stock market was up today...

#14,276
#14,276
jmacvols1 said:
I do trust them to make adjustments from time to time as economic conditions change but major adjustments I would like to know about first. Even with a car mechanic, even though he knows more about the car than I do I would still like to first know what he is going to do and how much it will cost me before he does anything.
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Didn’t realize any fiduciaries made trades on your behalf without getting your approval? Mine never do.
 
#14,277
#14,277
walkenvol said:
Didn’t realize any fiduciaries made trades on your behalf without getting your approval? Mine never do.
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Authorized agents trade on behalf of their clients and they’ll get signed contracts to solidify their defined the legality of their role.

Fiduciaries must put the interests of their clients ahead of their own. They have a low bar to clear by only making “appropriate” investment choices.

Both might document trade approvals to cover their butts even more.
 
#14,278
#14,278
Thunder Good-Oil said:
Bill Clinton was long gone by the time that the 2008/2009 market crash obliterated middle class retirement portfolios. But his policies from more than a decade earlier were the biggest reasons for the subprime mortgages fueling that catastrophe.

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Privatizing Moody's and Standard and Poor's helped. Banks leveraging 10-15 times on swaps in the MBS bond market had more to do with it than anything else.
 
#14,279
#14,279
BernardKingGOAT said:
Privatizing Moody's and Standard and Poor's helped. Banks leveraging 10-15 times on swaps in the MBS bond market had more to do with it than anything else.
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If the risky mortgages weren’t created in the first place then the secondary market activity wouldn’t have been much of a factor. Bubba Clinton advocated for mortgages for those that should never have been qualified for them and many used that leverage to speculate. It worked fine while house prices marched upward. It ultimately unraveled and took the economy and equity markets along on the downward slide.
 
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#14,281
#14,281
Thunder Good-Oil said:
If the risky mortgages weren’t created in the first place than the secondary market activity wouldn’t have been much of a factor. Bubba Clinton advocated for mortgages for those that should never have been qualified for them and many used that leverage to speculate. It worked fine while house prices marched upward. It ultimately unraveled and took the economy and equity markets along on the downward slide.
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But it didn't work fine. You're completely ignoring the fraudulent swap practices that were going on that were exponentially more than the subprime mortgages themselves
 
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#14,282
#14,282
BernardKingGOAT said:
But it didn't work fine. You're completely ignoring the fraudulent swap practices that were going on that were exponentially more than the subprime mortgages themselves
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The majority of the swaps were not fraudulent, they were allowable with the repeal of Glass-Stegall in 1999. Guess who signed that abomination?
 
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#14,283
#14,283
hog88 said:
The majority of the swaps were not fraudulent, they were allowable with the repeal of Glass-Stegall in 1999. Guess who signed that abomination?
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I know. They became fraudulent when mortgages started failing but banks continued to pay interest on MBS that were full of failed mortgages. Plus Moody's and S&P were complicit by overrating bonds
 
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#14,284
#14,284
hog88 said:
The majority of the swaps were not fraudulent, they were allowable with the repeal of Glass-Stegall in 1999. Guess who signed that abomination?
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Much of the junk was issued by non-bank lenders, and the biggest players the the securitization of the junk weren't commercial banks (Lehman, Bear, Goldman, etc.). AIG also was a non-bank. G-S, if it was still around, would not have prevented any of those players from doing that they did. Not saying its repeal had absolutely no effect, but I think its overblown.

The government pushing Fannie and Freddie over many years to purchase junk was the single biggest thing the federal government did to contribute.

Ultimately what did everything in was the leverage involved. The story was "worst financial crisis since the Great Depression" instead of "banks increase loan loss reserves, report annual loss" because of the leverage. It didn't take losses anywhere near what the banks actually experienced to put them at huge risk; they would have been screwed even in a mild situation.
 
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#14,285
#14,285
Thunder Good-Oil said:
Bill Clinton was long gone by the time that the 2008/2009 market crash obliterated middle class retirement portfolios. But his policies from more than a decade earlier were the biggest reasons for the subprime mortgages fueling that catastrophe.

