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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Think4Yourself who wrote (109149)	3/11/2008 7:18:16 PM
From: MulhollandDrive	Read Replies (2) \| Respond to of 306849

people keep saying this doesn't expand the fed balance sheet because it's basically a 'swap' well true enough.... but the crap that is being 'swapped' had absolutely NO BID until the fed stepped in to say ok, let's accept the AAA rated stuff and will call it the 'markIT' for now will it work in the longterm? jury is out....so far the $h@t sandwiches on the balance sheets had no takers....does this really change the valuation or does this maneuver just postpone the inevitable... we'll see <edit> btw, i've been reading some interesting comments about the dollar reaction to today's fed action....some folks are suggesting that the fed has finally got religion wrt the USD$ and the inflation impact with this continuous, mindless easing ....the thought being that the fed will not lower the .75 basis point that is currently baked in and will become more hawkish on inflation (or at the very least, not completely oblivious to the falling dollar)...so on that level at least i would agree that the fed is trying to target the problem directly, but i'm in the camp that ultimately the market needs to clear and the fed is just prolonging the process with it's ever increasing interventions

To: Think4Yourself who wrote (109149)	3/11/2008 7:30:32 PM
From: patron_anejo_por_favor	Read Replies (2) \| Respond to of 306849

>>The fed is addressing the liquidity problem without helping the gamblers or the mucked up companies<< You mean Citigroup, COF, MBI, WM, MER, BAC, WB haven't been gambling? ROTFL... This is the camel's nose of the Fed buying MBS's outright under the tent of monetary policy. It has a huge downside, which will be seen when they start to "expand the option" as has been bandied around. At that point it will be MORE expansionary than a simple FF cut, with resultant hyperinflation (to say nothing of creating a whole new class of zombie financial companies a la Japan). It's simply another way to avoid market clearing at any cost.

To: Think4Yourself who wrote (109149)	3/11/2008 7:33:44 PM
From: Smiling Bob	Read Replies (2) \| Respond to of 306849

If the ratings agencies aren't clear as to the quality of these MBS, why would the Fed be qualified? Collateral should have some liquidation value. What happens a few months down the road if all the collateral is found to be contaminated? This stuff is a long way from sound MBS are backed by depreciating RE. Some more than others and some even heading for a meeting with a bulldozer. Not exactly what the Fed should be pawning America's future with. So either the Fed calls the Tbills and we're back to where we started or we just continue to feel relieved every 28 days. Can't we just get the results from an EPT?

To: Think4Yourself who wrote (109149)	3/11/2008 8:50:53 PM
From: stomper	Read Replies (3) \| Respond to of 306849

<<They are only accepting AAA collateral, that isn't on credit watch, for either 80 of 85 cents on the dollar. If the securities change to no longer be AAA then they can't be rolled over>> Are you serious? AAA means NOTHING anymore. Literally, it is now a simple term of art that is used with no discernable meaning or measurement behind it. There are mountains of tranches out there that are rated AAA and have half their make up at 90 days delinquent and they are still rated AAA by the agencies. They are absolutely monetizing this crap. If you're good with that and think it great idea, then fine. But do not fall into the "they are only taking AAA" collateral and think that means anything. They will probably be taking junk bonds by the time this is done. Derivatives anyone?