Canadaman writes:
BS..........first
Canadaman | 03.21.08 - 11:13 pm | #

Canadaman writes:
*sniff, *sniff.........why Mr. Bernanke what is that cologne your wearing?

Ben Bernanke responds, "Why Canadaman it is a new scent called Desperation. Do you like it"

Oh it smells great on you Mr. Bernanke
Canadaman | 03.21.08 - 11:14 pm | #

SC writes:
Not yet... The Fed is taking AAA MBS in the TSLF and discount window. How long until they debase their own balance sheet. There are a lot of banks around the world involved in this - in Germany, WestLB essentially got a public bailout due to this MTM contagion.
SC | 03.21.08 - 11:14 pm | #

Pilgrim writes:
That is a very specific denial.
Pilgrim | 03.21.08 - 11:15 pm | #

infiniti writes:
I understand that those Thornburg mortgages sold last week went for 65 cents on the dollar. These were prime loans.

That makes every other bank in the US bankrupt; well, at least those that own Alt-A private label mortgages. Lehman, Wamu, Bank of America vis-a-vis Countrywide, probably Wachovia... the list goes on.

They're only alive because they refuse to touch marked-to-market bonds.

In other news, everybody in LA that has listed their real estate within the past month is asking a premium to the 2005/2006 price. Wait until we hit 36 months of inventory!

hahahahahahahahaha!
infiniti | 03.21.08 - 11:17 pm | #

es writes:
i will buy these bonds,..all day.
just cant find the ones i want

if anyone knows of a broker dealer who specializes in these areas retail, let me know

thanks
es | 03.21.08 - 11:20 pm | #

Misean writes:
The Fed is in a strange position...don't you think?

http://www.youtube.com/watch?v=U...h? v=U1TmeBd9338

Cheers,
Misean | 03.21.08 - 11:24 pm | #

Canadaman writes:
A rumor isn't true until it is officially denied.

I think the FED set a record with that denial.....and on a Holiday no less
Canadaman | 03.21.08 - 11:25 pm | #

Anonymous writes:
No credibility out of these clowns. Zero.
Anonymous | 03.21.08 - 11:26 pm | #

YLSP writes:
Ah okay, so our Fed is going to do an uncoordinated buy..
YLSP | 03.21.08 - 11:26 pm | #

sportsfan writes:
As Pilgrim said, this is a very specific denial

Of course there are no discussions with other CBs about "coordinated buying of MBS." The Fed is already doing the buying unilaterally.
sportsfan | 03.21.08 - 11:27 pm | #

sk writes:
That's a weird denial..

"The Federal Reserve is not involved in discussions with foreign central banks for coordinated buying of MBS," a senior Fed official said.


All it says is no coordination - so they might still be planning to buy ? Its like the "ridiculous" comment by the Bear Stearns executive or Cramer's statement -"Your money is safe in Bear Sterns - don't take it out", or all the splendidly slippery statements of our Billy.

Technically true and totally false.

-K
sk | 03.21.08 - 11:30 pm | #

Misean writes:
Canadaman,

I smell it too...

http://www.youtube.com/watch? v=W...feature=related

Some background music.

Cheers,
Misean | 03.21.08 - 11:32 pm | #

lb writes:
This denial was brought to you from the same guys (FED) that said there was no problem back in August.

Take anything they deny so explicitly as the gospel truth. A day before Bear Stearns goes bust they (both Fed and Goldman) denied there was a problem.

In earlier post we see that Goldman and insider execs selling their own shares at $175+ on Friday. The Lehman execs also unloading to the public.

Yes, the same Goldman Sacks who brought us Robert Rubin and Henry Paulson.

Yes the same Goldman who was issuing CDO's, SIV's to unsuspecting investors while shorting MBS securities.

The lies and deceptions are totally out of control. The problem is that the sheeple are in the chutes ready for the bullet but the brain, but too stupid to know the difference between the slaughterhouse and the feeding trough.
lb | 03.21.08 - 11:34 pm | #

mysterious eggs writes:
Where is the crossover point in "cents on the dollar" value where the majority of banks cross from solvency to insolvency?
mysterious eggs | 03.21.08 - 11:35 pm | #

bZb writes:
I think a number of people have noticed this already. All this denial says is that there is no coordination with others CB's.
bZb | 03.21.08 - 11:41 pm | #

andy in nz writes:
Where is the crossover point in "cents on the dollar" value where the majority of banks cross from solvency to insolvency?

January 2008!
andy in nz | 03.21.08 - 11:43 pm | #

homedad43 writes:
Jeez, I take a day off from this site and things go to hell.

If it makes anyone feel better, it's hard to maintain quiet decorum in a Good Friday Cross Walk when the person in front of you blows a ripping great fart.

That said, define "discussing". Emails? Or perhaps there was already something cooked up in the event that this went to hell, and there is no present need for discussions.

I'm feeling better about gold again.
homedad43 | 03.21.08 - 11:46 pm | #

homedad43 writes:
Heads will roll?

Okay, if the earlier post is correct, then I nominate GS for the first on the block.
homedad43 | 03.21.08 - 11:48 pm | #

Canadaman writes:
@Misean......

Perfect song to describe Bennie Boy.

I love the fact that BB is calling for the hail mary. Let's me know how much farther down we have to go in the markets.

And all BB had to do is make everyone tell the truth about their level of crap on their BS. Instead he is going to take everyone down instead of just the riskloves.
Canadaman | 03.21.08 - 11:48 pm | #

Misean writes:
Canadaman,

"Let's me know how much farther down we have to go in the markets."

The smell of death surrounds you.

Cheers,
Misean | 03.21.08 - 11:50 pm | #

ac writes:

I don't get it.

Who's going to be paying for my new house then?

ac | 03.21.08 - 11:55 pm | #

Canadaman writes:
Misean...

I'm going 100% long at DOW 400 or below in 5-10 years
Canadaman | 03.21.08 - 11:56 pm | #

AllenM writes:
Geez, last time I go skiing for a week!

So now the Fed has to deny a basic nationalization of mortgages?

DENY?

Why bother?

Isn't it obvious that the bust is an epic event? But still, shouldn't we at least decide to inflict some pain on the perpetrators of Wall Street?

Now why would the fed bother when fannie and freddie are being expanded along with the Fed home loan banks?

Deleveraging is raging across wall street and we are going to complain about a little liquidity provided to failing ibanks?

