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quote:

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Originally posted by rance56
NO,

mortgage backed securities are a pool or mortgages, but it does not mean they are sub prime or toxic, they could be made up of perfectly fine mortgages or govt back pools

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quote:

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Originally posted by shakethevine
So that explains why they choose QE....to buy perfectly fine mortgages that were hurting the economy....lol

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quote:

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Originally posted by rance56
what are you talking about?

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quote:

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Originally posted by rance56
what are you talking about?

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quote:

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Originally posted by shakethevine
In an early post you stated that the Security Backed Mortgages being bought through QE were not Toxic............Does it make sense to start QE to buy "perfect fine mortgages"?

As far as I know perfectly fine mortgages require no QE to help shore up the economy.

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Last edited by rance56 on 11-27-2013 at 09:28 PM

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Originally posted by Paul Frederick
Rance,

He's trying to say that all mortgage backed securities are backed, exclusively, by toxic mortgages. That way, if the QE is buying MBS's (I don't feel like typing it out, you get it) then it is, in effect, a TARP program and he wins, apparently.

So, I'm not a financial guy like Rance. Heck, I do good to keep my own finances in line, I don't want to deal with someone elses, but I did learn in 11th grade accounting class what a MBS was. In fact, when my wife and I were looking at houses it was explained to us again how a mortgage is used to back securities and how ours would also be used for that purpose. Don't ask me to explain it all to you because I'll be the first to admit I couldn't do it but I'm smart enough to figure out that not all, not even most, MBS's are toxic. If they were, banks would stop using them.

Now, could a MBS be backed, exclusively, by toxic mortgages? Sure, it could. But it would be a pretty darn big 'if' in my opinion. Maybe rance can help us out and tell us about how many mortgages are behind the average MBS and then all of those (or at least a good majority) would have to be toxic for the actual MBS to be toxic as well.

(Full disclosure, this next paragraph is not by a financial guy so it could not be right, but this is my understanding of it. If someone who is a financial professional tells me I'm way off base I'll gladly take it down and apologize.)

The reason the QE bought MBS's was not because they were toxic but because it frees up the cash to be put elsewhere in the economy. Even if the MBS wasn't backed exclusively by toxic mortgages, the institution held money back from the cash flow just in case that MBS did fail. They are, after all, some of the last to get the word that the MBS is full of toxic mortgages. By buying them from the institutions they not only freed up that cash to be spent in other segments but also the cash from the actual sale of the MBS. So, whether a MBS is toxic or not, it still generates cash into the economy.

How's that explanation from a dumb redneck Rance? Hope I got half-way correct!

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Last edited by rance56 on 11-27-2013 at 09:30 PM

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quote:

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Originally posted by rance56
Paul, I would say you have a perfectly fine working knowledge of it.

is what they cant grasp, and if they cant grasp the concept that mortgage backed securities can be AAA rated of the finest quality then they may never grasp it, but QE has nothing to do with adressing toxic asset issues, its to stimulate the economy by injecting more capital into the sytem so banks have more money to lend and to keep Interest rates low so businees/folks are more apt to borrow and spend just like your last paragrph adresses.

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quote:

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Originally posted by shakethevine
Last question........so no toxic mortgages were bought through QE?

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Sorry I Missed This Discussion!! I've Been Sick And Still Not Feeling Good. I Had To Be Out On Oxygen, Full Time, And Have To Use A Nebulizer Twice A Day. The Group Of Retirees I'm With, We've All Lost Our Insurance Thanks To truly's Hero!! Paul, Did You Wipe One Of My Blogs??? If I Get To Feeling Better, I Might Wade In!!

Last edited by brushrunretiree on 11-27-2013 at 10:12 PM

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oh we gottem on the run now!

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quote:

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Originally posted by rance56
oh we gottem on the run now!

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quote:

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Originally posted by shakethevine
Last question........so no toxic mortgages were bought through QE?

