So what do you think? A good thing for the markets or not? The market rallied hard this morning off the news and is starting to pull back a bit now. Personally, I don’t think that this is all that bad a plan. It has certain drawbacks i.e. the gov’t is now taking on market risk and thereby creating a situation down the road where tax payers may be forced to pay off the non performing loans, but in the short-term, it should help avoid a lot of margin calls and massive fire sales of AAA Agency bonds and hopefully restore some sensibility to this sector of the market.
It’s an f-ing stupid terrible plan. I hope the gov’t decides to use tax payer dollars to bail me out of margin calls.
JoeyDVivre Wrote: ------------------------------------------------------- > It’s an f-ing stupid terrible plan. > > I hope the gov’t decides to use tax payer dollars > to bail me out of margin calls. Isn’t that your money anyway?? Abso–f-ing–lutely! Market needs pain, otherwise pain will never end.
ws Wrote: ------------------------------------------------------- > JoeyDVivre Wrote: > -------------------------------------------------- > ----- > > It’s an f-ing stupid terrible plan. > > > > I hope the gov’t decides to use tax payer > dollars > > to bail me out of margin calls. > > Isn’t that your money anyway?? > > Abso–f-ing–lutely! Market needs pain, otherwise > pain will never end. Yes, because this is just about “pain” that bankers need to experience. Hey, here’s an idea. You’re in a run-away car, it’s not completely your fault that it got up to 200mph, but it’s there and now you can’t stop it. What should be done to make sure you don’t kill other people? A. Put a brick wall in front of you and let you hit it. Nobody else will get hurt, besides the passengers you have in the back seat. You, and they, will die, but nobody else will get hurt in the long-run and the pain will be over quickly. B. Slow you down so that nobody panics and everybody lives. How? Put a bunch of pillows in the way or another thing that will slowly get you down to a speed that isn’t dangerous, you’ll still crash, but you and the rest of the people on the road will live. C. Let you careen down the road, eventually taking out hundreds of cars on the way, doing irreparable damage and other damage that can be repaired, but not for years. Hmmm, yeah, lets just let the financial markets “take their pain”, while taking down everybody at the same time, rather than trying to slow down the markets, let them still take their pain in some ways, but saving pretty much everybody else from the paralysis of financial panic and massive crashes. Why are you guys studying for the CFA again?
A. I guess I should be more specific. Take the pain now…and let’s get it over with quickly.
Could anyone elaborate on how the TSLF is suppose to work? From my understanding, the Fed is lending 200+ billion with a 28 day window and is allowing AAA MBS’ to be used as collateral. But what does that do for the banks/economy considering the amount is repaid and the MBS’ go back on the balance sheets?
elparko Wrote: ------------------------------------------------------- > Could anyone elaborate on how the TSLF is suppose > to work? > > From my understanding, the Fed is lending 200+ > billion with a 28 day window and is allowing AAA > MBS’ to be used as collateral. But what does that > do for the banks/economy considering the amount is > repaid and the MBS’ go back on the balance sheets? The hope is that it will put liquidity in the market to allow the banks to lend to companies who will lend to consumers who will put the money into delevering ARMS and such. Choice A is where the passengers, which includes anybody even remotely connected to debt (which is everybody more or less) dies for a short period of time. Perhaps that wasn’t the best analogy. However, the realization must come that yes, the whole housing thing was pretty fricking stupid. This whole credit environment was. However, that’s in hindsight and we have to find a way to ease out of it without seizing up the whole market, which will erode long-term confidence and disrupt life to an extent only seen a few times in history. The ones that say “screw it, take the pain and get it over with” are the same ones who say “If they attack us, nuke 'em”, because they either don’t care about the circumstances, or just haven’t though it out and remain with their tunnel vision world.
Part of the reason I think that this is NOT an entirely stupid thing to do is because I sincerely think that without this we would have seen a significant increase in the number of large institutional investors (mostly HF’s probably) default, which could have made an already bad situation for a few funds and their investors in to a much bigger and more widespread catastrophe. I don’t know if the fallout would quite qualify as a financial crisis, but it certainly has the makings of one. Now I’m all for personal responsibility, but I also think that there comes a point where a simple ‘purge of the system’ as many are calling for, would serve no one any good. Besides, who is really to blame here? Is it the ibankers who created MBS structures, and by extension goosed everyone down the line to keep feeding the pipeline or should the onus fall on all those greedy bastards with 100% + NINJA mortgages on multiple properties that they simply can’t afford to hold on to? I think, in the end, it’s a shared responsibility and the costs are certainly being shared as well, but in this instance I think a laise fair approach to letting the market handle could end up costing the country, and the world, alot more pain than it was worth.
