Understanding Interest Rate Risk And Duration Of A Bond [View article]
Marley, the banks always win on swaps. They take the floating position and force companies who want loans to take the fixed position which is a losing bet. The companies have no choice if they want loans. Interest rates must, therefore, stay low:
And the Bernanke Backstop is real. The Fed must guarantee almost all mortgages or the securitization process, that can form bubbles, can't get started again. The goal is a no money down loan, with relaxed lending standards. Otherwise, all these guys in private equity will have no one to sell to. The banks won't like that.
Who cares what happens to main street? The Fed doesn't.
How The Fed Is 'In A Box' In Terms Of Creating Sound Collateral [View article]
you said:
:My impression, after reading several of your enightening articles, is that the banks are still insolvent (through derivatives exposure at 50-1 leverage or 100-1 leverage) and lower housing prices will implode the banks and level Western civilization. Is that how you are reading this?"
Bank leverage has come down. There is collateral that must be attached to these interest rate swap deals. They will go the way the banks want, reducing risk. Read the other article and it will tell you that this system looks pretty foolproof to me. http://seekingalpha.co...
It is foolproof because, as you will see, it is a scam, a coercion of companies to take the wrong side of the trade.
How The Fed Is 'In A Box' In Terms Of Creating Sound Collateral [View article]
"I have a question for you. Do you think Paul Volcker understood in the early 1980's that higher interest rates would save the country but destroy some banks...and he chose his country?"
It would seem that way Michael. Now we are in a stall. Stalls can last for decades. Look at Japan. Maybe centuries. Who knows?
Thanks for the kudo. I hope you would consider my new article that pretty much reveals why there is so much demand for treasury bonds and why the new way to fight inflation is to prevent the economy from growing significantly along with keeping this treasury bond demand up.
Not that I am a fan of Hayek, but the saying rings true. Why would anyone believe that the TBTF banks in Europe are really TBTF? They may be, but then why not just put the money in a safe and quit worrying about it? It is not like you get such a great rate in the TBTF's.
Understanding Interest Rate Risk And Duration Of A Bond [View article]
And even when they raise interest rates, the goal is low rates. So you don't see much raising of rates. Inflation and Volcker's response were an aberration. People write as if that was the normal.
Understanding Interest Rate Risk And Duration Of A Bond [View article]
Perhaps as a counter argument, you may want to look at this I put out today: http://seekingalpha.co...
The demand for treasuries is way larger than the supply. And there is a little revealed scam that is causing this demand, as well as clearinghouse needs going forward.
The spread between 10-year Treasury bonds and comparable German bunds widened Monday after the Cyprus bailout sent investors scrambling for the safest of safe havens. At 59 basis points, the premium investors demand to hold Treasuries over bunds is double the 10-year average and sits near a 33 month high. Demand for Treasuries is also being held back by a U.S. economy that is "much better than expected," according to a dealer interviewed by Bloomberg.[View news story]
I bet that dealer is lying. I bet the treasuries are oversubscribed as always. The dealers want people to think interest rate hikes are just around the corner.
If it is cheaper to buy than to rent, why are banks only facilitating investors and the uber wealthy hedge funds?
Seems to me that if you can't get a loan that doesn't mean anything. There is a cash driven bubble. I think it is unsustainable. Easy money is a possibility, but will the Millennials bite? I don't think they will.
Understanding Interest Rate Risk And Duration Of A Bond [View article]
http://seekingalpha.co...
The only way banks lose is if there is not enough collateral, and that would be more likely in Europe.
Bernanke's Exit Plan [View article]
http://seekingalpha.co...
And the Bernanke Backstop is real. The Fed must guarantee almost all mortgages or the securitization process, that can form bubbles, can't get started again. The goal is a no money down loan, with relaxed lending standards. Otherwise, all these guys in private equity will have no one to sell to. The banks won't like that.
Who cares what happens to main street? The Fed doesn't.
How The Fed Is 'In A Box' In Terms Of Creating Sound Collateral [View article]
:My impression, after reading several of your enightening articles, is that the banks are still insolvent (through derivatives exposure at 50-1 leverage or 100-1 leverage) and lower housing prices will implode the banks and level Western civilization. Is that how you are reading this?"
Bank leverage has come down. There is collateral that must be attached to these interest rate swap deals. They will go the way the banks want, reducing risk. Read the other article and it will tell you that this system looks pretty foolproof to me. http://seekingalpha.co...
It is foolproof because, as you will see, it is a scam, a coercion of companies to take the wrong side of the trade.
With Treasuries, It's Not About The Interest Rate [View article]
I am certain that the Fed has a lid on interest rates and will prevent inflation rather than let it out of the bag.
A Short Analysis Of Capital Reserves Of European Banks [View article]
Author may want to check out my article on the weakness of collateral in the Euro Union as well: http://seekingalpha.co...
Understanding Interest Rate Risk And Duration Of A Bond [View article]
How The Fed Is 'In A Box' In Terms Of Creating Sound Collateral [View article]
It would seem that way Michael. Now we are in a stall. Stalls can last for decades. Look at Japan. Maybe centuries. Who knows?
Thanks for the kudo. I hope you would consider my new article that pretty much reveals why there is so much demand for treasury bonds and why the new way to fight inflation is to prevent the economy from growing significantly along with keeping this treasury bond demand up.
Bailing In [View article]
Understanding Interest Rate Risk And Duration Of A Bond [View article]
Understanding Interest Rate Risk And Duration Of A Bond [View article]
Understanding Interest Rate Risk And Duration Of A Bond [View article]
The demand for treasuries is way larger than the supply. And there is a little revealed scam that is causing this demand, as well as clearinghouse needs going forward.
We Face Derivative Collateral Deflation And ECB Banks Could Be The Losers [View article]
We Face Derivative Collateral Deflation And ECB Banks Could Be The Losers [View article]
The spread between 10-year Treasury bonds and comparable German bunds widened Monday after the Cyprus bailout sent investors scrambling for the safest of safe havens. At 59 basis points, the premium investors demand to hold Treasuries over bunds is double the 10-year average and sits near a 33 month high. Demand for Treasuries is also being held back by a U.S. economy that is "much better than expected," according to a dealer interviewed by Bloomberg. [View news story]
The Housing Bubble Is Back [View article]
Seems to me that if you can't get a loan that doesn't mean anything. There is a cash driven bubble. I think it is unsustainable. Easy money is a possibility, but will the Millennials bite? I don't think they will.