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quote:

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Originally posted by truly
You still sound like Mitt and Karl Rove on election night!
Paul and Rance, I am not sure where you came up with the notion that anyone said that MBS were "EXCLUSIVELY" toxic. MBS securities as you must know are bundled mortgages. During the great crash of 2008 what was realized was that the slicing and dicing and repackaging and reselling of mortgages has made it nearly impossible to separate the good solid mortgages from those that are "toxic". I think what Shake is getting at, and what I know and understand to be true is that if these MBS were not full of toxic paper there would be no need for the fed to be buying them up. They would be good solid investments that any cash flush investor would be happy to own. And we know that the investment community is currently cash flush, they are sitting on record amounts of cash right now, but what they are not doing is buying up these MBS that originated during the Bush years. Cause as much as they will talk up Bush, they WILL NOT PUT THEIR MONEY WHERE THEIR MOUTH IS and buy up those MBS. And this is how QE stimulates the economy, holding steady the value of something that would otherwise crash. Bailing out the wealth class.

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Originally posted by truly
. And this is how QE stimulates the economy, holding steady the value of something that would otherwise crash. Bailing out the wealth class.

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http://abcnews.go.com/blogs/busines...s-fed-doing-it/

The Fed wants to get money moving in the economy, which is stuck in many ways. That’s why it announced what’s being called QE3, or a third round of quantitative easing.

The Fed has been criticized for buying Treasury bonds to finance the U.S. debt. So perhaps to avoid that criticism the Fed is now buying mortgage-backed securities.

http://www.reuters.com/article/2012...E88C1CT20120913

WHAT IS QUANTITATIVE EASING?

A central bank buys large amounts of assets -- in this case, bonds backed by housing mortgages -- in an effort to bring down interest rates and boost the economy. The Federal Reserve has tried quantitative easing twice before, thus earning this round the designation QE3.( I don't see this fits into anything that truly has been telling us)

WHY IS THE FED DOING IT?

By lowering borrowing costs and spurring banks to lend more, the Fed hopes to induce more spending and eventually set the stage for more hiring. This time around, the Fed tied its bond-purchase program explicitly to jobs, saying it will keep buying bonds until it sees a substantial improvement in the labor market.(hmm, don't see anything about toxic asset removal)

WHAT ARE THE RISKS?

Buying bonds expands the Fed's balance sheet. While the central bank says it will be able to shrink its giant balance sheet -- $2.85 trillion before its latest round of buying bonds begins on Friday -- without sparking inflation, it has never done anything like it before. Critics also say bond-buying enables Congress and the president to avoid dealing with looming fiscal problems by giving them a handy buyer for the nation's ever-increasing debt. Politicians in other countries have complained that U.S. quantitative easing cheapens the dollar and hurts their exports, and floods their economies with capital that is hard to absorb. The unprecedented stimulus could also draw accusations that the Fed is overstepping, ultimately threatening the Fed's independence should lawmakers move to curb its powers in response.(wow no mention of the risk of buying toxic assets and them losing great amount of value at tax payers expense-why because they are not buying toxic assets with QE like truly and shake are so misinformed or lieing about to us)

like I said boys, you are in way over your heads. now its just a matter of who is too prideful to admit when they are blatantly, without a shadow of a doubt wrong.

and it leads to the question if they cant admit they are wrong here where its clearly black and white, what other things are they wrong on and continue with a farce of that not being the case?

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quote:

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Originally posted by rance56
its your boy shake the vine that thinks MBSs and toxic assets are one in the same.


SO I ASK YOU AND SHAKE, DO YOU THINK THAT THEY ARE CURRENLTY BUYING TOXIC ASSETS WITH QUANTATIVE EASING?

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quote:

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Originally posted by shakethevine
My answer is no Rance to your question.......but as a finance guy you know that QE1, QE2 and QE3 all have different areas of economic recovery that they focus on, and during QE1 I can guarantee you a mountain of toxic assets were bought up.