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When the Democrats held a gun to Fannie & Freddie’s head, and said - “Yes, you will purchase these mortgages”

The die was cast. That was the sand upon which the house of cards was built.
 
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#14,287
#14,287
hog88 said:
Pic the worst long term move the Fed could possibly make for short term political gain and that's what they will do.
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They are already doing it


  • For the past year, short-term debt — or Treasury bills — have been about 20% of all outstanding debt.
  • That's at the high end of the old suggested range. Last week the range was updated to say that 20% should be the average, not the cap.
The accusation: Short-term debt is becoming a rising share of all outstanding debt, while the share of long-term debt, like 10-year or 30-year bonds, stays flat. In turn, critics say the lower supply is preventing long-term interest rates from going up. Those rates influence borrowing costs across the economy.


Executive Summary
By adjusting the maturity profile of its debt issuance, Treasury is dynamically managing financial conditions and through
them, the economy, usurping core functions of the Federal Reserve. We dub this novel tool “activist Treasury
issuance,” or ATI. By manipulating the amount of interest rate risk owned by investors, ATI works through the same
channels as the Fed’s quantitative easing programs.
ATI has been a major market driver over the past year and we expect it will continue to play a significant role in the
years ahead; ATI may become a regular element of the policy toolbox, driving political business cycles in the market
and the economy.
We calculate that ATI has reduced 10-year yields over the last year by roughly a quarter of a percent, providing similar
stimulus as a one-point cut in the Fed Funds rate, the central bank’s primary policy tool. Combined with higher neutral
rates, ATI implies the total stance of both monetary and issuance policy, considered together, is roughly
neutral—in other words, ATI has interdicted the Fed’s attempt to restrain the economy, helping explain inflation
persistence and upward nominal growth surprises over the past year.
If ATI is unwound via terming out $1 trillion of excess Treasury Bills, we expect it to temporarily boost 10-year yields by 50
basis points, before settling into a permanent 30-bp increase, with corresponding price changes in risk assets. A 50-bp
increase in the 10-year yield will have similar economic effects as a two-point hike in the Fed Funds rate.
If ATI is not unwound but becomes a permanently employed policy tool, we are likely to see higher equilibrium
inflation and interest rates priced in over time due to political business cycles becoming reality.



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www.hudsonbaycapital.com
 
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#14,288
#14,288
BernardKingGOAT said:
But it didn't work fine. You're completely ignoring the fraudulent swap practices that were going on that were exponentially more than the subprime mortgages themselves
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The sub prime mortgages that are directly the result of Clinton’s bad policies are what polluted those packaged products with toxic assets.

What you’re not picking up on or ignoring is that most of those policies take years to digest in the economy and the markets. Trump’s tax cuts targeting the job creators and investors in CapEx benefit our capitalist system for a very long time. The cuts benefiting the middle class were more immediate as they quickly stimulated consumer spending. Those at the bottom of the economic spectrum benefited from better employment opportunities as businesses did better. They didn’t benefit directly from those tax savings because only the highest 50% of earners pay any FIT. Biden’s EOs out of the gate attacking the energy industry have had a long term negative impact on entire sectors, especially energy.

My point is that the moves POTUS makes can play out for years. The guy in office when good or bad news materializes usually isn’t the reason why. There are other threads to argue the cause of the 2008/2009 collapse. Bubba is certainly complicit. 10-15 years later.
 
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#14,289
#14,289
Thunder Good-Oil said:
The sub prime mortgages that are directly the result of Clinton’s bad policies are what polluted those packaged products with toxic assets.

What you’re not picking up on or ignoring is that most of those policies take years to digest in the economy and the markets. Trump’s tax cuts targeting the job creators and investors in CapEx benefit our capitalist system for a very long time. The cuts benefiting the middle class were more immediate as they quickly stimulated consumer spending. Those at the bottom of the economic spectrum benefited from better employment opportunities as businesses did better. They didn’t benefit directly from those tax savings because only the highest 50% of earners pay any FIT. Biden’s EOs out of the gate attacking the energy industry have had a long term negative impact on entire sectors, especially energy.

