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Risky Mortgage Bonds Are Back and Delinquencies Are Piling Up

bloomberg.com

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

#71

Post by skybrian »

CyanLite2 wrote: post #65
skybrian wrote: post #16

Earlier quoted context omitted.

Is there a reason why Japan shouldn't monetize the debt? The usual explanation is that it would cause inflation, but I'm not sure how that works for government debt that trades near 0% anyway. It's a tradeable store of value that you can trade 1:1 for money, so might as well be money?

Japan however is shrinking in population and missed the whole baby boomer generation for obvious reasons. Without the population growth, they can't grow their GDP to get their debt levels in a reasonable range.

But, hypothetically, if they monetized the debt, it wouldn't be debt anymore?

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

#72

Post by aazaa »

> The strength of the housing market has helped support the bonds for now. Home-price appreciation has slowed over the past year, but the average U.S. house value still rose more than 2% in August from a year earlier, according to S&P CoreLogic Case-Shiller data....

It's odd when articles like this don't specify whether the increase they're reporting was inflation-adjusted or not. It makes a big difference. If not inflation adjusted, then 2% represents almost no increase given the trailing 12 month CPI change of about 1.7%.

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

#73

Post by mc32 »

awinder wrote: post #58
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…

1. Yeah plenty of non-Americans think this too, _maybe_ if you said “westerners” it’d be defensible, but it’d still be wrong. 2. The nba & activision are selling goods to China, or maybe they put a little money into real assets to reach that audience. They’re not investing in Chinese financial instruments which is what the entire thread is about

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

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

#74

Post by api »

notyourday wrote: post #57
api wrote: post #39

I'm a founder and have been getting spammed hard-core lately for small business loans. There are many companies offering 5-6 digit business loans and revolving lines of credit to basically anyone who can fog glass, and there are salespeople and spammers pushing them. I'd say I average 2-3 e-mails or cold calls per day. Feels like they're trying to stuff loans down my throat. I've spoken to other founders and small bu…

Arent these loans based on receivables factoring?

Sure, just like mortgage loans are based on things like credit score and income. I just don't see any sign they're checking much. Reminds me of mortgages in 2003-2007.

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

#75

Post by anonuser123456 »

skybrian wrote: post #71
CyanLite2 wrote: post #65

Earlier quoted context omitted.

Japan however is shrinking in population and missed the whole baby boomer generation for obvious reasons. Without the population growth, they can't grow their GDP to get their debt levels in a reasonable range.

But, hypothetically, if they monetized the debt, it wouldn't be debt anymore?

I believe Japan owns most of it's debt, so it cant monitize it for political reasons.

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

#76

Post by refurb »

Vysero wrote: post #69
maximente wrote: post #30

Earlier quoted context omitted.

since jan 2 2019 S&P 500 is up from 2510 => 3074 so if you read a doom porn article and liquidated on 12/30 you missed out on insane growth spurt this is no different. you have to factor in potential lost growth when you go risk averse mode; it's against our loss aversion bias but has to be done when thinking long term.

I think the general trend has been an increasingly healthy stock market since around 09 correct? That was 10 years ago, how much longer can this balloon rise? Currently I am about 70/30 stocks/bonds perhaps I should just stay put considering I really don't know.

Timing is the market is a luck play. You might be right and avoid a loss or you might be wrong and miss out on big returns.

Easier to stay invested. That way you’re fully in whenever the bottom comes.

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

#77

Post by nostrademons »

skybrian wrote: post #34
H8crilA wrote: post #17

Earlier quoted context omitted.

Bernanke was pitching them this idea. He suggested the Japanses government issues zero-coupon perpetual bonds and the BoJ buys them. Ha, ha, "bonds". As crazy as this sounds I think it makes sense - just admit honestly that the situation is fucked up, monetize, generate stagflation and eventual normalization.

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 growth will find things that they want to spend money on, creating new jobs for the previously unemployed. What if this doesn't happen? What if instead of using money as a means to an end, people use it as the end itself, effectively treating it as a scorecard to be maximized without spending it? And what if on the other end, instead of people finding new ways to obtain money, they opt out of the economy instead, creating alternate games (literally - video games are apparently the main extra-economic outlet) to play. With basic survival needs taken care of by parents, there's no forcing function that makes them participate in the economy. You'd get a reality that looks fairly similar to our actual reality, in Japan and increasingly in other developed areas of the globe.

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

#78

Post by YourMatt »

xwdv wrote: post #35
Vysero wrote: post #26

Earlier quoted context omitted.

I have only been investing for 2 years I am currently 32. So I think most investors wouldn't mind me keeping my stocks but I saw my mother and father loose hundreds of thousands of dollars back in 09 and I am not about to bite that bullet.

Take advice from someone who has been investing for the past 10 years and has made ridiculous money while these perma-bears are still poor. You can’t time the market. Keep buying stocks like they will continue to go up, at the end of the day, if the market crashes and values tank, it’s no big deal. Keep holding your stocks, they will recover, in fact buy while everything is super cheap. If you would have bought back…

It seems like this time around, everyone's on edge about a coming crash, and they've already cashed out a good amount, with intent to buy back in when everything's on sale. Wouldn't this have the effect of turning a would-be crash into a minor correction, because there'll be so many people ready to buy?

I'm one of these people that's sitting on more cash than stocks at this point, by about 4x, but I'm starting to question this choice.

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

#79

Post by smabie »

richardknop wrote: post #33
whiskyant wrote: post #28

Earlier quoted context omitted.

Gold/Silver also tanked with the 2008 recession though.

My bet is on 10k gold after next recession. I guess I’m a gold bug. But it’s still only 10% of my portfolio so I’m well diversified imho

The problem is that gold is not a hedge against market risk, it’s simply (mostly) uncorrelated to equities. If you’re specifically trying to mitigate the possibility of a large market downturn, gold isn’t necessarily going to help you at all. Instead you should look into assets that have a negative correlation with equities. Bonds are a good choice but are more strongly correlated than they once were with the market. Or you could go witb some sort of portfolio insurance: VIX futures, index puts, or whatever. I personally wouldn’t recommend them though because they are almost always a rip-off (more natural buyers than sellers).

On the otherhand, if all you’re looking to do is lower your volatility, gold isn’t a bad choice. Whenever you diversify into different investments you alwaya reduce volatility as long as the correlation is less than one. Though if that is your goal, maybe consider investing in many different metals, as well as crypto.

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

#80

Post by dragonwriter »

skybrian wrote: post #16
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…

Is there a reason why Japan shouldn't monetize the debt? The usual explanation is that it would cause inflation, but I'm not sure how that works for government debt that trades near 0% anyway. It's a tradeable store of value that you can trade 1:1 for money, so might as well be money?

Monetizing debt makes both your currency and your government untrusted.
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