darkhelmet Wrote: I think, in the end, it’s a shared > responsibility and the costs are certainly being > shared as well, but in this instance I think a > laise fair approach to letting the market handle > could end up costing the country, and the world, > alot more pain than it was worth. Yes it’s a shared responsibility. Shared by the people that bought houses they couldn’t afford, shared by the mortgage lenders that convinced them that they could afford them, shared by the banks that bought the mortgages, and by the bankers that packaged them into MBS’s. Now what about me…the poor schlup who didn’t buy a house that I couldn’t afford, didn’t lend to any of the schlups that did buy the houses that they couldn’t afford, didn’t buy the mortgages or package them into MBS’s. Why the hell do I have to share in the responsibility? Using tax dollars arbitrarily punishes me for a bunch of irresponsible actions by a lot of other people. F’ That!!!
that’s a cost of society… sucks a@@!
jg1996business Wrote: ------------------------------------------------------- > darkhelmet Wrote: > > I think, in the end, it’s a shared > > responsibility and the costs are certainly > being > > shared as well, but in this instance I think a > > laise fair approach to letting the market > handle > > could end up costing the country, and the > world, > > alot more pain than it was worth. > > > Yes it’s a shared responsibility. Shared by the > people that bought houses they couldn’t afford, > shared by the mortgage lenders that convinced them > that they could afford them, shared by the banks > that bought the mortgages, and by the bankers that > packaged them into MBS’s. Now what about > me…the poor schlup who didn’t buy a house that > I couldn’t afford, didn’t lend to any of the > schlups that did buy the houses that they couldn’t > afford, didn’t buy the mortgages or package them > into MBS’s. Why the hell do I have to share in > the responsibility? Using tax dollars arbitrarily > punishes me for a bunch of irresponsible actions > by a lot of other people. F’ That!!! Not to mention the actions of an irresponsible federal reserve which everyday helps corrode the value of your assets, (assuming you have any USD’s) and contributes to a rapidly (by recent standards) rising cost of living
CFA_Halifax Wrote: ------------------------------------------------------- > > Not to mention the actions of an irresponsible > federal reserve which everyday helps corrode the > value of your assets, (assuming you have any > USD’s) and contributes to a rapidly (by recent > standards) rising cost of living They are just doing their best to make sure their buddies at the highest rungs of society are able to get out with all of the wealth that they started with. As for everyone else their attitude is…F’em.
Some are more at fault than others, no doubt, but to a degree anyone who participates in the financial system in complicit. It’s the nature of the beast. What’s significant about the TSLF is that it is available to primary dealers of gov’t securities, which include all the large broker/dealers (and Countrywide). The TAF was availble just to depository institutions.
jg1996business Wrote: ------------------------------------------------------- > CFA_Halifax Wrote: > -------------------------------------------------- > ----- > > > Not to mention the actions of an > irresponsible > > federal reserve which everyday helps corrode > the > > value of your assets, (assuming you have any > > USD’s) and contributes to a rapidly (by recent > > standards) rising cost of living > > > They are just doing their best to make sure their > buddies at the highest rungs of society are able > to get out with all of the wealth that they > started with. As for everyone else their attitude > is…F’em. lol. What would you have them do? Look, securitization volumes are about 25% of what they were last year. Liquidity premiums are massive, regular deals are getting repriced 1-2% higher. Transaction costs are shootign through the roof and credit departments are on deals like white on rice, even if they are structured 5x better than they have ever been in history and the asset classes don’t show a smidgen of declining performance. Do you, for one second, think that *tightening* up credit is a good idea? Perhaps you should go check out what happened in 1930. What’s funny is that people bitch about the Fed yet fail to understand the scope of a credit crunch and what it would do to the economy. Their tunnel vision is ridiculous. They think everything is encapsulated by the dollar and only greedby MBS bankers should be punished. ROFL, tell that to the poor small business owner who wants a loan, only to find out the cost is not 3% greater, he will get half as much, and it will only go out 2 years, not his needed 5. What happens if nobody can get loans at all for 12-24 months because the entire credit market is shut down and large banks go under. Do you think that this short-term pain will be suddenly left by the way side on month 25? Do you think that our economy will pick up where it left off? Hell no, it would cause irreperable damage to our stature in the world *and* the transparity and robustness of our financial markets. It would cause such heavy damage that it would take decades to repair what’s left. As far as the weak dollar, get a grip. BMW’s already talking about large cuts in Europe with large expansion of production in the US. In speaking with travel/services companies, they are seeing massive influxes of tourists. US manufacturers of high-grade mechanical parts and machinery are seeing orders balloon. Companies that were taking advantage of offshore outsourcing are now reconsidering as the labor arbitrage is becoming far less profitable, reducing the downside offset to lower quality service. As far as people worried about their value being eroded. In the long-run, provided you aren’t pushing dollars under the mattress, your long-term value shouldn’t go anywhere. Long-term wages will equalize to inflation and assets held in inflation adjusted investments that will appreciate higher than inflation will be just fine. Get a grip and stop looking at only a few aspects of the problem.