What about some bigger failures?

How about huge losses in hedge funds that are now just beginning to emerge?

What about those pension, mutual, and insurance funds that have *reached* for yield?


Um, where's Waldo?

Someday this war's gonna end...but the slopes were dynamite this week.
AllenM | 03.21.08 - 11:58 pm | #

Misean writes:
homedad43,

OT

I'm Catholic:

"If it makes anyone feel better, it's hard to maintain quiet decorum in a Good Friday Cross Walk when the person in front of you blows a ripping great fart."

Is a Cross Walk like the signs of the Cross? If so, I tear up to much to respond to flatulence.

Here's a bit for ya,

http://www.youtube.com/watch?v=r...h? v=rDHoTOgeNWE

Cheers,
Misean | 03.22.08 - 12:01 am | #

unirealist writes:
I take that overly-specific denial to mean that the discussions have already been completed.

To paraphrase Bill, it all depends on what your definition of are is.
unirealist | 03.22.08 - 12:01 am | #

Anonymous writes:
Hey,

The Fed may not be "discussing" MBS, but The Fed branch called SIFMA is!
Anonymous | 03.22.08 - 12:02 am | #

Misean writes:
homedad43,

The better version,

http://www.youtube.com/watch? v=O...feature=related
Misean | 03.22.08 - 12:02 am | #

infiniti writes:
So now the Fed has to deny a basic nationalization of mortgages?

DENY?

Why bother?
__________________________

I agree completely. Fannie and Freddie are the nationalization of mortgages. Fannie/Freddie/Fed, it doesn't matter which agency buys the loans; the ultimate owner is the taxpayer.
infiniti | 03.22.08 - 12:03 am | #

Milkman writes:
"We deny all rumors that the Federal Reserve is coordinating the purchase of worthless securities from people who made stupid investments but refuse to pay the price. Furthermore, we deny that this action will lead to the continuing devaluation of the US dollar. We also deny that we are getting on a plane on Easter Sunday, to meet Dick Cheney in an undisclosed location . . ."
Milkman | 03.22.08 - 12:05 am | #

Anonymous writes:
Re: That is a very specific denial.

Me doth think zee ladies do protest too much
Anonymous | 03.22.08 - 12:05 am | #

FFDIC writes:
Lets all wait until Mr. Greenspan comments on the matter and he will at any moment now.
FFDIC | 03.22.08 - 12:08 am | #

Anonymous writes:
Ok, here's the deal, they may not be planning on swapping MBS, but they may have plans to swap ABS?
Anonymous | 03.22.08 - 12:10 am | #

ac writes:

So now the Fed has to deny a basic nationalization of mortgages?

DENY?

Why bother?

If this starts to look like a redistribution of wealth from people who paid off their houses to people who haven't it's going to get kind of nasty in a way the Fed probably wants to stay out of, especially if they don't know who's going to win the next election yet.

ac | 03.22.08 - 12:11 am | #

Rob Dawg writes:
The U.S. Federal Reserve, responding to press reports, said it is not discussing coordinated purchases of mortgage-backed securities with other central banks.

Other central banks asked; "coordinated purchases?" The Fed said yes. There was no discussion. Credibility preserved.
Rob Dawg | Homepage | 03.22.08 - 12:16 am | #

homedad43 writes:
I'm Catholic:

Misean:

I'm Lutheran, we're the Catholic JV.

It was an ecumenical walk across town akin to the stations of the cross.
homedad43 | 03.22.08 - 12:17 am | #

Anonymous writes:
On December 14, 2007, the Securities In-dustry and Financial Markets Association (SIFMA) announced revised guidelinesfor delivery of offering materials relating to GSE fixed-income securities...

The revised SIFMA guidelines cover all securities issued by Fannie Mae, Freddie Mac, the Farm Credit System, and the Federal Home Loan Bank System.

annie Mae is prepared to comply with these new SIFMA guidelines, as offering documents are already posted to Fan-nie Mae’s Web site

SIFMA is The Fed
Anonymous | 03.22.08 - 12:19 am | #

John Stark writes:
We can hope that a bunch of ambitious federal and state prosecutors recognize they can get some public acclaim by doing their jobs. The wheels are beginning to turn:

http://www.bloomberg.com/apps/ne...MSSw& refer=home
John Stark | 03.22.08 - 12:21 am | #

awgee writes:
.
Anybody care to speculate as to why gold took such a header the last couple of days?
.
awgee | 03.22.08 - 12:21 am | #

RayOnTheFarm writes:
My first thought when I read that was, ok you're not in talks with "foreign central banks" but you could be in talks with other parties (but we won't go there tonight).
RayOnTheFarm | 03.22.08 - 12:25 am | #

REBear writes:
About gold, wasn't IMF planning to sell 400T of gold. Are we in the middle of that sale?
REBear | 03.22.08 - 12:25 am | #

sportsfan writes:
I don't know what's going on with the Tampa RE market, or the water supply there, but the idea that all four 12s and 13s can all advance in four games on the same floor on the same day has to be a once-in-a-lifetime.

Hoocoodanode?
sportsfan | 03.22.08 - 12:29 am | #

Anonymous writes:
http://www.fanniemae.com/markets...mily/ msls.jhtml
Anonymous | 03.22.08 - 12:29 am | #

Anonymous writes:
http://www.fanniemae.com/mbs/disclosure/
index.jhtm
Anonymous | 03.22.08 - 12:30 am | #

franz writes:
Agreed. I think that the FED protested quickly and too loudly about this issue. They should have waited until Monday to address this issue. This means that they are talking about MBS buying. While they are not coordinating MBS purchases, the FED may be doing something with Fannie and Freddie about purchasing additional MBS. This two have just been given 200B from their own personal credit line covered by the federal government and tax payer (implied of course!!!!!).
franz | 03.22.08 - 12:30 am | #

Billy Hill writes:
Cramer's statement -"Your money is safe in Bear Sterns - don't take it out",

Defending Cramer means I have too much time on my hands, but let me ask: was he talking about shareholders or people who had brokerage accounts there?

