Friday, Nov 20, 2009
The Fed is a giant Mortgage Backed Security black hole
Zero Hedge: Fed Balance Sheet Hits Record $2.2 Trillion In Assets On $71 Billion Weekly Increase In MBS
This week it was reported that a record number of Americans are behind on their mortgage payments (won't pay rather than can't pay in many cases, endless debt forgiveness leading to extreme moral hazard). And guess who is holding the rotten MBS? $1 Trillion, 50% of the Feds assets are now mortgage backed securities and accelarating. Little wonder investors are fleeing to gold and Short-term US T-bills as rates turned negative again this week on the 3 month T-bills, the first time since the panic of 2008.
Posted by mountain goat @ 06:33 PM (638 views) Add Comment
9 Comments
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1. mountain goat said...
In mortgage debt we trust.
2. mountain goat said...
Sorry too big, click on the article to see the plot properly.
3. cynicalsoothsayer said...
Pop! Or should that be BANG!
Yeah, some here seem to think it is business as usual: House prices will only ever go up.
4. Paul H said...
Here’s an interesting video. Explains a lot about the FED.
http://www.youtube.com/watch?v=p3_Q1SiRN-A&feature=channel
Also, an experiment to see if my mild, topical and well meaning comments accompanied by a link from Chris Martenson's Crash Course actually get posted.
Is there an HPC inner circle?
Prove me wrong, I’d appreciate it!
5. cynicalsoothsayer said...
"$2.2 Trillion in Assets"
Hahahahahahahahahahahahahahahahahahaha! Assets? Hohohohohohohohohohohohohoho!
6. mountain goat said...
@CSS Yes ready and primed for a pin to make it all go pop.
Just to back up my claims above.
T-Bills negative rates - http://ftalphaville.ft.com/blog/2009/11/20/84516/t-bill-terror/
Record US delinquencies - http://www.housepricecrash.co.uk/newsblog/2009/11/blog-us-delinquencies-and-foreclosures-set-th-straight-record-in-rd-quarter-as-layoffs-keep-rising-26494.php
7. alan said...
Be careful with that pin MG ! Thanks for the chart.
Lots of people must have read the article....Gold just hit $1150.
8. refusetobuy said...
I buy the window dressing argument.
Particularly at the bottom of FTAlphaville there is this
In fact, this is what some people were saying back in December 2008:
“It’s the year-end factor,” said Chris Ahrens, an interest-rate strategist in Greenwich, Connecticut, at UBS Securities LLC, one of the 17 primary dealers that trade directly with the Federal Reserve. “Everyone wants to be in bills going into year-end. Buy now while the opportunity is still there.”
9. Ndg said...
Pump up the vo$ume.