Edward Harrison of CreditWritedowns was all over the EU announcement today, and ended the day with a post about how the “voluntary” 50% writedown on Greek debt by banks skirts a default. Which means that investors who bought credit default swaps (CDS)—insurance where investors get paid in the event of a default—don’t get paid. Net [...]
Archive for the ‘Derivatives’ Category
PrimeX Primer: How MBS Trading Impacts Consumer Mortgage Rates
At the end of last week a leading Wall Street researcher wrote, “The general tone at ABS East was somewhat gloomy, however most participants view the non-agency sector relatively attractive versus other sectors. The market has seen a recent drop in PrimeX prices, and it is important to understand the collateral underlying in the Prime [...]
The Greatest Subprime Meltdown Story Ever Told
The mortgage industry melted down August 2007, then whole financial world melted down September 2008. The Subprime Primer, a hilarious powerpoint chronicle of the crisis, made the rounds back then. I just stumbled across it, and I’ll repeat what I said at the time: Of all the deep analysis of the subprime crisis, this is [...]
eTrade Baby Loses Everything (VIDEO)
This is a good one…
Financial Product Largely Blamed For Crisis Was Created In A Crisis
In all of the post-bubble analysis of what went wrong lots of blame is placed on credit default swaps (CDS), which are fairly new, having not existed before 1994. Inauspiciously enough, CDS stemmed from a disaster. On March 24, 1989 the Exxon Valdez, an oil tanker headed to Long Beach, CA hit a reef in [...]
Consumer Debt “Only” 118% Of Disposable Income vs. Peak of 130%
In a recent report, the Federal Reserve Bank of San Francisco said low interest rates, lax lending standards, the proliferation of exotic mortgage products, and the growth of a global market for securitized loans promoted increased U.S. household leverage (as measured by the ratio of debt to disposable income) to an all-time high of 130% [...]
How much is U.S. government’s monthly payment on its debt?
Monthly Payments on U.S. Debt Since early October, the 10-year US Treasury yield has gone up about 85 basis points (from 2.4% to 3.35%). The crisis in Europe and the Fed’s $600 billion bond-buying program (QE2) in theory would move rates lower. But a pick-up in world economic indicators, along with concern over a growing [...]
Area man creates ‘Mortgage Securitization Made Simple’ FLOWCHART
An area man created this flowchart to figure out how is mortgage was securitized. No he’s not Rube Goldberg, and this isn’t from The Onion. He’s a securitization auditor named Dan Edstrom and ZeroHedge has more. Click chart for full size.
Fed’s Conflicting Recovery Agenda. Wells, Morgan Earnings. Derivatives 101.
Fed’s Conflicting Recovery Agenda The Federal Reserve Bank of New York has joined forces with BlackRock, PIMCO and other major bond investors in trying to force Bank of America to repurchase $47b of mortgages that were packaged into securities. Bank of America defended its position. “We’re not responsible for the poor performance of loans as [...]
Everyone Hates Their Bookie Sooner Or Later (A Primer On Goldman’s Troubles)
This guest post from a hedge fund exec does a good job of explaining Goldman’s regulatory/legal issues in terms we can all understand… When you win, your bookie wins. When you lose, your bookie wins. No matter the outcome of the game, your bookie skims a little “juice.” Sometimes your bookie screws you (e.g. you [...]
