I wanna be a bond vigilante

NEW -> Contingent Buyer Assistance Program
<p>lendingm---is there any melting at all in the mkt or is Paulson just lying. Think I know the answer here, but just want to check.</p>

<p>Awgee, thanks for the correction, I am a tax moron, and should keep my mouth shut.</p>
 
I did a double take after seeing this. The spike on the far right almost meshes into the right border line of the chart....holy shiiikeeesssss
 
<p>I won't mention my little venture in bonds.... let just say people though I was an idiot for the longest time. They aren't laughing much these days. AND I HATE being patient.... CALGAL... just stay the course, bonds are a very long term thing. anyways good luck</p>

<p>-bix</p>
 
lawyerliz - Tax code is so obtuse, complex, and confusing that everybody is a tax moron, especially tax professionals.
 
Minimums on auction rate municipals are typically $25,000. Thus, many of the people here can partake. For one of the clearer publicly available sites, google "fidelity auction rate municipals". Click on "current offerings" near the bottom.



Go ahead. Stick it to the man. Get your 10%+ taxfree return for as long as it lasts.
 
MalibuRenter - Can an individual short the bond market? And if so, how? Which bonds? Let's say the 10 yr treasury? And a basketful of corporate? Or any suggestions you may have.
 
<p>Trading desks of brokers/dealers routinely have short positions on certain fixed income securities. More often than not, it happens to facilitate customers' trading activities, if the trading desk believe it can restock its inventory later, at or below current market price with ease. It is usually not a bet strictly on the price decline. If a bet on the price decline was desired, credit default swap, interest rate futures, etc., are much more effective. </p>

<p>In theory, an individual can short a bond or the bond market. The only problem is most individual investors have to trade through the "retail" trading desk of a broker/dealer. The individual investor is, in effect, trading against that particular trading desk. The retail desk either refuses the trade, or provides a bid that is substantially below the real market. Leaving an individual short seller extremely disadvantaged.</p>

<p>I think shorting a bond like stock is much more practical for an individual. ETFs like "TLT" mimics long term treasuries, and "AGG" mimics Lehman Aggregate (corporate). If I remember it right, I think you can short these even on an up tick.</p>
 
<p>Okay, call me stupid, but I just do not get it.</p>

<p>It seems obvious by now that the credit, (housing), bubble was caused by low interest rates and easy credit, so why in the world do folks think that lowering the fed funds rate, or lowering mortgage rates, or making credit easier, or freezing adjustable loan rates, or making refinancing easier, or any number of other "solutions", will in any way help the housing market?</p>

<p>Even if you could find some more buyers, isn't it obvious that there are only a few more "qualified" buyers left? Isn't it obvious that prices have to come down to affordability levels? What am I missing?</p>

<p>If a heroin addict going through withdrawals asks you for more heroin, do you give it to him? And if so, why?</p>
 
Because they all believe that low fed funds rate created the credit boom and thus can propel it to a state that will lead to sustainable prices.



Like you said it's not a mortgage / credit problem...it's a qualified / affordability problem.
 
<em>"Because they all believe that low fed funds rate created the credit boom and thus can propel it to a state that will lead to sustainable prices."</em>





That is exactly what people believe, and it simply is not true.
 
And here is another one: Why in the world is Congress investigating Roger Clemens and steroid use in major league baseball? Why is Congress spending my money investigating anything to do with major league baseball? Where in the ____ in the Constitution does it tell Congess it should or can "investigate" a sport? If a law was broken, wouldn't it be the purvue of local law enforcement? Baseball? Are they freakin' serious?
 
<p>This is a sign that we no longer really have a representative form of Government.</p>

<p>If the Congress was willing to do something meaningful, they'd do it. They are paid not to do anything, by compaign contributions.</p>

<p>What we have is an empire run by a bureaucracy, composed of states that are more or less republican in nature. Our emperor is elected every 4 years instead of being installed by the army, or appointed by the prior emperor. But the fact that we have 2 families alternating comes close to that.</p>
 
<p>Me, too. I was very unhappy with our Fed's reactions. I don't know what's going through their mind, but I do need to be at peace with the reality which I have no control over. So, I came up with a few possible rationale that I could personally understand and accept.</p>

<p>The fed is hoping lower rates will stimulate other parts of the economy, and make up for the lost demand after the home ATMs were broken. They are hoping for a soft landing.</p>