spierce Wrote: ------------------------------------------------------- > > > > lol. > > What would you have them do? > > Look, securitization volumes are about 25% of what > they were last year. Liquidity premiums are > massive, regular deals are getting repriced 1-2% > higher. Transaction costs are shootign through > the roof and credit departments are on deals like > white on rice, even if they are structured 5x > better than they have ever been in history and the > asset classes don’t show a smidgen of declining > performance. > > Do you, for one second, think that *tightening* up > credit is a good idea? Perhaps you should go > check out what happened in 1930. > > What’s funny is that people bitch about the Fed > yet fail to understand the scope of a credit > crunch and what it would do to the economy. Their > tunnel vision is ridiculous. They think > everything is encapsulated by the dollar and only > greedby MBS bankers should be punished. > > ROFL, tell that to the poor small business owner > who wants a loan, only to find out the cost is not > 3% greater, he will get half as much, and it will > only go out 2 years, not his needed 5. > > What happens if nobody can get loans at all for > 12-24 months because the entire credit market is > shut down and large banks go under. Do you think > that this short-term pain will be suddenly left by > the way side on month 25? Do you think that our > economy will pick up where it left off? > > Hell no, it would cause irreperable damage to our > stature in the world *and* the transparity and > robustness of our financial markets. It would > cause such heavy damage that it would take decades > to repair what’s left. > > As far as the weak dollar, get a grip. BMW’s > already talking about large cuts in Europe with > large expansion of production in the US. In > speaking with travel/services companies, they are > seeing massive influxes of tourists. US > manufacturers of high-grade mechanical parts and > machinery are seeing orders balloon. Companies > that were taking advantage of offshore outsourcing > are now reconsidering as the labor arbitrage is > becoming far less profitable, reducing the > downside offset to lower quality service. > > As far as people worried about their value being > eroded. In the long-run, provided you aren’t > pushing dollars under the mattress, your long-term > value shouldn’t go anywhere. Long-term wages will > equalize to inflation and assets held in inflation > adjusted investments that will appreciate higher > than inflation will be just fine. > > Get a grip and stop looking at only a few aspects > of the problem. Okay drama queen. Do you think this is the first time the financial markets have experienced a crunch? Is this your first rodeo or what? Yes things suck for a while…and it sucks most for people that took the most risk…for everyone else it creates an opportunity. I’m sorry if you were leveraged to the hilt when the sh^t hit the fan but that’s the way the cookie crumbles. You take risks and you either make out big or you get your taint handed to you. Quit expecting everyone else to take up the slack for your bad bets. A good cleaning out of the system is what’s needed to give the speculators a sense of perspective.