My point is that the moves POTUS makes can play out for years. The guy in office when good or bad news materializes usually isn’t the reason why. There are other threads to argue the cause of the 2008/2009 collapse. Bubba is certainly complicit. 10-15 years later.
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So a bond rated AAA but filled mostly with B and C mortgages was the result of the subprime loans? That's BS. You're completely ignoring the defunding of the SEC and the privatization of the bonds' ratings' agencies. Also the fraudulent payment of interest on the bonds that contained failing mortgages
 
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#14,290
#14,290
volfanhill said:
They are already doing it


  • For the past year, short-term debt — or Treasury bills — have been about 20% of all outstanding debt.
  • That's at the high end of the old suggested range. Last week the range was updated to say that 20% should be the average, not the cap.
The accusation: Short-term debt is becoming a rising share of all outstanding debt, while the share of long-term debt, like 10-year or 30-year bonds, stays flat. In turn, critics say the lower supply is preventing long-term interest rates from going up. Those rates influence borrowing costs across the economy.


Executive Summary
By adjusting the maturity profile of its debt issuance, Treasury is dynamically managing financial conditions and through
them, the economy, usurping core functions of the Federal Reserve. We dub this novel tool “activist Treasury
issuance,” or ATI. By manipulating the amount of interest rate risk owned by investors, ATI works through the same
channels as the Fed’s quantitative easing programs.
ATI has been a major market driver over the past year and we expect it will continue to play a significant role in the
years ahead; ATI may become a regular element of the policy toolbox, driving political business cycles in the market
and the economy.
We calculate that ATI has reduced 10-year yields over the last year by roughly a quarter of a percent, providing similar
stimulus as a one-point cut in the Fed Funds rate, the central bank’s primary policy tool. Combined with higher neutral
rates, ATI implies the total stance of both monetary and issuance policy, considered together, is roughly
neutral—in other words, ATI has interdicted the Fed’s attempt to restrain the economy, helping explain inflation
persistence and upward nominal growth surprises over the past year.
If ATI is unwound via terming out $1 trillion of excess Treasury Bills, we expect it to temporarily boost 10-year yields by 50
basis points, before settling into a permanent 30-bp increase, with corresponding price changes in risk assets. A 50-bp
increase in the 10-year yield will have similar economic effects as a two-point hike in the Fed Funds rate.
If ATI is not unwound but becomes a permanently employed policy tool, we are likely to see higher equilibrium
inflation and interest rates priced in over time due to political business cycles becoming reality.



Loading…

www.hudsonbaycapital.com
Click to expand...
So the Treasury has been manipulating long-term interest rates down, via a back door by pursuing an over-allocation of short term debt in its portfolio?

In essence - Treasury has been “pulling” while Fed has been “pushing”… to manipulate the short term business cycle for political benefit.

@hog88 and others (cough, cough 🙋‍♀️) have been trying to tell people - she’s not stupid, she’s the most dangerous of the bunch.
 
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#14,291
#14,291
BernardKingGOAT said:
So a bond rated AAA but filled mostly with B and C mortgages was the result of the subprime loans? That's BS. You're completely ignoring the defunding of the SEC and the privatization of the bonds' ratings' agencies. Also the fraudulent payment of interest on the bonds that contained failing mortgages
Click to expand...

Moody's and S&P have always been private companies. And exactly when was the SEC defunded?
 
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#14,298
#14,298
Vol8188 said:
Sounds like he’s doing something far worse than leaving. He’s trying to keep his job for four more years
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Ah the sordid underbelly of DC politics.. try to suck off the government teat for life.. good work if you can get it, but I think you sell your soul in the process
 
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#14,299
#14,299
The underlying issue was the subprime mortgages issued to unqualified borrowers. The house buyers (including many speculators) drove up prices which created the bubble. When the bubble burst the 30% decline in home values hit the middle class extremely hard. But the shenanigans from repackaging those loans only created collateral damage. Wall Street firms were wiped out and the mortgage debt products and failed public companies damaged traders’ portfolios and middle class retirement accounts. But without the idiotic lending on the front end those after effects that pulled down the economy even more wouldn’t have been catastrophic.
 
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