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Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

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Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#111

Post by sp332 »

djrogers wrote: post #13

FTA: "There are more than $27 billion of outstanding bonds backed by non-qualified mortgages now, a small fraction of the approximately $10 trillion mortgage-bond market. In 2007, there were around $1.8 trillion of bonds backed by loans to non-prime borrowers." I'm gonna need to see a lot more than a tiny fraction of investors / loan makers dealing with non-QM bonds before I'd say that 2007-era silliness has come bac…

The crisis was caused by lying about the kind of risk hidden in collateralized bundles of debt. That doesn't seem to be an issue this time. It's just about the inherent dangers of lots of people moving in to homes they can't afford to pay for.

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#112

Post by H8crilA »

AWildC182 wrote: post #3
H8crilA wrote: post #2

Mortgage debt will probably not be a problem in this cycle. People have this bias to remember most recent event, but it's rarely the same thing twice in a row: https://imgur.com/a/0dT7iHK Corporate debt may be: https://imgur.com/a/b54hMSg And frankly with the amount of outstanding US govt debt and underfunded pension & healthcare liabilities the USD may either get dethroned and devalued or sent into the negative inte…

There definitely seems to be motive and opportunity on the housing side though right? Student debt among other things is high and not many 25-35yo people are buying houses but there's a lot of cash chasing returns. These mortgage backed securities are always seen as a reliable way to make a buck but nobody is questioning the market because "It'll never happen the same way twice".

I meant it's probably not going to be the same "core reason".

When shit hits the fan probably all delinquencies and spreads will go up, including mortgage.

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#114

Post by aSplash0fDerp »

Chasing yields in the age of efficiency is going to lead to another global hangover that defies common finacial wisdom, guaranteed.

Business models that exploit consumers seem to be some of the only plays with any movement or staying power during the current innovation wave, but prosperity fueled by debt can only go so far.

We'll see how the "decade of sustainability" (2020-2030) pans out, but if greed turns to desperation, its definitely going to get messier/wreckless/more complicated.

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#116

Post by awinder »

landryraccoon wrote: post #103
mc32 wrote: post #73

Earlier quoted context omitted.

Exactly, now if they were paying the nba etc with 30 year Chinese non transferable bonds the parent would have a case.

Why would investors not want to invest in a country that flush with liquid cash? I don't see how this is an argument that investors wouldn't see China as desirable.

Because Chinas current market system is just about a decade old.

https://en.m.wikipedia.org/wiki/Chinese_accounting_standards

By all means, investors want to put money into China. It’s the amount of money you want to put into an immature market that is the question. And that’s not a dig and it’s not jingoistic, it’s just a fact, when you run a large market for over a century you kinda build solid foundations that can’t just be replicated on the spot. China’s market developing is a great thing but it’s just too young to seriously think it’s ready to be a reserve currency today.

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#117

Post by aidenn0 »

simonebrunozzi wrote: post #105
H8crilA wrote: post #2

Mortgage debt will probably not be a problem in this cycle. People have this bias to remember most recent event, but it's rarely the same thing twice in a row: https://imgur.com/a/0dT7iHK Corporate debt may be: https://imgur.com/a/b54hMSg And frankly with the amount of outstanding US govt debt and underfunded pension & healthcare liabilities the USD may either get dethroned and devalued or sent into the negative inte…

> at 2% rates 100% of their tax take will go towards paying the interest on their 250% national debt. I'm not sure I agree with your math. Care to elaborate a bit further?

I know nothing about japan so I worked the numbers

1. Japan's debt is 250% GDP (from GP)

2. At 2% interest rates, 100% of the tax haul will go towards servicing debt (from GP)

3. 2.5*0.02 = 0.05; Japans tax take is 5% of GDP?

#3 seems off by a factor of 6. So No clue what GP was suggesting.

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#118

Post by connectsnk »

nostrademons wrote: post #77
skybrian wrote: post #34

Earlier quoted context omitted.

It seems like I'm missing something basic. I would like to understand when the inflation happens and where it comes from. More money chasing fewer goods, sure, but if we already have too much of a money-equivalent, why aren't bondholders chasing goods with it already? And, clearly there isn't any inflation. It seems like demand should have increased when the government sold the bonds and spent the money.

You and everybody else. Japan's current situation seems to stump most economic models. I wonder if there's something about culture and having basic survival needs met. Most economic models assume effectively unlimited long-term demand: as productivity grows and people in existing sectors are thrown out of work, they will find new things to do, and the people who have reaped the financial rewards of productivity growt…

>What if instead of using money as a means to an end, people use it as the end itself

This line got me thinking about so many things from my own life. You opened my eyes to another view point I had missed for the past 10 years. I am truly thankful to you for posting this comment.

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#119

Post by chepaslaaa »

ISL wrote: post #43
landryraccoon wrote: post #38

Earlier quoted context omitted.

> CN bookkeeping’s suspect... IMO Americans are biased to overweight this. It doesn't matter as long as China can keep up appearances better than other countries for long enough. Investors will happily invest in a bubble believing that they are smart enough to get out before everyone else if things go south. Bad bookkeeping doesn't keep the NBA and Activision from kowtowing to China, I don't see why it would keep peo…

One of the many Buffett-isms is to only make investments where, if the market were to close for five years, you'd sleep well. It is that premise that shapes my investing theses relating to China.

If investors were all as wise as Buffet time arbitrage wouldn't be a thing.

Re: Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

#120

Post by ta0xdeadbeef »

H8crilA wrote: post #2

Mortgage debt will probably not be a problem in this cycle. People have this bias to remember most recent event, but it's rarely the same thing twice in a row: https://imgur.com/a/0dT7iHK Corporate debt may be: https://imgur.com/a/b54hMSg And frankly with the amount of outstanding US govt debt and underfunded pension & healthcare liabilities the USD may either get dethroned and devalued or sent into the negative inte…

Consumer debt (auto loans/credit cards) spooks me more than corporate debt, since that's the tentpole that's kept up spending with stagnant wages. Auto loans are especially sketchy, it's way too easy to buy a car you can't afford.
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