Quoted: Here is a great post outlining the reasons why there is no MBS/CDO market: Naked Capitalism -- I'll try to summarize it as best I can and then I will further address Indymac's balance sheet later this weekend. It's a bit discouraging when posters tell me I'm flat out wrong and try to shut me up with one-liners, but I know there are a lot of people reading this and learning. If you have questions feel free to ask and I'll try to address as best I can. Don't get me wrong guys, I wish that the dollar stronger so gas was cheaper. Remember when gas was under a dollar and ammo was $0.10/rnd for the good shit? Those days could come back if we either defend the dollar, or move to the gold standard. There is a chart in the ammo section of arfcom which prices ammo in gold and it's just as cheap as it was 6 years ago. There isn't a shortage of ammo, there's just a surplus of dollars.

Again - it is hard to have a discussion with someone who can not stay on point. Those that can not stay on point typically do so b/c they can not defend a previous position.

We were discussing your vast inside knowledge of Indymac - remember?

As for your link: Great you sent me to a left leaning BLOG - not a peer reviewed scholarly text -  from March of 2008 discussing the merits of nationalizing the banks to alleviate the credit crunch. What the BLOG – not peer reviewed scholarly text  - conveniently leaves out of the article are several key points about how the housing market got to where it went and and why it is unfair to ask you and I to bail out the vast majority of those in trouble:

- An estimated 30% of all failing loans are to spec investors of non owner occ property
- Lack of regulation in the mortgage industry – hey, even YOU could be a mortgage broker tomorrow.
- Lack of consumer responsibility – lord know’s none of these consumers took their escrow and loan doc’s to qualified legal and financial advisors prior to signing. A substantial number thought it was wise to run up multiple credit cards, then re-fi to “pay them off” only to go out and lever themselves into the hole even deeper.
- Transactions wherein the seller paid for the purchaser’s  closing cost skewed market data – If closing cost were 5%, that same 5% was included in the sale price and the cumulative and compounding effect over the sustained run up resulted in double digit phantom value to the entire market.
- Corrections are supposed to weed out market inefficiencies. That’s why they are called corrections.

Was I supposed to shudder in fear from “Reader Lune’s” thoughts – Gee... "reader Lune" – that’s just like reading the thoughts of J.M. Keynes, or W. Buffet – isn’t it? BTW did you catch this link? http://www.nakedcapitalism.com/2007/08/extreme-measures-i-bill-gross-at-pimco.html Corressponds with what most of the CNBC talking heads are saying too - yeah, it'll hurt but it won't do real damage.

I’m not real sure what you didn’t agree with regarding what I wrote, other than calling you out on not knowing anything about IndyMac, or the Fed being swallowed by the banks on the watch list. There really isn’t much to argue over the rest of it. The MBS market exists today and as things become more risky, a greater discount rate will be assigned to the value. B/c MBS are a tranched investment the US Gov  (tax payer) will back Fanny / Freddy (and get it straight – if Fanny and Freddy fail you’re talking about America failing – b/c the government will honor it. If you and I can not pay it – look out for WW3 b/c that’s where we’ll be going). And lastly, while credit may be tighter the banks are lending and property transactions are still going on. Those are just facts - should be of interest since you are just looking for the truth and all.

Again, it is easier to have a discussion if you stay on point. Otherwise it really is like the Special Olympics.

Either way...some hurt has to be applied to someone because this thing happening now where nobody is hurt and momma kisses the wounds of these people has got to stop.

no consequences for this reckless action means it WILL happen again and again and again...

Quoted:
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Quoted: Here is a great post outlining the reasons why there is no MBS/CDO market: Naked Capitalism -- I'll try to summarize it as best I can and then I will further address Indymac's balance sheet later this weekend. It's a bit discouraging when posters tell me I'm flat out wrong and try to shut me up with one-liners, but I know there are a lot of people reading this and learning. If you have questions feel free to ask and I'll try to address as best I can. Don't get me wrong guys, I wish that the dollar stronger so gas was cheaper. Remember when gas was under a dollar and ammo was $0.10/rnd for the good shit? Those days could come back if we either defend the dollar, or move to the gold standard. There is a chart in the ammo section of arfcom which prices ammo in gold and it's just as cheap as it was 6 years ago. There isn't a shortage of ammo, there's just a surplus of dollars.

Again - it is hard to have a discussion with someone who can not stay on point. Those that can not stay on point typically do so b/c they can not defend a previous position.

The point I was making is that the market value of MBS and CDOs - of which Indymacs assets are primarily made up of because it's a commercial bank which originated most of it's loans in California which has seen the largest drops in property values - are probably worthless. Not because the houses aren't there and people won't live in them, but because no investor, besides the inept government, wants to hold those securities.

