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re: In honor of Ben's last FOMC meeting, let's appreciate Bernank the Tank
Posted on 1/31/14 at 5:34 pm to BennyAndTheInkJets
Posted on 1/31/14 at 5:34 pm to BennyAndTheInkJets
quote:
Yomiuri Shimbun, a Japanese newspaper
Yomiuri Shimbun has the largest circulation of any newspaper in the entire world.
That's like what the Economist does when they say "research from Citibank, a bank, states ...".
0
Posted on 1/31/14 at 5:47 pm to BennyAndTheInkJets
quote:
quote:
I Love Bama
Wow... I actually wasted 15 minutes of my life reading that article.
So his whole argument is that Bernanke has made the dollar plummet. Let's just say for fricks sake that a weak dollar is horrible as he states, at the end of Bernanke's first year as Fed president the dollar index was 83.92. It's sitting at 81.25 right now, which is an annualized 0.54% depreciation a year. That is half of what the average annualized drop in the dollar index has been over the previous 50 years. The dollar index is actually higher than it was before the easing programs. Also, the volatility of the DXY over the past 3 years throughout his easing programs has been insanely low, I'd have to go back over 25 years to find an era like this, which makes the author's claim that Bernanke has failed at the price stability mandate kind of outrageous.
Benny schooling the Gump....
This post was edited on 1/31/14 at 5:48 pm
Posted on 2/1/14 at 1:55 pm to NC_Tigah
quote:
Bernake's work in Autumn 2008 through 2009 was superb. IMO QE extended too far, too long though.
Those of us with available resources did very well as a result. However, there are obviously costs. Those will eventually be spread over a much broader and nonbenefitting population base.
It's one of the few cases where there is validity to claims of upward (trickle up) wealth redistribution, and validity to complaints of an expanding wealth gap.
Solid post, can't disagree with anything here. The truth is there isn't much the Fed can do to reach the lower part of the wealth gap. Previously, the transmission mechanism between monetary policy and the general population was mortgage rates, now that transmission mechanism is broken.
The Fed can also try to raise asset prices, but once again that won't do as much anymore. Before 2000, 51% of the average population's non-house equity was in the stock market. That figure dropped after the dotcom bubble to ~41% (need to double check that) and hasn't recovered since. So it's really tough for the Fed to directly touch the average citizen, all they can do is use the tools they have.
The big X factor to this entire recovery and real wage growth is CapEx. The problem is companies have no incentive to invest in CapEx. Since '09, every company that has issued debt for CapEx has seen their stock price go down while those that have issued debt for shareholder activity (buybacks) have seen their stock price go up. When listening to CEOs, they say they can't in good judgement invest until they see strength in aggregate demand, while the flip side is wage growth and in turn demand won't pick up until companies invest in CapEx and labor. There's your Catch 22.
And like the previous poster said, we won't know the true affects until long down the road. Hopefully we all get to live and see it happen, whether good or bad.
Posted on 2/1/14 at 1:58 pm to LSURussian
quote:
Benny schooling the Gump
Wouldn't say that. For some reason that author has blasted Ben every article I've ever read from him, even before he was Fed chairman. I'm starting to the Bernanke fricked his wife, mom, and peed on his pillow every day when he was a kid. Admittedly, my conscious bias is definitely pro-Ben but the magnitude kind of pales in comparison to that author's hard on for all things anti-Ben.
Regardless, back da boss
Posted on 2/1/14 at 3:38 pm to BennyAndTheInkJets
I guess Bill Gross is happy now. 
I will miss Mr. Bernanke.
I will miss Mr. Bernanke.
Posted on 2/1/14 at 3:49 pm to BennyAndTheInkJets
I will say this. The man has fantastic facial hair.
Posted on 2/1/14 at 4:00 pm to I Love Bama
quote:
I will say this. The man has fantastic facial hair.
That's the one thing I hold against him. My head hair is thick and amazing, but my facial hair is some straight trailer trash Joe Dirt shite. I've got spots next to both sides of my chin that won't grow in thick like the rest. I call it the mark of the park. Hence I will always be well shaven to slightly shadowed. My only chance at facial hair brilliance is to go into hiding for 6 months to grow a Burt Reynolds mustache.
The nicknames for Hank and Ben through the crisis were Bald and Beard. When you're nickname is actually the Beard, you know you have great facial hair.