jg1996business Wrote: ------------------------------------------------------- > spierce Wrote: > -------------------------------------------------- > ----- > > > > > > > > lol. > > > > What would you have them do? > > > > Look, securitization volumes are about 25% of > what > > they were last year. Liquidity premiums are > > massive, regular deals are getting repriced > 1-2% > > higher. Transaction costs are shootign through > > the roof and credit departments are on deals > like > > white on rice, even if they are structured 5x > > better than they have ever been in history and > the > > asset classes don’t show a smidgen of declining > > performance. > > > > Do you, for one second, think that *tightening* > up > > credit is a good idea? Perhaps you should go > > check out what happened in 1930. > > > > What’s funny is that people bitch about the Fed > > yet fail to understand the scope of a credit > > crunch and what it would do to the economy. > Their > > tunnel vision is ridiculous. They think > > everything is encapsulated by the dollar and > only > > greedby MBS bankers should be punished. > > > > ROFL, tell that to the poor small business > owner > > who wants a loan, only to find out the cost is > not > > 3% greater, he will get half as much, and it > will > > only go out 2 years, not his needed 5. > > > > What happens if nobody can get loans at all for > > 12-24 months because the entire credit market > is > > shut down and large banks go under. Do you > think > > that this short-term pain will be suddenly left > by > > the way side on month 25? Do you think that > our > > economy will pick up where it left off? > > > > Hell no, it would cause irreperable damage to > our > > stature in the world *and* the transparity and > > robustness of our financial markets. It would > > cause such heavy damage that it would take > decades > > to repair what’s left. > > > > As far as the weak dollar, get a grip. BMW’s > > already talking about large cuts in Europe with > > large expansion of production in the US. In > > speaking with travel/services companies, they > are > > seeing massive influxes of tourists. US > > manufacturers of high-grade mechanical parts > and > > machinery are seeing orders balloon. Companies > > that were taking advantage of offshore > outsourcing > > are now reconsidering as the labor arbitrage is > > becoming far less profitable, reducing the > > downside offset to lower quality service. > > > > As far as people worried about their value > being > > eroded. In the long-run, provided you aren’t > > pushing dollars under the mattress, your > long-term > > value shouldn’t go anywhere. Long-term wages > will > > equalize to inflation and assets held in > inflation > > adjusted investments that will appreciate > higher > > than inflation will be just fine. > > > > Get a grip and stop looking at only a few > aspects > > of the problem. > > > Okay drama queen. Do you think this is the first > time the financial markets have experienced a > crunch? Is this your first rodeo or what? Yes > things suck for a while…and it sucks most for > people that took the most risk…for everyone > else it creates an opportunity. I’m sorry if you > were leveraged to the hilt when the sh^t hit the > fan but that’s the way the cookie crumbles. You > take risks and you either make out big or you get > your taint handed to you. Quit expecting everyone > else to take up the slack for your bad bets. A > good cleaning out of the system is what’s needed > to give the speculators a sense of perspective. You’ve been through a major credit crunch? I’m working with guys that have been in this market for 25 years and this is far worse than they’ve ever seen. So perhaps you’re rodeos where the kiddy kind in front of Wal Mart.
I understand the severity of the problem, and I see the parallels to the early 1930’s that Mr. Bernanke and even to an extent Greenspan and much of the rest of the fed are so well schooled, as opposed to Bundesbankers who base economic ideology upon their hyperinflation of the early 20’s. I see how credit is vital to the growth of an economy and I do believe that there are times that government needs to begrudgingly intervene for the greater good, but it seems to me that we have played this game before with the same strategy of excessive monetary growth which has caused the problem that we have today. I think it is good for America in the long-term to have an ORDERLY decline in the dollar, we all know that the US trade and current account deficits are ridiculous, and are just as much the fault of exuberant US consumption as they are Asian mercantalism. But what we have seen is the dollar in relative free fall, which brings up the question of how much longer will foreign central banks and oil companies etc. continue to purchase US treasuries due to the dollar’s percieved global currency status. I’m not one of the schools of thought that the Euro takes over the #1 spot over-night , but still we saw this week the Bunds with a lower implied risk than T-Bills! I see what your saying, we need to look at the cars in front of us on the freeway (at which we’re all speeding anyways) instead of thinking about what lies a few miles down the road, but I think the Fed needs to also keep in mind the moral hazard of being seen as more of a bailout bank than one which ensures low inflation and a healthy economy.
People in this industry love to scream that the sky is falling when it appears that conditions aren’t conducive for them to receive a 7 figure bonus at the end of the year. The fact is that markets are resilient and these conditions open up all kinds of opportunities for people who have a long term time horizon and don’t view the market as their own personal little casino.
jg1996business Wrote: ------------------------------------------------------- > People in this industry love to scream that the > sky is falling when it appears that conditions > aren’t conducive for them to receive a 7 figure > bonus at the end of the year. The fact is that > markets are resilient and these conditions open up > all kinds of opportunities for people who have a > long term time horizon and don’t view the market > as their own personal little casino. There are some who’ll never know unless they are in the market.
CFA_Halifax Wrote: ------ At this point it’s nowhere near what the Wiemar did to their DM. Look, in the mid-20s the US helped 3 countries refload a gold backed currency, the UK, Italy, and Japan. To help the UK maintain strength of the pound we held our interest rates low, flooding the market with liquidity. This in turn created the credit boom seen during the “roaring '20s” and the pyramid scheme of holding companies. The Fed wanted to fight to keep the dollar stable, since that’s the whole reason why you kept a gold backed currency and it just wouldn’t do to have a shaky one, so as banks failed, they tightened. Keeping the dollar strong at the cost of liquidity, market transparency, and orderly unwinding of the credit idiocy is reckless. A cheaper dollar isn’t death to the country and, in the end, will probably end up better for us.