With Geoffrey Batt The ongoing troubles at the GSEs are no secret: it is public knowledge that Fannie had a 5.38% delinquency rate at December , while Freddie just passed the 4% threshold in January; both continue to rise rapidly each month. The fact that the mortgage-bond spread has just hit a record tight is merely an ongoing artifact of the Fed's endless meddling in the mortgage market, with the sole purpose of keeping rates artificially low, and preventing banks from being forced to take massive writedowns on their entire loan book.
From the press release: Fourth quarter 2009 net loss was $6.5 billion. After the dividend payment of $1.3 billion to the U.S. Department of the Treasury (Treasury) on the senior preferred stock, net loss attributable to common stockholders was $7.8 billion, or $2.39 per diluted common share, for the fourth quarter of 2009.
With Geoffrey Batt With everyone's attention drawn to each and every step the IMF takes, while contemplating the imminent Greek bailout, which without exception and with the grace of a drunk 3-ton bull in a China store, leaves nothing but annihilation and currency boards in its wake, is the popular opinion once again getting the Houdini treatment courtesy of the mainstream media? One thing learned over the past year is that everything is a distraction for something else, and that something else, quite usually without failure, ends up being the Marriner Eccles building on Constitution Avenue in D.C
Today's 4 week Bill auction was unique in that the hit ratio for the Indirect Bid hit a record (and an inability to go any higher) at 100% . We have charted the hit ratio over the past 3 months, where aside from the window dressing auction from December 29, the average ratio has been at 68% (69% including that particular 97% hit ratio auction)
A new proposal by House Republicans, lead by Rep. Scott Garrett (R., N.J.), is seeking to address changes to Fannie and Freddie accounting, along the lines of what has been previously proposed by Zero Hedge, and to not only include the GSE's losses as part of the Federal budget, but to also count the debt from the two mortgage zombies toward the nation's total statutory debt limit. As we stated previously, it is only semantics at this point which distinguish the GSE obligations from other Treasury obligations.
The $182 billion bail out that just won't quit. In a latter just released, Darrell Issa, true to his promise,
Frequent readers are aware that in the past month, Zero Hedge has speculated on both the direction of Chinese UST holdings as well as the identity of the direct bidders. Our thesis , presented over a month ago, was that Chinese accounts, operating as UK-based direct-bidders, are perpetuating a form of covert easing, by buying treasuries which never hit the TIC account as a Chinese counterparty and thus remain under the radar, being relegated to UK purchases for all official purposes (whose holdings have spiked in 2009). To be sure, this theory was met with some skepticism within the Zero Hedge community
Some time ago UBS economist Paul Donovan claimed that hyperinflation as a policy tool to inflate away a staggering debt load (for those of you who have missed all the recent musings by SocGen's Edwards and Grice, this is precisely the situation the developed world countries, not to mention the STUPIDs, find themselves in right now) is unworkable due to the impacts this type of concerted action would have on broader markets . " The idea that governments can readily inflate their way out of their debt problems is a misnomer — arising, perhaps, from confusion between the fate of the individual bondholder and the response of the collective market..
An AP article which has been syndicated throughout the web , making such reputable outlets as CNBC , reports this interesting tidbit: Japan also reduced its holdings of U.S. Treasuries, cutting them by $11.5 billion to $768.8 billion in December, but that amount was still more than China's December total of $755.4 billion.
Gradually we are getting confirmation that Chinese "posturing" about offloading US debt is all too real. The most recent TIC data confirmed the Treasury's greatest nightmare: China is now dumping US bonds
Tuesday, March 9, 2010
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