I mean come on, that's not even fair...
This post was edited on 2/1/14 at 4:01 pm
Posted on 2/1/14 at 4:04 pm to Notro
quote:
I guess Bill Gross is happy now
Bill can tweet all he wants about financial repression, but monetary policy since 2008 has definitely benefited his firm for the most part. Admittedly the two are not mutually exclusive, as Bill is actually an extremely honest individual considering his stature. You can think something is "right" or "wrong" while still upholding your responsibilities to your clients.
Posted on 2/1/14 at 5:08 pm to BennyAndTheInkJets
Greenspan supported the Neg Am Loan. Wish he never left.
But I do like that Ben kept mortgages rates this low for so long
But I do like that Ben kept mortgages rates this low for so long
Posted on 2/1/14 at 5:15 pm to SDVTiger
quote:
Greenspan supported the Neg Am Loan. Wish he never left.
Just curious, why do you like negative amortizing loans? I always viewed them in the same light as PIC bonds (Principal Interest Coupon, you can pay principal or coupon by just giving the holder more notional) that a lot of HY companies have been issuing lately.
Those are the extremes of covenant light/power to the issuer/etc..
This post was edited on 2/1/14 at 5:16 pm
Posted on 2/1/14 at 5:36 pm to BennyAndTheInkJets
Best loan ever made other than a Reverse Mortgage (true neg am)
Everyone who stuck with it has been riding 2% I/O or PI 30 or 15yr for like 5yrs.
Everyone else was struggling with their 30yr fix at 6% front loaded with interest that they will only stay in for 5yrs
Everyone who stuck with it has been riding 2% I/O or PI 30 or 15yr for like 5yrs.
Everyone else was struggling with their 30yr fix at 6% front loaded with interest that they will only stay in for 5yrs
Posted on 2/1/14 at 5:55 pm to SDVTiger
This really isn't the thread for this but, depending on the structure, although some NegAm's can help out early they can severely frick certain borrowers later.
It's really structure dependent so unless there is a prospectus for a certain deal in front of me I can't comment (even then I'd be lost on about 50% of it). They can be extremely helpful for the borrower under certain conditions but also extremely hurtful. The FHA is actually cracking down on NegAms for this reason as some of the loans fall under the umbrella of 'predatory lending'. Looking at the payments made for the first 5 years on a 30-year non-Agency non-standard mortgage deal doesn't capture the story at all.
Structured products are the most complicated securities I've ever encountered. You have to really go line by line through the 300-400+ page prospectuses to get a feel for the true payments. I don't even pretend to act like I'm well versed in the area, I know guys that have traded mortgages for 30 years and still confused on how to model some of these deal structures. I've seen some of the Countrywide NegAms that after the analysts thumbed through the the structures, traders weren't allowed to touch because there was no way the underlying mortgages wouldn't have to be substituted or made whole under the reps and warranties clauses.
It's really structure dependent so unless there is a prospectus for a certain deal in front of me I can't comment (even then I'd be lost on about 50% of it). They can be extremely helpful for the borrower under certain conditions but also extremely hurtful. The FHA is actually cracking down on NegAms for this reason as some of the loans fall under the umbrella of 'predatory lending'. Looking at the payments made for the first 5 years on a 30-year non-Agency non-standard mortgage deal doesn't capture the story at all.
Structured products are the most complicated securities I've ever encountered. You have to really go line by line through the 300-400+ page prospectuses to get a feel for the true payments. I don't even pretend to act like I'm well versed in the area, I know guys that have traded mortgages for 30 years and still confused on how to model some of these deal structures. I've seen some of the Countrywide NegAms that after the analysts thumbed through the the structures, traders weren't allowed to touch because there was no way the underlying mortgages wouldn't have to be substituted or made whole under the reps and warranties clauses.
Posted on 2/1/14 at 5:56 pm to BennyAndTheInkJets
Throwback Ben
Posted on 2/1/14 at 6:21 pm to BennyAndTheInkJets
Almost 90% of the borrowing public adjusts their mortgage every 5-7yrs or at least here in Cali.
Everytime you cash out or take a HELOC out you neg am yourself
30yrs are front loaded for the first 10yrs which no one ever gets to so it only benefits the Bank.
