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 (1008 views)
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9 Comments

1. mountain goat said...

In mortgage debt we trust.

Friday, November 20, 2009 06:35PM Report Comment
 

2. mountain goat said...

Sorry too big, click on the article to see the plot properly.

Friday, November 20, 2009 06:37PM Report Comment
 

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.

Friday, November 20, 2009 07:02PM Report Comment
 

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!

Friday, November 20, 2009 07:10PM Report Comment
 

5. cynicalsoothsayer said...

"$2.2 Trillion in Assets"

Hahahahahahahahahahahahahahahahahahaha! Assets? Hohohohohohohohohohohohohoho!

Friday, November 20, 2009 07:32PM Report Comment
 

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

Friday, November 20, 2009 07:33PM Report Comment
 

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.

Friday, November 20, 2009 09:05PM Report Comment
 

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.”

Saturday, November 21, 2009 12:27AM Report Comment
 

9. Ndg said...

Pump up the vo$ume.

Saturday, November 21, 2009 07:30AM Report Comment
 

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