Is it just me or does something not feel right about this economy? (companies, abortion)
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Mark to market IS an issue. The Federal Reserve is hiding losses because it can. The GSE MBS were bought with created money with no corresponding REAL debt created to back it (like US Treasuries). All it takes is a keystroke to wipe out any defaults/nonpayments, and no one actually has to realize any loss. No one's the wiser.
And yes, I know that the MBS the Federal Reserve owns were not directly purchased from the GSEs. They're the underperforming GSE MBS the Federal Reserve bought from others to take them off their hands. A back door bail out that completely sidestepped the Congressional approval process.
This has to be a large part of how China can do what they do on such massive and rapid scale. And why they keep it all secretive. They get away with it because of their culture, secretive central command and success.
And yet there China is, on the brink of an economic collapse unless they keep printing funny money. If China's productivity was so great, they wouldn't have needed the equivalent of $19 trillion in QE.
It would not have happened, without the proper economic/world timing, huge numbers of people/cheap labor and resources. Either on hand or easily imported.
IMO there will be no collapse. Much of the debt will be neutralized or forgiven, 'lost' off the secretive books. And in a generation their consumers will support their economy, much like ours.
This is because money was printed to get out of this recession. Now you have huge Venture Capital Funds, private equity, bank balance sheet that just got a ton of cash because of it, and is now being 'filtered' down throughout the economy. There wasn't been any major substantial increases in productivity, real underlying growth, etc. Alot of multi-billion dollar venture capital funds pumping money into anything tech, bio-tech, etc. Alot of it which is likely overvalued or in search of trying to make real money as opposed it's 'expected' to. That's why nothing feels really solid, or evenly distributed (plenty of finance, law, supporting industries, tech people working in offices making alot of $$, but less so elsewhere).
Mark to market IS an issue. The Federal Reserve is hiding losses because it can. The GSE MBS were bought with created money with no corresponding REAL debt created to back it (like US Treasuries). All it takes is a keystroke to wipe out any defaults/nonpayments, and no one actually has to realize any loss. No one's the wiser.
And yes, I know that the MBS the Federal Reserve owns were not directly purchased from the GSEs. They're the underperforming GSE MBS the Federal Reserve bought from others to take them off their hands. A back door bail out that completely sidestepped the Congressional approval process.
Both the US treasuries and the MBS bought as part of QE were done using the same mechanism. The MBS are being removed from the Fed balance sheet when they are paid off; similar as when the US treasuries mature. As MBS are paid off and US treasuries mature some new replacement MBS and US treasuries are purchased to maintain a target balance. The target balance has been decreasing since last year. There is zero evidence of significant defaults or write offs involving the MBS the Fed owns. The GSE still guarantee payment of the mortgages. The GSEs are not experiencing significant defaults.
There is no evidence that anyone involved is hiding losses. There isn't any advantage to hiding losses, so why would they?
Both the US treasuries and the MBS bought as part of QE were done using the same mechanism. The MBS are being removed from the Fed balance sheet when they are paid off; similar as when the US treasuries mature.
How do we know? The Federal Reserve neither has to mark to market nor declare losses.
Quote:
There is no evidence that anyone involved is hiding losses. There isn't any advantage to hiding losses, so why would they?
Because the Federal Reserve can. With just a keystroke. Do you really not know that?
How do we know? The Federal Reserve neither has to mark to market nor declare losses.
Because the Federal Reserve can. With just a keystroke. Do you really not know that?
What would be the advantage to the Federal Reserve to do what you are claiming? You alleging a conspiracy that has does not benefit anyone. Why would the Federal Reserve bother?
You have a point there. The plurality (majority?) is exasperated and more than mildly perturbed. Anger swirls, with culprits and scapegoats varying depending on one's biases and political persuasions. Imagine a political candidate stating that "OK, things could assuredly be improved, but in the large they're OK, and the last thing that we ought to pursue, is some massive and unprecedented alteration." Would such a candidate succeed?
Lol no. Probably why you can't trust politicians.
They tell people what they want to hear, not what they NEED to hear...
Last edited by Lycanmaster; 06-20-2018 at 12:33 PM..
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