Thursday, July 24, 2008

A little dusty since the last excitement/orgy ...

I really am running out of material to spew out maybe I will start putting links for porn on the sidebar.

In TF, 7 months ago I was really speculating that FRE and FNM will have to be taken over by the government and their shareholder value would be wiped out. The owner of that forum was really mad and this is some of his retort, I wont force you to read the entire confusing debacle:

Well, .... I guess now we just sit and wait for that Treasury moonshot then?

This whole simple thing is just a reflection of the lack of war since like 1940s. I really don't mind risking my life in WW3 right now. If I survive, then I would hug everybody, apologized, and sing kumbayah, with the remaining 40% of the world who survive. Then we can do business again. This place gets too crowded, man. Besides, I am tired with the stock footage they use in video games these days. Need new material man. By the way, are you still long basic material my friend? You won't be able to farm that much crop when the fields are thoroughly mined.

Heheheh, I really don't like posting this in TF because I'd rather shit on my own carpet. But then again, I have a good record shitting live giant black mambas on the floor, as the links posted above would testify.

Still laughing?


gtt said...

As I said in the same thread

"The thing is FNM becoming insolvent would be such an unprecedented nightmare scenario that IMHO it is impossible to know exactly how the .gov will react. Desperate governments do unbelievably stupid things, we have seen it over and over again throughout history. "


Penn said...

OSTK is back on REG SHO list.

Looks like the ride to $7-$10 will need to be called off??

D said...

The MFF called me today about the NAB CDO marks and asked me to explain how CDOs can only be worth .10 on the $...he said there is no way they can be worth that much and will be marked up.


I just said, "you don't understand the mechanics and structure of structured finance securities...Imagine standing in a long line of people looking to collect from someone with a negative net-worth and no job. The first guy in the line gets the Air Jordan's, the next guy gets the FUBU jeans, and the third guy gets the Tarheels jersey...what does everyone else get? They fight over the dirty underwear."

The retail investor really has no chance because the industry was "modernized" beyond their scope of competence and perceptive capabilities...shotgun diversification, shaking hands and buying dinner. Trying to explain that risk was under-priced on a no-frills FNM mortgage is too esoteric to them to even try explaining to these people, much less CDOs.

MTGSPY said...

well why are they worried, those AAA are wrapped by towering institutions like ABK and MBIA? :D

ARAK said...


What is your opinion on the long term treasuries yield going forward after the pigmen bailout bill passes? Will it do the moonshot like the TF guy says or do you think deflation will depress yields like in Japan?

Japan was an easy case in hindsight given they were a nation of savers. We however are mega spenders with no concept of spending within income limits and foreigners at some point will have to demand more for the credit they have extended the drunken sailor. Do you think interest rate moonshot will happen or will we go the japanese way?

MTGSPY said...

There is every indication it is going to go up, how much I don't know. What I know is there will be NO printing at all and more of the same money and credit destruction.

Confusing higher price of money with availability of money will get their ASSES handed down to them.

There are so many that are attracted to commodity because of zimbabwean impressionists and throngs of analysts selling POT for the last(?) time to retails will again, burn.

I want to write about the money supply relation with the housing bill but I am afraid many won't like what they read as I may come across as apologists for the gov't.

I'll write it later.

MTGSPY said...

well, ok, this is a good read on this round about topic of

a) why cost of credit is up
b) deflation is happening..

Answer: Global imbalance/Fake Decoupling from pumpers.

ARAK said...

I've been nibbling on POT the last few days after it started decisively breaking down.

Meanwhile, am waiting for this rally to 1320 and the shit is taking way too long this time around. I guess the Fed put doesn't have the same mojo as before. I wonder if the ramp to 1320 on the SPX will come at all.

vin said...


If the bill passes and essentially confirms the govt backstop for the GSEs, wouldn't major bond holders find the 70-80 bp spread for their notes even more tantalizing? TF likes to go on and on about a total bond market collapse, but it seems more likely that long-term treasury (and GSE) yields want to adjust to narrow the gap, now that the perceived risk is lessening.

MTGSPY said...

I'd just say this when the dust settles there will be less lending activities, the govt is involved more in lending, and by definition most rates would seem to me converge to albeith higher level than here. It's the final supply and demand out there. Deflation will reduce the rate, risk-based pricing/macro factor will increase the rate. But they'd probably meet somewhere.