Thursday, August 7, 2008

Cobb Douglas

told us the basic relation of input - output of production.

The 3 inputs are

1. technology
2. capital
3. humans

We failed to use #1 to inflate production in 2001.
We failed to use #2 to inflate wealth via shadow capital in 2006 and from lack of savings the past 20 yrs.

I think we should focus our efforts on #3.

America, I set new goals for thee, beat Chinese population by 2025.

I can help rewrite sex-ed for schools, this can potentially reverse the tide of deflation. ( I think in addition to outlawing contraceptives, I would also outlaw anal and oral sex, only allowed is good old pregnancy inducing activities.).


gtt said...

You sick fuck ;)

So is fannie gonna miss like freddie tomorrow?

MTGSPY said...

Thank you, Mtg Sickfuck Spy bows to your wisdom.

I will share one more secret with you all.

Do you remember 2002-2005?

When refinancing was heavy? When rates were low?

A mortgage investor like Freddie and Fannie would lose a lot of money from mortgages prepaying EARLY (due to incessant repeat cashouts and declining rates) if they don't hedge.

So they hedge using CHEAP options on interest rates. in other words, OUT OF THE MONEY options.

Including these and still Not-marking to market, Freddie Mac already in their own words, negative capital.

There's 1 - 2 yrs life left on these options, and they're still out of the money for both FRE, and more so for FNM.

Combined, these are "valued" at $20B+ when by admission, their book value is negative including that +$20B.

How much confidence do you have, that these options will be in the money and realize the value of that $20B, given your own experience trading out of the money option?

Given that house prices are not controllable variables, do you think the government would relinguish the last thing they control, interest rate?

Or even if they do, have you seen that mortgage rates are taking a life on their own, that they continually going up just from risk based pricing.

Hehehehheh. $20B just from NON-MORTGAGE book in these GSEs, going poof in a year or so.

And how's the prime book losses pal? I really want to keep the story about prime defaults as a turkey for y'all before I go for winter vacation.

Greenie said...

but alpha told me to go long.

MTGSPY said...

Then you shall dear greenie, you shall. :D

MTGSPY said...

By the way, in the spirit of the olympics, I join Huanhuan and Beibei in offering olive branches to everyone who has and has been conned by mortgage scientists/investors/paranormals along the way, and let us rejuvenate what's good in us and not commit more fraud or crimes or outright burst of insanities for at least three weeks or just as long as you can hold it if that's too much.

Anonymous said...

does "alternate energy" come under tech ?

why not focus on creating infrastructure and alternate-engery bubble created by .gov (tax payer debt)

If it results in somekind of breakthrough where we literally have to spend only a cent for gallon-gas-equivalant-energy with help of this, that alone should solve-all-the-current problems, and all the money spent by individuals and companies for energy, can be diverted to wage-increase or other useful-productivity-increasing tech or medical-research.

One more bubble, please, in, this time deliberately by .gov spending.

more humans ? dude be careful what you wish for.

Penn said...

MTG, will you provide any kind of warning when you stop comtemplating and actually declare "JIHAD" ??

Anonymous said...

To create human capital would require rivers of high IQ sperm.....

PCap said...

I'm willing to help out with my high IQ spermies!

PCP said...

Why outlaw oral? It always leads to regular for me. I say keep that and get that anal shit out of here.

gtt said...

Dude you should put that options hedging tidbit in its own post on the frontpage. It deserves better than to only be seen by us commenter-trolls.