Re: DOW Up 416.66 : Financial Groups' Correction?

On Tue, 11 Mar 2008 17:43:16 -0500, "John Galt"
<whoisjohngalt@[EMAIL PROTECTED]
> wrote:

>
><stuff_stuff@[EMAIL PROTECTED]
> wrote in message 
>news:171et3di4lsljdm74hnvqb93d00br6s2mt@[EMAIL PROTECTED]
>> On Tue, 11 Mar 2008 16:47:34 -0500, "John Galt"
>> <whoisjohngalt@[EMAIL PROTECTED]
> wrote:
>>
>>>What the Fed is doing now and what they did then could not be more
>>>different.
>>
>>
>> Except it's not. It's created a whole new entity to loan money out
>> with bonds as collateral. But the bonds are about 50% over rated.
>> They're trading good paper for bad. This is not going to end well.
>> IMHO.
>
>1929 was a tight money Fed policy. Today is the opposite. Not the same. 
>Today, the goverment is going with loose money and as you point out, 
>absorbing risk. Today the exposure is topped at 200B, but since they're
only 
>taking the AAA stuff (yes, I know....), one would *hope* that losses
won't 
>top a point or two while restarting the credit market.

But that triple A is almost all bogus. 

Look at this graphic.
http://www.bloomberg.com/apps/data?pid=avimage&iid=iQUy2GaasArs

Look at the column "collateral at risk" defined as percentage of a
bonds total collateral that is 90 days delinquent, foreclosed or
repossessed.

Read this guy on the bonds and fed move. He's the best I think.
http://bigpicture.typepad.com/


>If the taxpayer can restart the markets at the cost of 4 to 10B, it's a 
>bargain. Should have done that instead of the 150B rebate.
>
>JG
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