On the other hand, I think a clear case of Cramer weaselling was his rant about Poole where he talked about his Wall Street buddies losing their jobs (he was right about that, it seems), but later attempted to portray it as concerns about a spike in unemployment.
Billy Hill | 03.22.08 - 12:30 am | #

Anonymous writes:
Tanta, tanta,

What is this stuff?

http://www.efanniemae.com/ syndic...2008SumInfo.txt
Anonymous | 03.22.08 - 12:32 am | #

Anonymous writes:
Re: I think that the FED protested quickly and too loudly about this issue. They should have waited until Monday to address this issue. This means that they are talking about MBS buying.

That also means they are talking this weekend
Anonymous | 03.22.08 - 12:33 am | #

sportsfan writes:
They should have waited until Monday to address this issue.

Good point, franz. As Canadaman noted, the Fed must have set a record with that quick a denial - and on a sleepy quasi-holiday Friday.

Sumthinsup.
sportsfan | 03.22.08 - 12:36 am | #

John Stark writes:
The Bear Stearns situation in brief:

http://www.theonion.com/content/ ..._chase_acquires
John Stark | 03.22.08 - 12:37 am | #

scotty at the zoo writes:
Huh?

OFHEO estimates that Fannie Mae’s and Freddie Mac’s existing capabilities,
combined with this new initiative and the release of the portfolio caps
announced in February, should allow the GSEs to purchase or guarantee about
$2 trillion in mortgages this year. This capacity will permit them to do more in
the jumbo temporary conforming market, subprime refinancing and loan
modifications areas.

To support growth and further restore market liquidity, OFHEO announced that
it would begin to permit a significant portion of the GSEs’ 30 percent OFHEO-
directed capital surplus to be invested in mortgages and MBS. As a key part of
this initiative, both companies announced that they will begin the process to
raise significant capital. Both companies also said they would maintain overall
capital levels well in excess of requirements while the mortgage market
recovers in order to ensure market confidence and fulfill their public mission.
scotty at the zoo | 03.22.08 - 12:37 am | #

scotty at the zoo writes:
Freddie Mac Chairman and Chief Executive Officer Dick Syron said, “The recent
environment demonstrates the benefits of the GSEs to the U.S. economy.

http://www.fanniemae.com/media/ p...ounce031908.pdf
scotty at the zoo | 03.22.08 - 12:39 am | #

Ralph Cramdown writes:
Wow, you people are really gullible.

I'm really bearish, but if it ever gets to the point where someone manages to convince the Bundesbank, er, ECB, to buy crappy junk, er, high yield, MBS, I might have to start getting worried.

Maybe the tinfoil hat crowd could possibly believe that the Fed or others circulate this to give the market some hope, but no way I believe it comes to pass, not the ECB anyway. That WOULD be bearish.
Ralph Cramdown | 03.22.08 - 12:40 am | #

REBear writes:
Let's say the fed buys most of the crapy bonds and the politicians put a foot under foreclosures. Where would you invest other than commodities?
REBear | 03.22.08 - 12:44 am | #

homedad43 writes:
Talked with my better half today about what was going on...when I told her that the Fed was going to take on lower quality assets in return for Treasuries, she asked, "so what does that mean?"

Apart from making the Federal Reserve System of the United States a really large version of Bear Stearns, what is the ultimate meaning?

What happens when the Fed balance sheet becomes too illiquid?
homedad43 | 03.22.08 - 12:51 am | #

homedad43 writes:
Oh, yeah. I forgot. Moody's will just give the Fed a AAA rating.
homedad43 | 03.22.08 - 12:52 am | #

sk writes:

Defending Cramer means I have too much time on my hands, but let me ask: was he talking about shareholders or people who had brokerage accounts there?

Billy Hill


Its as I stated - he said "Don't take your money out of Bear Stearns - he claims he meant out of your accounts there; the thing is his show is an equities show; while he was talking the charts of BS were on the screen, Bear Stearns is not a bank that takes deposits, nor is it a retail brokerage - it does wealth management for (wealthy) individuals and offers institutional and hedge fund brokerage services - hardly the type of people who'd call Cramer doncha think ?

So, I categorize it as - "technically true but deeply misleading"

-K
sk | 03.22.08 - 12:53 am | #

scotty at the zoo writes:
Ran across a link on Fed talk:


EconTalk

Tyler Cowen of George Mason University and Marginal Revolution talks with EconTalk host Russ Roberts about money, inflation, the Federal Reserve and the gold standard. Cowen argues that alternatives to the current Federal Reserve system promise more risk than return.

http://www.econtalk.org/ archives..._on_moneta.html

Re (it goes on a bit in a weird format, but kinda entertaining): Simple version: More money in the system, people spend or lend more, greater flow of purchasing power, and over time prices rise. Pretty clearly is true. More complicated version: What Fed is really doing is buying up Treasury Bills with cash. From the point of view of a bank, why is a cash holding different from a Treasury Bill holding? Different for tips in coffee shop, but not for financial institution. But they have different effects on the economy. Why? Friedman used to use idea of a helicopter drop, mental experiment. Experiment Number 1: Fed adds money to the system--say, it doubles the money supply--and people find they have more green pieces of paper, higher liquidity than they want, so they try to spend it. But no more stuff available than before, so price level doubles as people bid for the goods.
scotty at the zoo | 03.22.08 - 1:07 am | #

Canadaman writes:
Apart from making the Federal Reserve System of the United States a really large version of Bear Stearns, what is the ultimate meaning?


........I do believe that if the FED loads up on a bunch of garbage loans in exchange for Treasuries, the FRN eventually becomes worthless. When a currency goes worthless, the country is bankrupt.

I think the FED will reach the point where they say no mas when that have to decide on letting the banks fail or the FED/currency to fail. They have about 200 billion or so of their balance sheet left to go, so we shall see.

Got popcorn???
Canadaman | 03.22.08 - 1:08 am | #

scotty at the zoo writes:
This is from that interview, some blog poster named Martin Brock, says: To lower the Fed Funds Rate, the Fed buys T-bills, bidding up the price of the bills and lowering their yield. Since it may create money for this purpose, the Fed may pay any price for the bills. Banks respond by selling T-bills and making deposits in other banks at a slightly higher rate. This slightly higher rate (higher than the nominally riskless T-bill rate) is nonetheless lower than the rate at which banks previously lent to one another, so the Fed Funds Rate falls. Since this operation increases liquidity in the banking system (money not parked in T-bills), it can increase lending.
scotty at the zoo | 03.22.08 - 1:17 am | #

waitinginPNW writes:
John Stark-

that's kind of a wierd Bloomberg article. Are they insinuating at the end that "terorists" are somehow to blame for the lending mess? Why throw references to terrorism in? Seems to come out of left field as an afterthought at the end.

