Sunday, July 2, 2023
Friday, March 17, 2023
Today's toxic assets, if you're a bank, are AAA-rated 30-year fixed rate mortgages from 2020-2021, and 10-year and 20-year US Treasuries of the same vintage
A bank would normally keep AAA assets happily, and hold them to maturity in many instances.
Having to sell them in a rising interest rate environment is where all hell can break loose.
No one wants to buy a UST paying 0.89% when T-bills pay 4.5%, so you have to sell it at a loss to raise cash.
A bank without cash is a failed bank.
Be kind to your banker. He's not having a good week. Even if he didn't pay you interest like he should have since 2008.
Sunday, March 12, 2023
The wizards of smart at Silicon Valley Bank loaded up on mortgage backed securities in the last few years, and when they needed to raise cash recently they had to sell some at a big loss
$1.8 billion.
That sparked the run.
The problems have been known for months by people like Chris Whalen.
This guy below actually tweeted out some particulars in January. This was no surprise.
Except to the federal regulators, who were completely asleep at the switch.
This is what happens when your bond portfolio is full of low-yielding securities. No one wants them when you have to sell them in the new higher interest rate environment. It's not a problem if you will "hold to maturity".
SVB wasn't very smart loading up on this stuff. Apparently they did not even hedge this otherwise foolish over-large position.
Hell, it's probably all California MBS, too. Think the outrageously overpriced homes, refinanced at rock bottom rates, of the very elite who have all their personal and business banking at SVB which is now blowing up. And all the second tier businesses and their employees dependent on them.
It's an inferno devouring their wealth from every side.
And they are screaming like stuck pigs for a bailout.
Saturday, October 29, 2022
Distressed debt reaches $271 billion after five straight weeks of growth
Growing Pile of Distressed Debt Signals Coming US Default Wave
Friday, August 26, 2022
The Fed is all talk and no action fighting inflation
The effective federal funds rate stands at 2.33% and $8.85 trillion remains on the balance sheet while Powell makes speeches.
Borrowing is still very cheap for the big boys and the Fed's finger on the scale makes it impossible to know the true value of its mortgage backed securities and US Treasuries.
Meanwhile inflation rages at 8.5% in July.
The market "rout" is merely another yawn as Americans get punished at the grocery store and the gas station.
Current GDP of $24.883 trillion, reported 8/25, implies a fairly valued market level of around 1,600 not 4,057. The S&P 500 remains 153% above that.
They remain rich, and you remain . . . the reason why.
Monday, July 25, 2022
Institutional investors have bought up 20% of mobile home parks and jacked up the rents on the low income residents, devouring widows' houses
The plight of residents at Ridgeview is playing out nationwide as institutional investors, led by private equity firms and real estate investment trusts and sometimes funded by pension funds, swoop in to buy mobile home parks. Critics contend mortgage giants Fannie Mae and Freddie Mac are fueling the problem by backing a growing number of investor loans. ...
Driven by some of the strongest returns in real estate, investors have shaken up a once-sleepy sector that’s home to more than 22 million mostly low-income Americans in 43,000 communities. Many aggressively promote the parks as ensuring a steady return — by repeatedly raising rent. ...
George McCarthy, president and CEO of the Lincoln Institute of Land Policy, said about a fifth of mobile home parks, or around 800,000, have been purchased in the past eight years by institutional investors.
He was among those singling out Fannie Mae and Freddie Mac for guaranteeing the loans as part of a what the lending giants bill as expanding affordable housing. Since 2014, the Lincoln Institute estimates Freddie Mac alone provided $9.6 billion in financing for the purchase of more than 950 communities across 44 states. ...
Soon after investors started buying up parks in 2015, the complaints of double-digit rent increases followed.
More.
Friday, July 15, 2022
CNBC story blames capitalism's law of supply and demand for inflation: 92 million millennials caused it, not Federal Reserve interference with interest rates and mortgages
Wednesday, July 6, 2022
This is as good a day as any to remember that Ben Bernanke's Fed under Obama bailed out the banksters and hung 6.5 million homeowners out to dry
Bloomberg, August 21, 2011, here:
Monday, June 20, 2022
Housing market conditions update, now vs. then
Housing market conditions, now vs. then:
Monday, March 18, 2019
Wow, WaPo's Glenn Kessler almost becomes Rush Limbaugh, doubts Bernie's $1 trillion bailout claim
Wednesday, November 7, 2018
What matters to Rush Limbaugh is that Trump get reelected in 2020, not that we get jobs, pay raises and The Wall
Thursday, October 11, 2018
Tuesday, September 18, 2018
Ten years after fall of Lehman, lawyer still tracking down borrowers who committed fraud
Monday, August 27, 2018
Martin Wolf for The Financial Times likes business historian Adam Tooze's important new book CRASHED: HOW A DECADE OF FINANCIAL CRISES CHANGED THE WORLD
Sunday, August 5, 2018
Wells Fargo sets aside $8 million to compensate about 400 homeowners foreclosed from 2010-2015 due to computer glitch
Thursday, November 16, 2017
House tax bill passes 227-205, Senate still working on theirs
Thursday, November 2, 2017
CNBC's Jake Novak lets it slip that his libertarian hatred of single family homes has been aesthetic all along
Tuesday, October 31, 2017
The only reason itemized deductions are on the table is a minority of 30% of tax filers itemize
Sunday, October 29, 2017
Strike Three and You're Out: Both National Associations, of Homebuilders and of Realtors, pull support from House tax plan
The tax plan as it stands this weekend eliminates the itemized deductions for mortgage interest and state income taxes, keeping only the deduction for property taxes.
This is all the fault of our so-called conservatives in the US House. They aren't conservatives. They're doctrinaire libertarians who HATE people who want to get married, settle down and buy a house and have children. They view people as CAPITAL, whose value only decreases if it is too difficult to move them around at the whim of GLOBAL BUSINESS. That's why you'll never hear these people target the tax revenue lost to the lower capital gains and dividend tax rates, which are almost TWICE those lost to the mortgage interest deduction. These people are the enemies of localism and are instead the champions of the homogenization of society with its bland sameness everywhere. They are the ones who've shipped our jobs overseas and let in the tens of millions of immigrants who've further reduced our wages and opportunities.
One year from now you'll have another chance to send them packing.
I'll be voting for Mickey Mouse and Donald Duck before voting for a libertarian in 2018.