tag:blogger.com,1999:blog-940142538364421402.post7288533837454138945..comments2024-03-02T02:30:55.592-08:00Comments on Bill Maloni's GSE Blog: "TARP, Squared?"Bill Malonihttp://www.blogger.com/profile/17459277100798719104noreply@blogger.comBlogger6125tag:blogger.com,1999:blog-940142538364421402.post-7880691603398063852009-01-30T12:50:00.000-08:002009-01-30T12:50:00.000-08:00bill - your third paragraph from the bottom hits i...bill - your third paragraph from the bottom hits it squarely. <BR/><BR/>I am not sure that I absolve the GSE's from the process - they bought this paper and did the same shoddy due diligence as Wall Street did. Anyone taking a close look at the loan qualities (as opposed to hiring outsourcers who sampled loans on an ad hoc and pressured basis) would have refrained from buying this paper. I suspect the GSE's were subject to the same market pressures as Lehman and Bear - and went along. One can bet some smart people at the GSE's saw it early on and objected, but to no avail.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-940142538364421402.post-47715839308317798512009-01-27T17:17:00.000-08:002009-01-27T17:17:00.000-08:00We can quibble about facts, but some things stand ...We can quibble about facts, but some things stand out.<BR/><BR/>The "local" real estate market was history after the "Thrift Debacle," in part because of the Post-Vietnam War inflation which tragically proved that thrifts--heretofore the largest of mortgage lenders/investors--couldn't manage the interest rate risk, when their costs rose above their revenue.<BR/><BR/>That fact, in the early 1980's, is what gave huge impetus to the development of Fannie and Freddie and use of their mortgage backed securities and debt activities. Those securities had buyers all over the world. It made our mortgage market the most efficient, liquid, and successful.<BR/><BR/>That, in itself, wasn't a problem. For more than 25 years, all of the "Belgian dentists" and other foreign investors bought both the Fannie/Freddie debt and mbs and funded American home mortgages, because our domestic deposit base and our depositories (banks and thrifts) couldn't.<BR/><BR/>Our multifacted current problem keeps coming back to the same source; hundreds of billions of dollars in poorly underwritten U.S. home mortgages--originated by by Wall Street and their mortgage broker networks--and sold around the world (with even Fannie Mae and Freddie Mac buying them) to "yield hogs," while no Bush federal financial regulatory source was willing or able to blow the whistle, until it was too late.<BR/><BR/>International financial interdependence is a contemporary fact of life. It didn't go awry--in any major way--until all of those overseas investors/markets OD'd on toxic private lable (non-GSE) subprime mortgage securities.<BR/><BR/>And, as long as we are a debtor nation, we better hope those foreign financial relationships don't go away.Bill Malonihttps://www.blogger.com/profile/17459277100798719104noreply@blogger.comtag:blogger.com,1999:blog-940142538364421402.post-39421768886897102122009-01-27T04:48:00.000-08:002009-01-27T04:48:00.000-08:00Some must reading about the financial crisis in th...Some must reading about the financial crisis in the Economist this week. <BR/><BR/>Although there are many ways of looking at it, one angle struck me as prescient. <BR/><BR/>With housing and mortgages, we took an process that used to be local (and which used local judgment and expertise in making loans), then nationalized it, and then, with the creation of the CDO market, exported it around the world, with disastrous results. <BR/><BR/>The Economist also points out how silly the CDO markets were. With the currency exchange markets, the banks did a good job - because their quant models held up - note these markets mostly trade on short term time horizons and the banks knew at some level what they knew and didn't know in terms of assumptions. But the models made no sense with hopelessly complex mountains of paper cdo's - that no one can now figure out. <BR/><BR/>My guess is that the GSE's stubbed their toe badly here - but not as bad as the private banks, who muscled their way into the market with aggression.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-940142538364421402.post-54151069439244482402009-01-26T18:49:00.000-08:002009-01-26T18:49:00.000-08:00John. Make that "The Quiet Man," with John Wayne.O...John. Make that "The Quiet Man," with John Wayne.<BR/><BR/>One of these days, I'll do a completely typo free blog and comment section!!Bill Malonihttps://www.blogger.com/profile/17459277100798719104noreply@blogger.comtag:blogger.com,1999:blog-940142538364421402.post-3652162440706336222009-01-26T12:03:00.000-08:002009-01-26T12:03:00.000-08:00How about Slim and Katy Jurado in the "Billy the K...How about Slim and Katy Jurado in the "Billy the Kid" movie with Kris Kristoferson, James Coburn, and Bob Dylan?<BR/><BR/>Dylan's "Knocking on Heaven's Door" song, as a wounded town Marshall Pickens realizes that he's soon to die, is haunting.<BR/><BR/>Don't get me going on Clint Eastwood in "The Outlaw Josey Wales" or John Wayne in "The Quiet American."<BR/><BR/>Last comment, Eastwood in "Gran Torino" and Mickey Rourke in "The Wrestler" are must sees!Bill Malonihttps://www.blogger.com/profile/17459277100798719104noreply@blogger.comtag:blogger.com,1999:blog-940142538364421402.post-75747512381153627522009-01-26T09:52:00.000-08:002009-01-26T09:52:00.000-08:00The most brilliant piece of casting in that movie ...The most brilliant piece of casting in that movie (and IMHO one of the best ever outside of The Magnificent Seven, which was in a class by itself) was Slim Pickens as Capt Kong. He was great in Blazing Saddles, too.<BR/><BR/>I liked a young Raymond Burr as intrepid reporter "Steve Martin" (of all names) in the pasted on American scenes to the original Godzilla, but that was pretty lame.John Mhttps://www.blogger.com/profile/02337271384448275952noreply@blogger.com