Also a bit wierd to say that it was "the collapse in the credit markets (that) has forced people from their homes".

Silly me , I thought they were forced out of their homes because they signed up for a loan they could not repay.

Seems like they're fishing around for explanations because they can't/don't want to accept the obvious corruption and greed on the part of lenders, appraisers, homebuyers, bankers and politicians?

Really behind the curve too with that hackneyed reference to "subprime borrowers". Sheesh. It's been at least a week now that even the regular TV media has acknowledged it's beyond subprime.

Are they flailing around, trying to turn back the Conjure clock to 10 minutes to midnight and come up with a "better", read facesaving explanation to what has happened.

Or is this guy just a really bad reporter?
waitinginPNW | 03.22.08 - 1:27 am | #

scotty at the zoo writes:
The US Congress has begun an inquiry into last weekend’s bailout of Bear Stearns by the Federal Reserve and JPMorgan Chase as Washington grows increasingly concerned that American taxpayers are paying the price for Wall Street’s mistakes.

http:// business.timesonline.co.u...icle3599417.ece

At the same time, the Senate Finance Committee announced that it will hold its own inquiry into the bailout. Charles Grassley, a committee member, said: “I’ve instructed my staff to delve into the details of the deal; I want to understand what the downside risk for the taxpayer is and any upside potential.”

>> Scotty wants to know about FTC and antitrust abuses!
scotty at the zoo | 03.22.08 - 1:30 am | #

Troy writes:
"Don't take your money out of Bear Stearns - he claims he meant out of your accounts there; the thing is his show is an equities show

Not that it matters, but the original question was talking about "taking money out" and not selling BSC itself, and Cramer's answer just said the caller's "money" was safe since the worst-case scenario was that BS would be bought out.
Troy | 03.22.08 - 1:33 am | #

Beemer writes:
Substitute "the Fed" in the sentence below as needed:

"Bear Stearns' balance sheet, liquidity, and capital remain strong...

Our liquidity position has not changed at all, our balance sheet has not changed at all..."
Beemer | 03.22.08 - 1:33 am | #

scotty at the zoo writes:
Camilla writes:

Why should the taxpayer bail out banks that have no depositors? Aren't these the same idiots who convinced Americans in trailer parks to buy houses they couldn't afford? Who packaged up dodgy loans into elegant parcels and passed them around the world? Yes. Abetted by complacent rating agencies, who stuck triple-A quality labels on junk, banks such as Bear Stearns have created a new kind of financial crisis, because there were so many players playing pass-the-parcel, and because no one knows where all the parcels ended up. They now sit like unexploded bombs on the balance sheet of almost every financial institution.

But that is precisely why Bear Stearns had to be saved. The company was a financial intermediary at the heart of many complicated global transactions. Had it collapsed, no one knew how many more dominoes would have fallen. The Fed's bold bailout avoided the much bigger bailout that a collapse would have necessitated, because so many of the counterparties to Bear Stearns' agreements were banks that do have depositors.

http://www.timesonline.co.uk/ tol...icle3586712.ece

Why can't the press in America have some balls?? Why does it take a nice looking bird in The UK to say it like it is.....where is the press in America?
scotty at the zoo | 03.22.08 - 1:41 am | #

scotty at the zoo writes:
Bank of England officials, initially the dukes of moral hazard when the credit crisis broke, must be worried. They are considering buying up mortgage-backed securities in an attempt to ease conditions in the UK mortgage market, as part of potential concerted action with other central banks.

In difficult times, it is only sensible to consider all the options. The Council of Mortgage Lenders warned on Thursday of "ongoing problems in the mortgage funding markets", as UK mortgage lending declined 7 per cent month-on-month in February.

The UK authorities lack the wide range of tools available in the US, for example using state-sponsored giants Fannie Mae and Freddie Mac, to help ensure mortgages remain available. And the relatively small size of the UK MBS market – with about £250bn outstanding – means that buying in sufficient quantity to provide support is feasible.
scotty at the zoo | 03.22.08 - 1:52 am | #

scotty at the zoo writes:
In delivering his first Budget, Alistair Darling announced the setting up of a working group to help improve liquidity in the mortgage-backed securities (MBS) market. Lenders will contribute to the group, along with the Treasury, the Bank of England, the Financial Services Authority (FSA) and the investment industry. In the summer, it will report to the chancellor, who will announce proposals in the pre-Budget report in the autumn. But there could be earlier action if the group can agree credible measures for reviving the MBS market. The problems in mortgage funding markets have been well documented. After the initial freezing of debt markets in August 2007, conditions improved in September and October only to deteriorate in the run-up to Christmas. After concerted central bank intervention, conditions initially improved but have worsened again in recent weeks, requiring yet more central bank action on the eve of the Budget. There have been no new MBS issues in the UK since last August, and only a single publicly sold deal from anyEuropean market. There were two public UK covered bond issues in the autumn – from Nationwide and HBOS – but there has been nothing since. Banks have found it equally difficult to fund in the uncollateralised senior debt market, meaning that, for most lenders, capital markets are effectively shut across the board.

However, with market conditions deteriorating again more recently, pressure is now building for a newapproach. Recent moves by the Federal Reserve to provide liquidity support to primary dealers in the MBS market, specifically to stabilise this market, illustrates the room for further imaginative thinking in the use of monetary policy. At a time when there is heightened preference for liquidity amongst banks, simply providing more central bank funds may not be the most efficient or focused way to address the problem. While the Treasury may be able to help, central bank action is still likely to be a key component of any action plan to lift the market out of its current torpor

The Treasury has been conducting an internal review of sale-and-leaseback, and the Budget report said that the Office of Fair Trading will now lead a study of the market this year. It will look at the experiences of customers and then consider options to strengthen consumer protection. The study will also take into account the views of the Financial Services Authority.
scotty at the zoo | 03.22.08 - 1:56 am | #

scotty at the zoo writes:
The Council for Mortgage Lenders has urged the Bank of England to play a "key" role in easing strains in the U.K. mortgage market, the organization said Tuesday.

The CML acknowledged that the BOE had shown "some flexibility" in its responses - widening the range of collateral it would take in money market auctions last year.

