Comments on: Links 9/26/08 http://www.nakedcapitalism.com/2008/09/links-92608.html Mon, 23 Nov 2009 10:17:20 -0500 http://wordpress.org/?v=2.8.4 hourly 1 By: doc holiday http://www.nakedcapitalism.com/2008/09/links-92608.html#comment-17601 doc holiday Fri, 26 Sep 2008 16:50:00 +0000 http://www.nakedcapitalism.com/2008/09/links-92608/#comment-17601 Have to steal this from Ghost Busters --<br/><br/> Dr. Peter Venkman: This city is headed for a disaster of biblical proportions. <br/>Mayor: What do you mean, "biblical"? <br/>Dr Ray Stantz: What he means is Old Testament, Mr. Mayor, real wrath of God type stuff. <br/>Dr. Peter Venkman: Exactly. <br/>Dr Ray Stantz: Fire and brimstone coming down from the skies! Rivers and seas boiling! <br/>Dr. Egon Spengler: Forty years of darkness! Earthquakes, volcanoes... <br/>Winston Zeddemore: The dead rising from the grave! <br/>Dr. Peter Venkman: Human sacrifice, dogs and cats living together... mass hysteria! Have to steal this from Ghost Busters –

Dr. Peter Venkman: This city is headed for a disaster of biblical proportions.
Mayor: What do you mean, “biblical”?
Dr Ray Stantz: What he means is Old Testament, Mr. Mayor, real wrath of God type stuff.
Dr. Peter Venkman: Exactly.
Dr Ray Stantz: Fire and brimstone coming down from the skies! Rivers and seas boiling!
Dr. Egon Spengler: Forty years of darkness! Earthquakes, volcanoes…
Winston Zeddemore: The dead rising from the grave!
Dr. Peter Venkman: Human sacrifice, dogs and cats living together… mass hysteria!

]]> By: Dave Raithel http://www.nakedcapitalism.com/2008/09/links-92608.html#comment-17565 Dave Raithel Fri, 26 Sep 2008 14:20:00 +0000 http://www.nakedcapitalism.com/2008/09/links-92608/#comment-17565 The Credit Slips post has a link to Levitin's little essay on how/why Fed/Treasury cannot modify underlying mortgages simply by owning the MBSs. Excellent nuts-n-bolts explanation for people like me. The essay reminded me of one of those "so obvious I forgot about it" points: Mortgage insurance. As defaults grow, then aren't mortgage insurance payouts growing? Is this yet another debilitating feed-back mechanism? I realize that not everyone has to buy mort insurance - e.g. VA loans, or having sufficient equity. But didn't everybody(?) most everybody(?) without significant downpayment, etc., have to buy mort insurance?<br/><br/>An aside re Discount Window borrowing: The people on Squawk Box were yelling at each other again this morning; in the context of reporting this, one of the parties claimed that credit default swaps for McDonalds were trading cheaper than credit default swaps for Treasuries.... The Credit Slips post has a link to Levitin’s little essay on how/why Fed/Treasury cannot modify underlying mortgages simply by owning the MBSs. Excellent nuts-n-bolts explanation for people like me. The essay reminded me of one of those “so obvious I forgot about it” points: Mortgage insurance. As defaults grow, then aren’t mortgage insurance payouts growing? Is this yet another debilitating feed-back mechanism? I realize that not everyone has to buy mort insurance – e.g. VA loans, or having sufficient equity. But didn’t everybody(?) most everybody(?) without significant downpayment, etc., have to buy mort insurance?

An aside re Discount Window borrowing: The people on Squawk Box were yelling at each other again this morning; in the context of reporting this, one of the parties claimed that credit default swaps for McDonalds were trading cheaper than credit default swaps for Treasuries….

]]> By: Anonymous http://www.nakedcapitalism.com/2008/09/links-92608.html#comment-17549 Anonymous Fri, 26 Sep 2008 13:02:00 +0000 http://www.nakedcapitalism.com/2008/09/links-92608/#comment-17549 Re the detailled Politico article (p. 3), if Bernanke believes that the plan as currently structured is going to aid in price discovery, he does not understand the market he is proposing to enter. One of the issues with the MBS/CDO market is the complexity, customization and individuality of the products. You can't have some reverse auction where the Fed asks for sale prices on Ford bonds maturing in 15-20 years.<br/><br/>I have been suspicious of academic economists being heavily involved in this process because of their general ignorance of the financial services industry. The fact that I suspect Bernanke was being sincere confirms that suspicion. Re the detailled Politico article (p. 3), if Bernanke believes that the plan as currently structured is going to aid in price discovery, he does not understand the market he is proposing to enter. One of the issues with the MBS/CDO market is the complexity, customization and individuality of the products. You can’t have some reverse auction where the Fed asks for sale prices on Ford bonds maturing in 15-20 years.

I have been suspicious of academic economists being heavily involved in this process because of their general ignorance of the financial services industry. The fact that I suspect Bernanke was being sincere confirms that suspicion.

]]> By: dearieme http://www.nakedcapitalism.com/2008/09/links-92608.html#comment-17519 dearieme Fri, 26 Sep 2008 09:07:00 +0000 http://www.nakedcapitalism.com/2008/09/links-92608/#comment-17519 Mr Broad DeRound hasn't just admitted an error; he has revealed that he was completely wrongheaded on a fundamental part of macroeconomics. If a physicist said that he had been wrong all along about the physics of Newton, Clerk Maxwell, Planck and Einstein, we'd wonder what right he had ever had to be called a physicist. Perhaps DeRound may now be recognised as falling into the category "Holy Fool". Mr Broad DeRound hasn’t just admitted an error; he has revealed that he was completely wrongheaded on a fundamental part of macroeconomics. If a physicist said that he had been wrong all along about the physics of Newton, Clerk Maxwell, Planck and Einstein, we’d wonder what right he had ever had to be called a physicist. Perhaps DeRound may now be recognised as falling into the category “Holy Fool”.

]]> By: Fred http://www.nakedcapitalism.com/2008/09/links-92608.html#comment-17513 Fred Fri, 26 Sep 2008 08:06:00 +0000 http://www.nakedcapitalism.com/2008/09/links-92608/#comment-17513 Brad DeLong, grasping reality woth both hands and watching it slip through his fingers. Brad DeLong, grasping reality woth both hands and watching it slip through his fingers.

]]>