<p>They hope the intended lower mortgage rates, credit accessibility, and easier refinancing would allow for the housing bubble to deflate slowly, instead of bursting in their face. They, at least Bernanke believes that the quick collapses of asset markets were the main culprits behind the U.S. Great Depression, and the recent Japanese Depression. They wish to avoid a depression. The want a soft landing.</p>

<p>Adjustable loan rate freeze and easier refinancing is probably the best option available to lenders/mortgage investors. When they are presented with the option of keeping/enforcing the original loan agreement, and face high defaults and loses; Or the option of modifying/freezing adjustable loan rate, and a "hope" that they will not face as many foreclosures. A hope that at least some cash will continue to flow in. A smaller than expected return is always better than a lose. The politicians simply seized the opportunity and make it sound like the are doing something for the poor ignorant public. Then lenders would, and have often done it on their own in many other types of restructures.</p>

<p>Me thinks they got too used to the idea of a soft landing.</p>

<p>Plus, my dark side rationale. As in ancient Rome, democracy meant <strong>mob</strong>ocracy. Give what the mass wanted. Provide a seemingly good life to the vast number of unemployed Roman citizens. Never mind the depleted national treasury, there is always more land and wealth to conquer. Give the people free food and drink, give them entertainment, fulfill their lust for blood and violence in the Colosseum. If you don't provide what the mass wanted rightly or wrongly, someone who promise to provide will replace you. Provide what they want, and you just might stay in power, at least in the mean time.</p>

<p> </p>

<p> </p>
 
<p>I'm starting to suspect the Fed is keeping the rates low mostly to feed profits to the banks (ex. banks keep collecting from loans at 6% or whatever, but borrow from the Fed for less), though there "is no bailout" - gosh, who'd want to openly do anything unpopular 1. in an election year 2. which might spark a panic?</p>

<p>re: ancient Rome</p>

<p>Fed: Don't worry, there are no lions loose in the colessum. Relax, enjoy the show.</p>

<p>The Forthcoming “Jingle Mail” Tsunami: 10 to 15 Million Households Likely to Walk Away from their Homes/Mortgages Leading to a Systemic Banking Crisis</p>

<p>http://rgemonitor.com/redir.php?sid=3&tgid=0&cid=244768</p>
 
The Fed does not care about you or me. The Banks do not care about you or me. The government does not care about your or me. They care about each other, and protecting their self-interests. The FED's actions in the last 6 months, proves that hypothesis.





Awgee, if you haven't read Schiff's article on www.financialsense.com here it is:http://financialsense.com/fsu/editorials/schiff/2008/0215.html





As I listen to these political debates I am beginning to realize more and more how quickly we lost control over our own country. America is like a baby fledging with its mouth wide open begging for food, and wall street is the momma regurgitating into our mouths. Our country has outsourced our entire manufacturing base. The money has flowed to a few powerful hands in New York and Washington, creating a massive house of cards, that until recently, the entire world believed in. We're now left saying..."damn, we really weren't rich after all."





Now that we have been raped of our job base, we're being robbed of our savings by lower rates and inflation.
 
Xtreeter said



Adjustable loan rate freeze and easier refinancing is probably the best option available to lenders/mortgage investors. When they are presented with the option of keeping/enforcing the original loan agreement, and face high defaults and loses; Or the option of modifying/freezing adjustable loan rate, and a "hope" that they will not face as many foreclosures. A hope that at least some cash will continue to flow in. A smaller than expected return is always better than a lose. The politicians simply seized the opportunity and make it sound like the are doing something for the poor ignorant public. Then lenders would, and have often done it on their own in many other types of restructures.



I really don't think this is why they are keeping rates low. Most homeowners who could have refinance have already done so. By keeping rates low many of your other hypothesis are very valid. They are keeping rates low to one, hope for a soft landing, two to provide some confidence / liquidity to the credit markets, and finally allow banks access to cheap capital.



If banks have to brink SIVs onto their books and if their muni bond holdings have their monoline insurance downgraded they are going to have to keep more in reserve to protect against insolvency if all goes bad. Ontop of that if they start devaluing, or renegotiating, the principal on the CDO, RMBS, and ABS then they will automatically have to mark to market their true value....which they have been reluctant to do so far....why every other report shows that they keep writing off BILLIONS of dollars.
 
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