"However, with market conditions deteriorating again more recently, pressure is now building for a new approach," the CML said in a press release.

"Recent moves by the Federal Reserve to provide liquidity support to primary dealers in the MBS (mortgage-backed securities) market, specifically to stabilize this market, illustrates the room for further imaginative thinking in the use of monetary policy."

There have been no new MBS issues in the U.K. since last August and only one publicly sold MBS deal from any European market.

The CML press release also welcomed the government's decision to back away from a so-called "gold standard" for mortgage bonds.

It was thought this would work as some kind of quality stamp for the least risk mortgage bonds. However, there were industry concerns that this could lead to an even greater decline in demand for non-gold standard MBS.

"Sensibly, the chancellor backed away from the gold standard idea in his recent Budget announcement and instead invited lenders and investors to join a working group to explore the best way to address the current funding market dislocation."

The working group, which includes the BOE, the treasury and the Financial Services Authority "is an opportunity for the industry to explore its own preferred solutions and propose answers," the CML said.
scotty at the zoo | 03.22.08 - 1:59 am | #

tg writes:
Maybe if we all dig in our pockets we can help out

Mhttp://www.theonion.com/content/news/ black_guy_asks_nation_for_change

John Starks you started it.
tg | 03.22.08 - 1:59 am | #

tg writes:
http://www.theonion.com/content/ ...tion_for_change
tg | 03.22.08 - 2:00 am | #

scotty at the zoo writes:
Bonus Material:

By KARA SCANNELL
March 20, 2008

The Securities and Exchange Commission is investigating the events leading up to the collapse of Bear Stearns Cos., specifically a surge in options contracts betting that the investment bank's share price would drop precipitously, according to people familiar with the matter.

The SEC inquiry focuses on a surge last week in "put" options that came days before the firm's proposed sale to J.P. Morgan Chase & Co. for stock now valued at about $278.5 million, or $2.32 a share, people familiar with the matter say. A put option allows the buyer of the option the right to sell a certain number of shares in the underlying company at a specific price within a set time.

• The Situation: Unusual trading in Bear Stearns "put" options in the days before its collapse is drawing SEC review.
• The Question: Did anyone have inside knowledge or was anyone spreading false rumors about the state of Bear Stearns.
• Bottom Line: Market manipulation is hard to prove.For instance, if a trader bought a put option for Bear at $60, and the stock fell to $50, the trader could buy Bear stock in the market for $50 and have the right to sell it back to the option underwriter for $60 -- making a $10-a-share profit. The more a stock declines, the better off a put holder is.

The unusual trading in Bear's options began as early as March 7 and escalated through the following week, as rumors began swirling about Bear's liquidity and ability to stay in business. Alan Schwartz, Bear's chief executive, issued a statement March 10 stating that the firm's "balance sheet, liquidity and capital remain strong." March 12, just two days later, Mr. Schwartz made reassuring statements on CNBC.

Last week, the number of open put options leaped from 167,439 at the open of trading on Monday to 465,820 by the following Monday. That compares with open put contracts on Bear Stearns hovering around 155,000 the previous week, according to data from Schaeffer's Investment Research Inc., an options-research firm in Cincinnati.

Last Thursday, the day before Bear received emergency funding from J.P. Morgan Chase and the Federal Reserve, some options traders gambled even more aggressively. They took on contracts that bet Bear's stock price would drop as low as $20 a share in the nine days until the contract expired March 20, according to Schaeffer's. Over the course of the trading day, 25,246 put option contracts at $20 a share were added.

The bets were particularly aggressive, since Bear's stock was trading above $50 until Friday morning, when the company announced the financial lifeline. Shares of Bear then plunged as low as $26.85 before closing Friday at $30. Those contracts are likely what caught the SEC's attention.

"Betting on a 57% decrease in Bear Stearns stock in nine days is very unusual," said Todd Salamone, senior vice president of research at Schaeffer's Investment Research. There was a similar increase in put options that had a strike price of $30.
scotty at the zoo | 03.22.08 - 2:01 am | #

scotty at the zoo writes:
The enemy is within!
scotty at the zoo | 03.22.08 - 2:03 am | #

scotty at the zoo writes:
Liquidity, rumour-mongering and housing market troubles top the list of subjects for discussion when Britain's top bankers meet senior officials from the Bank of England on Thursday.

Chief executives or senior directors from the 'Big 5' banks - HSBC, Royal Bank of Scotland, Barclays, Lloyds TSB and HBOS - are expected to meet BoE officials, including Governor Mervyn King, for a 'regular exchange of views'.

The meeting was only called last week, however, and little in banking at present can be considered routine. Details of the meeting have not been released.

A sharp cut in US interest rates this week and other measures to boost liquidity by central banks have provided only temporary comfort for banks there.

The BoE added an extra 5 billion pounds (US$10 billion) to its normal weekly lending operation on Thursday in an effort to boost UK confidence, after offering the same amount in an exceptional operation on Monday.

The interbank cost of borrowing three-month sterling hit a fresh high for the year of 5.98 per cent on Wednesday, after rising for nine straight days as worries about counterparty risks have left banks wary about lending to one another.

That has helped fuel the increased speculation about banks potentially in trouble.

Authorities are concerned that speculators can benefit from wild gyrations in share price and spread false information and banks and the BoE will discuss how to quell the talk early without creating a daily feeding frenzy.
scotty at the zoo | 03.22.08 - 2:07 am | #

scotty at the zoo writes:
An FSA spokeswoman said today that other investors have already been in
touch to offer the identities of those that they believe were behind the
rumours.
"We have found that other market participants are very keen to talk to us
about these matters and we're very keen to talk to them," she said.
"We are being seen as the overlord that is spoiling everybody's fun, [but]
market manipulation causes unfairness to other market participants. So they come
to us and say: 'We've heard this rumour, and it's being put about by so-and-so.
What are you going to do about it?"
"They help us. This is something they want to see removed."
The FSA is quick to stress it is not on a witch hunt against short sellers,
but is trying to track down on mischievous rumour-mongering.
It cannot easily find out who has short-sold HBOS stock, but it can use its
transaction monitoring system to track trading patterns which indicate
short-selling. Hedge funds and other investors who sold out of HBOS and quickly
bought back yesterday can expect a call after the FSA has picked out their
client ID numbers from the slew of data it will be ploughing through early next
week.
Trading volumes spiked yesterday, making the regulator's job more difficult
than usual, and the spokeswoman was unable to estimate when the FSA's
enforcement team might start knocking on doors.
scotty at the zoo | 03.22.08 - 2:11 am | #