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quote:

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Originally posted by rance56
btw, bernake is the fed resrve chairman, his term is for 4 years, big diffeence than the 14 years of the board members

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Originally posted by truly
Ok, first off you probably need to do a little more learning about the Fed:
"Governors are appointed by the President of the United States and confirmed by the Senate for staggered 14-year terms.[32] One term begins every two years, on February 1 of even-numbered years, and members serving a full term cannot be renominated for a second term.[58] "[U]pon the expiration of their terms of office, members of the Board shall continue to serve until their successors are appointed and have qualified." The law provides for the removal of a member of the Board by the President "for cause".[59] The Board is required to make an annual report of operations to the Speaker of the U.S. House of Representatives.
The Chairman and Vice Chairman of the Board of Governors are appointed by the President from among the sitting Governors. They both serve a four-year term and they can be renominated as many times as the President chooses, until their terms on the Board of Governors expire.[60]"

See to be the Chairman of the Board you have to first be on the board. To be on the board you have to be appointed by the President of the U.S. Which if you get appointed then you get a 14 year term. Then once you get on the board you MIGHT become chairman. Which if you do then you get a 4 year term as Fed Reserve Chairman.
Ok. Can you handle that?

Now regarding whether QE is buying toxic assets, it goes without saying that of course they are. Because even in a good economy there will be some portions of any MBS that is toxic. Due to the horrendous economic conditions during the Bush regime there were significantly higher rates of toxic mortgages within any given bundle of mortgages or any MBS. If you can not remember such recent history there are more than enough sources for you to go to.
You earlier called QE "training wheels" for the economy. FIne. You want to call it training wheels, the rest of us call it a bailout. But even if you do not consider QE a bailout to the investors that hold those MBS, it is still a bailout to the U.S. economy. Which you have said in as many words when you refer to it as "training wheels".

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Here is a quote from an article that took about one minute to find:

So what is the real purpose of this exercise? Catherine Austin Fitts recently posted a revealing article on that enigma. She says the true goal of QE Infinity is to unwind the toxic mortgage debacle, in a way that won’t bankrupt pensioners or start another war:

The challenge for Ben Bernanke and the Fed governors since the 2008 bailouts has been how to deal with the backlog of fraud – not just fraudulent mortgages and fraudulent mortgage securities but the derivatives piled on top and the politics of who owns them, such as sovereign nations with nuclear arsenals, and how they feel about taking massive losses on AAA paper purchased in good faith.

On one hand, you could let them all default. The problem is the criminal liabilities would drive the global and national leadership into factionalism that could turn violent, not to mention what such defaults would do to liquidity in the financial system. Then there is the fact that a great deal of the fraudulent paper has been purchased by pension funds. So the mark down would hit the retirement savings of the people who have now also lost their homes or equity in their homes. The politics of this in an election year are terrifying for the Administration to contemplate.

How can the Fed make the investors whole without wreaking havoc on the economy? Using its QE tool, it can quietly buy up toxic mortgage-backed securities (MBS) with money created on a computer screen.
http://www.webofdebt.com/articles/qeinfinity.php
If you want to argue this fact that is known by nearly everyone in the financial sector, take it up with The Financial Times.

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Originally posted by truly
But even if you do not consider QE a bailout to the investors that hold those MBS, it is still a bailout to the U.S. economy. Which you have said in as many words when you refer to it as "training wheels".

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Originally posted by rance56

interms of the BAILOUT OF THE BANKS, which started this conversation, here is an article that gives all the details and no mention of QE

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Originally posted by truly
Here is a quote from an article that took about one minute to find:

So what is the real purpose of this exercise? Catherine Austin Fitts recently posted a revealing article on that enigma. She says the true goal of QE Infinity is to unwind the toxic mortgage debacle, in a way that won’t bankrupt pensioners or start another war:

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Originally posted by truly
actually Rance, bailout of the banks did not start this conversation.

Amongst other things "devaluation of currency" started the conversation. We can agree that printing money to buy up assets, whether toxic or not does devalue currency right?

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Originally posted by truly

currency devalued= you talking about the big bank bailout led by Bush?
.

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