An Easy Government Solution to the Crisis? Bennet Sedacca Jan 14, 2009 3:15 pm |
![]() |
![]() |
|
||||||||||||
|
Instead of playing this carry-trade game -- selling bills at 0.1%, buying 10s at 2.25%, and buying mortgage-backed securities in an effort to artificially put a bid under the market, why not do the following:
As I've been pointing out for years now, you can put capital into the market, you can inject TARP funds into banks (and get ready for more of that), but you can't force someone to seek credit.
Which explains why all of these shenanigans aren't working yet.
So why not sell $1 trillion in 10s with yields all the way up to 3.5%? Granted, selling a trillion bonds would move the market - but there's lots of wiggle room with a beginning level of 2.25%.
So the 300 or so mortgage lenders that have folded up could be replaced with... Uncle Sam's Mortgage Company.
Uncle Sam then turns around and sells 4% mortgages (undocumented liar loans without appraisals) and all sorts of flexibility? Granted, this would hurt the premium mortgages I own (although I've sold a lot lately into Uncle Sam's and the TARP money bid) - but it might get rid of some housing inventory.
Want top traders to sit at your desk and share their insight and ideas?
Minyanville's Buzz & Banter- 14-day FREE trial
|
|||||||
|
|||||||
|
|||||||
|
|||||||
|
|||||||
discuss this article and more on the mv exchange |
|
Get real-time options trading ideas from Steve Smith, veteran options trader and newsletter author, plus let him show you the way to cut risk and boost your returns through the strategic use of options. Click here for a free 14 day trial to OptionSmith by Steve Smith.
The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.
Copyright 2009 Minyanville Media, Inc. All Rights Reserved.
| add rss feed | free article alerts |
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
DC
Delaware
Florida
Georgia
Hawaii
Idaho
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennesee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Local Guides

