scotty at the zoo writes:
"We are changing our enforcement stance: the gloves are off."
In this case, the regulator's enforcement team will see if there is
sufficient evidence to pursue traders to the point of issuing fines or bans, and
could go to the point of seeking a criminal conviction.
There has been some concern that the FSA's response was disproportionate,
appearing to blame short-sellers for rumours which litter the market daily, but
which have taken on greater significance as volatility spikes.
Will Duff Gordon from research firm IndexExplorer believes the idea that
HBOS fell prey to the short-sellers is misguided.
His company uses stock lending data to give an estimate of the amount of
shorting on any given company - and that showed HBOS had about 6 pct of its
market capitalisation short-sold at the close of business on Tuesday.
That might represent a greater number than the company's historical average
but he said that it sits only just above the average seen by financial stocks so
far this year.
"The data doesn't substantiate what everyone's been saying... that there was
a massive bear raid," he said.
"It doesn't lend any support to the idea that people were spreading rumours
in order to justify their short positions."
Based on IndexExplorer's data, the FTSE average is about 4.5 pct. By way of
comparison Northern Rock was at 20-25 pct as it drifted towards public ownership
- and the top 5 FTSE companies in terms of short exposure at present are all
above 20 pct.
"So for it to be 6 pct is high for a financial stock over history, but it
doesn't put any meat on the story [of a major raid]," Duff Gordon said.

Joel Dimmock: +44 (0) 20 7422 4809; joel.dimmock@thomson.com
jad/vlb
scotty at the zoo | 03.22.08 - 2:13 am | #

scotty at the zoo writes:
Finally:

Short steps: How clever trading and rumours can bring down banking giants

http://news.scotsman.com/ scotlan...ticleid=3896755

Both the FSA and HBOS are convinced that this was no one-off affair – and that organised scare-mongering has been a feature of trading in bank shares in recent days.

HBOS's chief executive Andy Hornby told The Scotsman: "It is a sign of how false rumour- mongering can have a huge impact in a very short space of time.

"This is not the first time this has happened. Other banks have been hit in recent days and weeks – Lloyds TSB, Barclays, RBS, Bradford & Bingley and now us.

"We vehemently deny these rumours. And I would draw attention to the strength of the FSA's statement and the phrase 'completely unfounded rumours', because that is what they are."

How can the rumour-mongers make big profits out of today's jittery and febrile conditions?
scotty at the zoo | 03.22.08 - 2:19 am | #

Ralph Cramdown writes:
Yo Scotty at the zoo: Is someone paying you by the word for these cut-and-paste operations?
Ralph Cramdown | 03.22.08 - 2:27 am | #

picosec writes:
Say good night, Doc.
picosec | 03.22.08 - 2:31 am | #

Anonymous writes:
Ralph,

I'm a not for profit charity.

Re: The mutual fund industry is going to war to circumvent the structured products industry’s growth. Through its trade group – the Investment Company Institute (ICI) – the MF industry is working frantically behind the scenes to kill our business. An Investment News editorial, “ICI Seeks a Protected Market for Mutual Funds” was spot-on when it noted, “Call me cynical, but whenever I see a behemoth mutual fund industry trade association campaigning in the interest of the lowly retail investor, I find it prudent to consider the notion that there might be more to it.”
Anonymous | 03.22.08 - 2:40 am | #

Anonymous writes:
Money Market Mutual Fund Assets
March 20, 2008

http://www.ici.org/home/ mm_03_20....html#TopOfPage

Washington, DC, March 20, 2008 - Total money market mutual fund assets increased by $13.59 billion to $3.468 trillion for the week ended Wednesday, March 19, the Investment Company Institute reported today.

>> Goodnight picosec
Anonymous | 03.22.08 - 2:43 am | #

BrantW writes:
Whenever denials include specifics such as, this, then you know they are BS.

"The Federal Reserve is not involved in discussions with foreign central banks for coordinated buying of MBS"

The FED denies "discussions" and "coordinated buying". So they can unilaterally buy them without FCB cooperation, and be called out on a lie.

Statements like those the FED made are quite depressing. Our future is starting to look pretty grim.
BrantW | 03.22.08 - 3:15 am | #

Bill Melater writes:
Yo! Scotty at the meth lab.

Isn't there a movie you could watch?
Bill Melater | 03.22.08 - 3:20 am | #

JLR writes:
*Scotty* = Wheat* = Doc Holliday
JLR | 03.22.08 - 3:29 am | #

w writes:
...but the idea that all four 12s and 13s can all advance in four games on the same floor on the same day has to be a once-in-a-lifetime.

Who could have modeled that?
w | 03.22.08 - 3:47 am | #

Richard Kline writes:
I am not in favor of central banks purchasing mortgage backed securities, at least in so many words. If these derivatives are purchased at a price level that leaves their holding institutions solvent, that's a bailout since the probable value of these instruments is well below that point: this is why the holding institutions are in-solvent. I'm much more in favor of national banking regulators, most especially in the US, nationalizing insolvent institutions as quickly as possible, including investment banks, wiping out shareholders and bondholders, and _then_ stripping out the MBSs into goverment receivership for management, renegotiation, liquidation, or what have you. The re-made institutions receive some small value in Treasuries against the surrendered radioactive securities to give them a capital base, and then they are sold back to the public when able to stand alone.

The banking system can be saved without saving existing stakeholders: they are already lost, or should be; welcome to the blessings of capitalism. The solution will take public money, but there is no way to avoid that outcome now. By nationalization, though, the public fisc may actually cushion its upfront costs by realizing something out of the underlying mortgages in the mid-term. By buying up MBSs on the open market, we save the banking system at the coast of soaking the public for the losses of the few. This is what the political argument should be but hasn't yet become: should banking shareholders take the hit along with the public, or should the public alone take the hit? I think we know how the public would vote on that one, but banking regulators are eager to avoid the appearance of a choice. Too eager.
Richard Kline | 03.22.08 - 4:19 am | #

Anonymous writes:
Gee I miss the old gang.

