yellow Journalism. Just the facts.
bk
http://www.zerohedge.com/news/did-they-just-shut-down-government-again
Petraeus 2012. There's no more time for fucking around.
The MBS==ReFi angle is solid. The Fed has used some serious jujitsu on this one. Bailing out BofA/Countrywide and repositioning their long position in one stroke. Why can't we get smartasses like this doing something worth while???
If it works they outlive the EU and the USA can sweep up the spoils of monetary war into another 30 year reign as superpower. If rates blow up, they're dead as dust and the USA is Bk (not BK, the other Bk). But that's why gamblers never leave the table. Play or die.
It's all up to Europe now. Think your smartasses are smarter than our smartasses? You guys better come up with something, fast. That's okay, we'll wait.
You're forgetting about China and the rest of the world. The PRODUCTIVE people - the ones that still make stuff (you know, all the crap you USE) are fed up with financing the US.
he US is thinking they can use military force to maintaion its status at the top of the heap - because economically, we're toast. But we can't afford that military Going full Third Reich or Imperial Japan and grabbing assets you can't afford didn't woprk out so well.... The rest of the world isn't going to let that happen and besides - a bunch of irregulars in Iraq and AFghanistan held us to a draw (and the AFghans held the Soviets to a draw when the Russians were willing to be far more brutal)
Careful - the ink's still a little wet.
http://online.wsj.com/article/SB10001424053111904563904576584653560747470.html?mod=WSJ_hpp_RIGHTTopCarousel_1