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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: russwinter who wrote (77890)	1/19/2007 10:11:20 AM
From: bart13	Read Replies (1) \| Respond to of 110194

Through the Looking Glass: "Mid-2005 corresponds to the peaking of housing prices suggesting that the underlying collateral, and ultimately credit quality of the vintages that FCBs have purchased are suspect. Looks like the masterplan is to make them the ultimate bagholders?" An interesting view on what the primary dealers of the Fed have been doing - the MBS green line: I also note in passing that both the accept/submit ratio is dropping on the TIOs ops since December and also that the last two TIO ops have not managed to move the market much (S&P is only up about 20 points since mid December with an approx. $40 $ $20 billion injection, respectively).

To: russwinter who wrote (77890)	1/19/2007 12:54:40 PM
From: Real Man	Read Replies (1) \| Respond to of 110194

"And a 10.85 VIX on a synthetic power keg is about as natural as 1989 Soviet Union economics." Well, after 1989 in Soviet Union came 1990, 1991, and 1992 hyperinflation. 1989 was surreal - you could walk into a store in Moscow (which was much better off than other regions of the country), and find nothing there, except a salesman selling it - nothing, that is. A salesman working in a store with completely empty shelves. Nothing at all, in the whole store. That's when money is really overpriced relative to goods. I was thinking: why would he come to work? The answer is, in a socialist system he was paid for just going to work. After 1992-1993 hyperinflation, the stores were full, but nobody could afford to buy anything. It's not fun now to see some totally empty shelves at a local Wallmart..., but it is certainly less surreal than 1989 Soviet Union. I have no guess as to how things will proceed from here. Synthetic market is being supported via futures by a single powerful entity. So, there are 2 possible scenarios. Scenario #1 - the entity is overpowered by the market forces in a market that wants to go down. Then we'll have a crash similar to 1929 or worse. Scenario #2 - the entity is the Fed, which can create money from thin air and can't be overpowered by the market. Then at some point the confidence in the dollar will evaporate, and we'll have a currency nightmare.