-- Hiding Out
Anonymous | 03.22.08 - 5:29 am | #

Jim writes:
In other news, everybody in LA that has listed their real estate within the past month is asking a premium to the 2005/2006 price. Wait until we hit 36 months of inventory!

hahahahahahahahaha



In my neck of the woods,in Tucson, people who have their properties on the market are asking about 25-50% more than Zillow says they are worth. Needless to add that nothing is selling; nothing moving. I have to wonder if they are setting the price at a level to cover what they owe on the house, and that is about 25-50% above what Zillow says it is worth.
Jim | 03.22.08 - 5:59 am | #

Jim writes:
I just took a look at prices on luxury high-rise condos in Phoenix. Quite a few are still asking $800-900 per square foot. Or about 2 million for a 2250 sq. foot apartment. I asked a broker about this and was told "of course it is absurd" and that nothing much was moving.
Jim | 03.22.08 - 6:05 am | #

swissluxury.com writes:
Intersting comments on Mortgage fraud in the Miami Condo Market....Perhaps the CB's want a slice of this?

http://www.miamicondoinvestments...99900/ #comments
swissluxury.com | Homepage | 03.22.08 - 6:22 am | #

sdtfs writes:
Okay, this lazy Californian is up. Where is Tanta? Still asleep I bet. Ha!
sdtfs | 03.22.08 - 6:56 am | #

Babs Corcoran writes:
Hilariously pathetic story over at the grey lady re the plight of poor realtors who's clients are getting second opinions:
http://www.nytimes.com/2008/03/2...tate/ 23cov.html

“Brokers fear second opinions because, human beings being what they are, people always want to justify why someone asked them to come in. So the first thing they do is look for something wrong. And they also tend to judge by their own standards. One man’s meat is another man’s poison in real estate, big time.”

Unfortunately for those selling houses or apartments, a slowing real estate market combined with recessionary fears is prompting a resurgence in outside counseling."
Babs Corcoran | 03.22.08 - 7:27 am | #

Babs Corcoran writes:
more ...

Of course, most brokers prefer buyers who refrain from asking for outside opinions at all. Married couples in their 40s, 50s, and 60s — particularly pied-à-terre buyers — often fulfill this wish.

“They are already settled in their life, they pay all cash, they don’t need a second opinion — you take them out twice, and they’re done,” said Pat Publik, an executive vice president at Halstead Property. “Those are the clients brokers dream about at night.”

Pat baby - Those people are called MARKS!
Babs Corcoran | 03.22.08 - 7:34 am | #

Taylor writes:
From a commenter at Brad DeLong's blog, one could read this as an explanation at the hasty Fed denial: W got pissed when he read the FT report:

let's also not forget that the longer this problem festers, the bigger the economic problems the democrats will have to deal with when they take over in 2009. this has undoubtedly played a part in the administrations' laissez-faire response to the crisis so far. (that and the fact that the DNC has received more $25,000 pledges from CT and NY alone than the RNC has received from the ENTIRE COUNTRY.)

i have dealt with all of the key players in the ongoing debate. there is a real sense of crisis and desire to arrive at joint solutions everywhere except the White House. they continue to view this in partisan terms. it's depressing.

Taylor | 03.22.08 - 7:47 am | #

jp writes:
hey sorry if this is off topic, but i live in south florida and my landlord's place where i'm staying was foreclosed on. I'm sure you have a post about this. Could someone let me know a link of how it affects me, the renter. I guess i get to live rent free. i can't get in touch with him. his phone is disconnected. thanks for the help.
jp | 03.22.08 - 8:06 am | #

Meltdown Man writes:
The more cynical side of me would think the headline SHOULD read:

Fed to CB: You WILL Buy MBS
Meltdown Man | 03.22.08 - 8:19 am | #

MoMo writes:
jp you now live in an abandominium.
MoMo | 03.22.08 - 8:23 am | #

Anonymous writes:
Homedad re: gold bull markets

This was written a few years ago, but you may find the article helpful.

"At the current juncture in its secular Bull Market, gold’s price action continues to confound the marketplace. Its plodding upward movements are frequently punctuated by sharp breathtaking price breaks. These act to both rattle the nerves of its adherents, and those questioning if a Bull Market truly exists, and deter onlookers from entering the market. Further, the skepticism of the masses, of the existence of the gold bull, is constantly fanned by the talking heads and virtually all information that they read or hear in the various media. The bold few that muster sufficient courage to venture into these markets run at the first sign of any setback. How can they possibly initiate and maintain positions when they are bombarded by negative or misleading information? This makes them constantly second guess themselves!"




http://www.financialinsights.org...icle03- 1105.asp
Anonymous | 03.22.08 - 8:43 am | #

Jim writes:
jp: maybe the bank would sell you place cheap cheap. Then it wouldn't have to go through a foreclosure, etc.
Jim | 03.22.08 - 8:43 am | #

Anonymous writes:
I would say we're just at the point where the seed has been planted in the general (solvent) public's mind about keeping a few gold coins in the safe deposit box.

I find the inflation adjusted rants about $2,500 gold disingenuous as this was a spike that vanished in the blink of an eye.

In other words, I expect gold to go higher based on a confluence of factors, but I don't think it's appropriate to say that the price is playing catch up to the former inflation adjusted peak and that this mitigates any risk.
Anonymous | 03.22.08 - 8:55 am | #

JimK writes:
Denied now by the Fed, but this folks is known as a classic "TRIAL BALLOON". Yes, from F-Troop, "it is balloooon...."

The Fed may be denying, but how interesting that from out of no where, on Good Friday when market are closed, that this idea of coordinated MBS intervention appears.