We were discussing your vast inside knowledge of Indymac - remember?
The only knowledge I have professed is that Indymacs assets are less than its liabilities, and then I gave my reasons why the assets had lost so much value

As for your link: Great you sent me to a left leaning BLOG - not a peer reviewed scholarly text -  from March of 2008 discussing the merits of nationalizing the banks to alleviate the credit crunch. What the BLOG – not peer reviewed scholarly text  - conveniently leaves out of the article are several key points about how the housing market got to where it went and and why it is unfair to ask you and I to bail out the vast majority of those in trouble:

It's not a left leaning blog, is a blog about financial markets, and the post was describing how the gov plan won't work :"There seems to be a collective fantasy at work, that somehow the powers that be can wave magic wands and turn bad assets into good ones. While you can do that on a small scale, we have a roughly $20 trillion residential housing market that is being repriced for good reason." - Does that sound liberal? Sounds like GWB though...hrm...

Good thing I'm not holding you to the standard of "peer reviewed scholarly text" of which none of your posts have met. You're the one whom is speculating wildy saying everything is peachy. Yea, tell that to the grandparents who had to wait in line for their life savings, and will probably not get it all back. $100,000 isn't a very big next egg. I didn't know it was normal for the FDIC to seize the largest bank in its history.  

- An estimated 30% of all failing loans are to spec investors of non owner occ property
- Lack of regulation in the mortgage industry – hey, even YOU could be a mortgage broker tomorrow.
- Lack of consumer responsibility – lord know’s none of these consumers took their escrow and loan doc’s to qualified legal and financial advisors prior to signing. A substantial number thought it was wise to run up multiple credit cards, then re-fi to “pay them off” only to go out and lever themselves into the hole even deeper.
- Transactions wherein the seller paid for the purchaser’s  closing cost skewed market data – If closing cost were 5%, that same 5% was included in the sale price and the cumulative and compounding effect over the sustained run up resulted in double digit phantom value to the entire market.
- Corrections are supposed to weed out market inefficiencies. That’s why they are called corrections.

Was I supposed to shudder in fear from “Reader Lune’s” thoughts – Gee... "reader Lune" – that’s just like reading the thoughts of J.M. Keynes, or W. Buffet – isn’t it? BTW did you catch this link? http://www.nakedcapitalism.com/2007/08/extreme-measures-i-bill-gross-at-pimco.html Corressponds with what most of the CNBC talking heads are saying too - yeah, it'll hurt but it won't do real damage.
I hope nobody gets their financial advice from CNBC, the court jesters they are. Those post you referenced says yes, other countries have survived a short and painful housing-bubble recessions, but then ends with: "But now, the bubble isn't just in a few asset classes in a couple of (admittedly large) economies. Thanks to greater integration of financial markets, asset inflation is substantial and involves more countries and asset classes. If we keep rolling it forward and eventually, collectively, have to socialize the costs of an even greater unwind, who will be left to be an engine of growth? " - All I'm saying here is that things are not completely ok, and we should question the governments intentions and actions.
I’m not real sure what you didn’t agree with regarding what I wrote, other than calling you out on not knowing anything about IndyMac, or the Fed being swallowed by the banks on the watch list. There really isn’t much to argue over the rest of it. The MBS market exists today and as things become more risky, a greater discount rate will be assigned to the value. B/c MBS are a tranched investment the US Gov  (tax payer) will back Fanny / Freddy (and get it straight – if Fanny and Freddy fail you’re talking about America failing – b/c the government will honor it. If you and I can not pay it – look out for WW3 b/c that’s where we’ll be going). And lastly, while credit may be tighter the banks are lending and property transactions are still going on. Those are just facts - should be of interest since you are just looking for the truth and all.

That's what is supposed to happen in theory with MBS, but in reality that's not what is happening. If the gov does back Fanny/Freddy, the dollar as we know it will be over. Like over 50% drop. Their liabilities will double the current US Debt. But just because the dollar fails doesn't mean America will fail. It will be painful economically, but I don't think a war will be started. We are still the only superpower, and that's because of our sometimes not-so-brilliant (yours truly), but none-the-less brilliant members of our Military and non-organized militia (i.e. you and others on arfcom). America isn't going to fail, but mortgage markets and other security classes have and will. I don't think I could survive without a positive American dream. This country is the greatest, and will continue that way - or else I won't be here. Could any of you?


Again, it is easier to have a discussion if you stay on point. Otherwise it really is like the Special Olympics. - well at least we'll all have something in common.

This is the proverbial point wherein even if you win, you are still retarded. I am done.

BTW - RIF - nowhere did I make wild speculations about anything. I reported facts. Nowhere did I say things were peachy. In fact, if you understand present value / future value concepts of money; the mere word 'discount' speaks volumes.