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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 375.93-1.8%Nov 14 4:00 PM EST
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To: TobagoJack who wrote (66903)10/7/2010 2:07:52 AM
From: Hawkmoon1 Recommendation  Read Replies (1) of 217815
 
... i thought Congress (by 'de-regulation' and fannie and freddie) did that together with al maestro greensputin ('print-a-thon')

Of course they did.. But who do you think was buying the securitized mortgage notes in their quest for yield?

From 2007:

bloomberg.com

From 2008 regarding China's Central Bank and it's activities in US T-bill and MBS:

It has been on a buying binge in the United States over the last seven years, snapping up roughly $1 trillion worth of Treasury bonds and mortgage-backed debt issued by Fannie Mae and Freddie Mac.

Those investments have been declining sharply in value when converted from dollars into the strong yuan, casting a spotlight on the central bank’s tiny capital base. The bank’s capital, just $3.2 billion, has not grown during the buying spree, despite private warnings from the International Monetary Fund.

nytimes.com

Wall St. is responsible for how they used that Chinese money to securitize, and then originate more, US mortgages.

And of course, China was accomodative because they wanted to maintain their USD peg and avoid US tariffs and protectionist measures.

So guess what? China is left holding the bag and they can't sell without creating even more global economic turmoil..

And if the US and China ever enter into conflict, guess how we're going to pay for a good part of it? Account freezes on Chinese assets and hitting "debit".

Let's both hope and pray that never happens...

Hawk
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