FT throws it out there, then they get a denial into the WSJ, but now the idea is out there for everyone to kick around so that if it does eventually happen the total-shock value will be gone.
JimK | 03.22.08 - 9:12 am | #

JimK writes:
and anyway, does the Fed, or the world's central bank have the buying power to conduct such MBS operations? The Fed's balance sheet is already going to hell in a hand basket. Sure, the Fed can magically make that balance sheet bigger, but that would come at a very dear cost, wouldn't it?? desperate times, indeed
JimK | 03.22.08 - 9:20 am | #

JimK writes:
or, put another way - if the denial by the Fed indicates there may be some truth to this, as someone cynically pointed out -- doesn't it seem as if we're getting to the end game quite quickly? If the Fed were to buy up selected MBS, what would happen tot he CDS side of things?
JimK | 03.22.08 - 9:25 am | #

Yearning to Learn writes:
tg:
that was one of the funniest Onions I've ever read! I literally blew cheerios all over my keyboard! :(
Yearning to Learn | 03.22.08 - 9:44 am | #

revro writes:
where exactly can one find info on composition of fed balance sheet? i tried to look at the fed webpage but kind of got lost :)
revro | 03.22.08 - 9:46 am | #

Anonymous writes:
The FED can do anything it wants as has been demonstrated repeatedly in the last several months and they are not going to give anyone the straight dope, ditto the treasury or the government.
Anonymous | 03.22.08 - 10:06 am | #

Anonymous writes:
I'm forever blowing bubbles,
Pretty bubbles in the air,
They fly so high, nearly reach the sky,
Then like my dreams they fade and die.
Fortune's always hiding,
I've looked everywhere,
I'm forever blowing bubbles,
Pretty bubbles in the air.

I'm dreaming dreams, I'm scheming schemes,
I'm building castles high.
They're born anew, their days are few,
Just like a sweet butterfly.
And as the daylight is dawning,
They come again in the morning!
Anonymous | 03.22.08 - 10:08 am | #

ozajh writes:
That's quite appropriate; RE in the West Ham area is very, very overpriced.
ozajh | 03.22.08 - 10:20 am | #

Yoringe writes:
what do you make of this??
so no inflation for 2008??

http://www.garynorth.com/public/3118.cfm
Yoringe | 03.22.08 - 10:50 am | #

Harvard71 writes:
The Fed deals with financial institutions, right? I (as an ignorant outside observer) wouldn't think financial institutions would own very much MBS - if they want to own debt they can just hold on to mortgages after they make loans, reducing their risk and costs by cutting out the middle man.

The bulk of the MBS held by financial institutions, I would guess, is collateral for loans to hedge funds. If the Fed offers to bail out the lenders by buying MBS, the lenders would first have to call in the loans and cause the collapse of the hedge funds.

On the other hand, if the Fed accepts MBS as collateral for non-recourse loans, the financial institutions can wash their hands of any risk of loss on their loans to hedge funds, without calling in the loans. The hedge funds stay in business and are effectively bailed out along with the lenders.

Is this what's going on when the Fed accepts MBS as loan collateral? Or am I missing something?
Harvard71 | 03.22.08 - 11:04 am | #

JimK writes:
@Revro>>>>>>>>>>>

Here's the link you're looking for

http://www.federalreserve.gov/re...es/h41/Current/
JimK | 03.22.08 - 11:09 am | #

Anonymous writes:
Does not the Fed deny almost everything?
Anonymous | 03.22.08 - 11:29 am | #

Anonymous writes:
It would not shock me if the Fed has been quietly selling some gold to suppress the price although nobody could ever prove it.
Anonymous | 03.22.08 - 11:31 am | #

tg writes:
YTL The Onion should put warning signs on their articles
tg | 03.22.08 - 11:34 am | #

Viewing with alarm writes:
The working assumption CR has used is that we could see housing prices drop 30% during this crisis. I just looked at the numbers in todays Orange County Register and am wondering if 30% is conservative. If average prices drop 50% there is no way in hell to print enough money to bail out all the paper out there. There probably is not at 30% but the FED will try.
Viewing with alarm | Homepage | 03.22.08 - 12:12 pm | #

Nick writes:
Why would they need to discuss coordinated MBS purchases? They are already purchasing hundreds of billions of dollars of them implicitly by taking them as face-value collateral for same-as-cash loans. Implicit nationalization will always be more politically feasible than explicit nationalization, at least while a republican is in office.

Curious that they would be so quick to deny something which is equivalent to what they are actually doing, though. Very telling...
Nick | Homepage | 03.22.08 - 12:12 pm | #

Anonymous writes:
Bill Melater writes:
Yo! Scotty at the meth lab.

>> Hey Bill this movie is probably not going to be released....

On January 7th, 2008, a 22 year old college student was "beat up" while shopping at a SAFEWAY in Carson City, Nevada, by an employee. The victim, after helping himself to what he claimed was a "free sample" of hot soup from the deli (most SAFEWAYs offer free samples of this product) and subsequently setting the empty cup down on a store shelf, was approached by the employee, demanding that he pay for the cup of soup.
Anonymous | 03.22.08 - 1:05 pm | #

Anonymous writes:
OT: Someone posted that we’ll know it’s a recession when we see the bmw with the pizza delivery sign on top. We’re almost there…Chinese takeout delivered by BMW:
Residents slide into spring snowstorm

Anonymous | 03.22.08 - 2:13 pm | #

Yal writes:
Is housing inventory still going up ?
Yal | 03.22.08 - 3:04 pm | #

GSM writes:
This confirms it- the official denial. Now we can be certain that the Fed is doing exactly that. The US Fed is hatching a plan to purchase MBS paper.
GSM | 03.22.08 - 4:19 pm | #

republicans are traitors writes:
How do we know they aren't discussing anything, they are a secret society. We must take back our currency. Please, e-mail your Congressman (Senate and the House of Representative) and tell them to disband the federal reserve and give the power back to the House of Representatives.
republicans are traitors | 03.22.08 - 6:00 pm | #

csi wall street writes:
Relax folks, this is another dog and pony show. So let's say CBs buy MBS to prop up the market, by spending billions of dollars and pounds. Surely this will blow a hole in government deficits and drive up long term rates thereby strangling the economy and making a depression a sure bet. Listen up guys, Bernanke may be a fool but he is not that stupid.
csi wall street | 03.22.08 - 7:57 pm | #

CHEAP-PILLS! REALLY! Get Trama writes:
excellent!nice article!
CHEAP-PILLS! REALLY! Get Trama | Homepage | 03.22.08 - 8:16 pm | #

DrChaos writes:
I think this is an amazing statment.


"The Federal Reserve is not involved in discussions with foreign central banks for coordinated buying of MBS," a senior Fed official said.

Most people would take this to mean, "US government isn't going to buy MBS".

But of course it could still mean any of the following:

1) We may buy MBS along with, or without, foreign central banks, but it won't be coordinated.
2) There are indeed discussions among foreign central banks for coordinated buying of MBS, but we're not part of it.
3) The Federal Reserve won't, but U.S. Treasury will buy MBS
DrChaos | 03.23.08 - 4:29 am | #