FHA isnt cracking down HUD and Frank/Dodd did. Even tho Dodd had a neg am lol
They are coming back so that didnt last long. I think you're talking more about the secondary market mess it might have caused.
There were many people who didnt fully understand the loan but they didnt care when they were getting 200k and lowering their payment by a grand
Everytime you cash out or take a HELOC out you neg am yourself
30yrs are front loaded for the first 10yrs which no one ever gets to so it only benefits the Bank.
FHA isnt cracking down HUD and Frank/Dodd did. Even tho Dodd had a neg am lol
They are coming back so that didnt last long. I think you're talking more about the secondary market mess it might have caused.
There were many people who didnt fully understand the loan but they didnt care when they were getting 200k and lowering their payment by a grand
Posted on 2/1/14 at 6:52 pm to SDVTiger
quote:
Almost 90% of the borrowing public adjusts their mortgage every 5-7yrs or at least here in Cali.
That 90% figure looks very high but the notion is true regardless as long as the structure allows it.
quote:
Everytime you cash out or take a HELOC out you neg am yourself
Yes... not sure your point?
quote:
30yrs are front loaded for the first 10yrs which no one ever gets to so it only benefits the Bank.
Regarding the interest absolutely, but that's simply the flip side of giving the borrower the prepayment option.
quote:
FHA isnt cracking down HUD and Frank/Dodd did. Even tho Dodd had a neg am lol
This is true, I always throw the FHA in with HUD when I shouldn't, even though the FHA is part of HUD they do different things.
quote:
They are coming back so that didnt last long. I think you're talking more about the secondary market mess it might have caused.
Both legs, not only the secondary market but the borrowers as well. It was a result of both sides, investor and borrower, not knowing exactly what they signed up for. Like I said, its deal specific. Say someone that didn't truly know what they signed up for had a fixed 3/27 ARM with a low expectation of an increase in income over the future horizon, that interest that got rolled into principal will hurt the borrower pretty bad over the long run. Finance has no free lunches and eventually you have to pay one way or the other.
Where do you see them coming back? Negative amortizations didn't make it through the CFPB rules for a qualified mortgage? Admittedly, as I've said, I don't pretend to be extremely well versed in mortgage space although I have done some work on it so I could have easily missed something.
quote:
There were many people who didnt fully understand the loan but they didnt care when they were getting 200k and lowering their payment by a grand
One rule in finance, there is no free lunch. Sorry, I'm still not sure what your point here. Negative amortization loans could be great for say, a first time home buyer that doesn't have a lot of income now but expects to get a large jump in salary soon. The key is knowing what you sign up for, and the more complex a structure gets the less likely the average borrower will understand what they're signing up for (and less likely the average investor will know what they're buying).
This post was edited on 2/1/14 at 6:55 pm
Posted on 2/1/14 at 7:09 pm to BennyAndTheInkJets
And of course... more Bernank the Tank
Posted on 2/1/14 at 7:19 pm to BennyAndTheInkJets
Point was everyone says neg am is bad. Then they cash out and neg am themselves.
Only people who got hurt were the greedy ones.
3/27 arms are nothing like neg ams and were subprime loans for people who thought they could ride the equity greed train and got burned. They wish they had the neg am
You will have to be counseled similar to a reverse mortgage to get the version of the neg am.
It wont be available with Fannie/Freddie/FHA. It will be a proprietary program with other investors so it wont fall under qm
Only people who got hurt were the greedy ones.
3/27 arms are nothing like neg ams and were subprime loans for people who thought they could ride the equity greed train and got burned. They wish they had the neg am
You will have to be counseled similar to a reverse mortgage to get the version of the neg am.
It wont be available with Fannie/Freddie/FHA. It will be a proprietary program with other investors so it wont fall under qm
This post was edited on 2/1/14 at 7:20 pm
Posted on 2/1/14 at 8:26 pm to SDVTiger
Posted on 2/2/14 at 1:52 am to BennyAndTheInkJets
Dude, with Bernanke and Obama the rich have gotten richer, the middle class has eroded, costs are skyrocketing.... Totally not a boss.
Well except when he's talking about how well Argentina is doing
He's proving Von Mises right.......
Well except when he's talking about how well Argentina is doing
He's proving Von Mises right.......
This post was edited on 2/2/14 at 7:57 am
Posted on 2/2/14 at 8:36 am to ironsides
quote:Wrong.
costs are skyrocketing
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