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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum -- Ignore unavailable to you. Want to Upgrade?

To: carranza2 who wrote (82030)	10/24/2011 9:49:46 AM
From: TobagoJack	Read Replies (1) \| Respond to of 217622

just sent From: J Sent: 2011 10 24 9:43 PM Subject: RE: Comments - Week of October 24 just saw on tv an advertisement by china gold on their 5-9 gold, a 99999 gold bar. the tv program is a 60-min type of show and the advertisement is a matter of fact but stylishly done 99999 bar must cut like triple cream butter must be good stuff From: J Sent: 2011 10 24 9:23 PM Subject: RE: Comments - Week of October 24 spoke to leader of large enough industrial intermediate goods trading operation and the lead lady reported that (i) after 8 months of negotiations with traditional usa clients, 12-15% increase in prices have been reached w/ win win result (ii) future increases / decreases have been automated, by indexing to exchange rate wobbles and to raw material indicators shuffles, w/ regular reviews once every 3 months my take-away, the structure planks for fractal-scaled-up wage-cost spiral have been put in place, and so inflation can now "go ahead" cheers, j

To: carranza2 who wrote (82030)	10/25/2011 4:49:40 AM
From: TobagoJack	Read Replies (1) \| Respond to of 217622

Just in, from r What is B&G Mortgage up to now? Ramsey Su Oct 2011 (for those who may be new, B&G Mortgage stands for Bernanke and Geithner Mortgage Company, USA) Mr B has been claiming that the Fed is not out of ammo and he has a lot more tricks left, hinting at some form of QE3. Last week, Fed Gov. Daniel Tarullo said large-scale purchases of mortgage securities could give a boost to home purchases and refinancing. This week, Mr G's boss announced some type of refinance plan for loans sold to the agencies. fhfa.gov You should read other reports for a summary of this refinance plan. Nick Timiraos of the WSJ provided a good report here. blogs.wsj.com I only have one question: Why is this a refinance? Given the criteria, the borrower has to have a fre or fnm loan originated before June 2009. They have to go back to the same servicer, be current for at least 6 months and no more than one payment late during the last twelve months. Nothing is needed from the borrower. No appraisals. This is not a refinance, this is a simple loan modification. FHFA can instruct all the servicers to write down the interest rate and recalculate the payments on all loans based on the criteria. In other words, this is as simple as doing a reset on a hybrid adjustable loan. This modification should not involve mortgage insurance, junior lien holders and anyone else in the title chain. Once again, WHY IS THIS A REFINANCE? Here is the way I see it. Reason #1 - Bail out the banks. The loans in question are basically uncollateralized losses, accidents just waiting to happen. When these loans default, the agencies have the responsibility to audit them and put back the bad loans to the originators. The banks therefore will absorb the losses instead of the taxpayers. The loss severity of these loans has to be 50% or higher. This is a risk that has been haunting the banks, especially for all the toxic loans originated back before 2009. This FHFA program will provide a safe harbor for the banks to cut ties to the original evil deeds. That is why these loans need to be relabeled as a "HARP refinance". Reason #2 - Operation Twist (I have not researched the following but I hope some of you bond guys, or investigative reporters would come up with some data) The Bernank wants to drive down long rates. The pools of agency loans targeted in the FHFA scheme are probably the highest yielding loans available today that comes with a US government guarantee. I speculate that they are largely in foreign hands, probably the Chinese. I do not know what right the agencies may have to unilaterally lower the interest for the borrowers without having to compensate the holder of these MBS. A refinance, on the other hand, is a prepay. Holders of the original MBS are welcomed to re-invest. Only now it would be at a much lower rate. This is actually a rather brilliant move to screw the original MBS investors. Since Mr G is guaranteeing these loans anyway, why pay them the high yield? As I stated above, Mr B's Fed printing press is standing by to buy up all these new MBS in the event the old investors do not want to step up to the plate again. In summary, I am neutral on this scheme. Even though I think it does very little to help the real estate market, I do not think it does any harm. Holders of the old MBS are the ones who are paying for this scheme. If they are in the hands of foreigners, screw them. If they are in the hands of domestic pension plans like CalPERS, or among those purchased by Bill Gross (PIMCO) recently, then they may have some issues which would not surface for quite a while. The bankers are the clear winners but as we have learned, THEY ALWAYS WIN, just live with it.