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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

#91

Post by jstewartmobile »

s3r3nity wrote: post #89
jstewartmobile wrote: post #55

Earlier quoted context omitted.

I'd put my bets on student loan debt. The push for forgiveness is so strong, there must be some other force at play--something more than just pandering to millenials.

Looking at the data, the best estimates peg student loans to be consolidated to ~10-12% of the US 18+ population. Not saying it _isn't_ part of the story, but I don't think it's as big of a factor as folks might initially (or anecdotally) believe.

that's also what they said about residential mortgage debt in 2007. never underestimate the bankers' ability to use one large batch of shitty loans to back an even bigger batch of them.

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

#92

Post by landryraccoon »

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

If China has enough real money to bend the NBA and Activision doesn’t that imply that the bookkeeping isn’t fake - CN’s success is real, not imagined?

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

#93

Post by [deleted] »

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.

[deleted]

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

#94

Post by richardknop »

DuskStar wrote: post #87
richardknop wrote: post #40

Earlier quoted context omitted.

It’s a very risky bet for sure. But there is a very small possibility central banks will go back to gold standard to instil confidence during a Great Recession when markets fall by 50+% in a very short time.

Personally, I'd take central banks heading back to the gold standard as a massive signal that things were about to get worse, not better. It'd be like having your oncologist suggest enrollment in a phase-one study - they aren't doing that because the outlook of a patient in a phase-one study is good , but because the alternative is worse , and now they're reduced to trying for a hail mary.

Gold is able to support entire global GDP and also growth. It all depends on the price. With current gold price a return to gold standard would be a disaster and would bring on the greatest recession of our lifetimes.

But at about 10k price gold standard starts to make sense. The idea is that during the next big crises central banks will have no tools to use (we are close to 0 in the US and in negative rates across the world) to support a recovery so a radical move will be needed to bring back confidence in the financial system.

A return to gold standard at a much higher gold price (calculated based on the world GDP and GDP growth) would be a very drastic move central banks could go for if situation got very dire but it might be the only choice they will have since we haven't really normalised the financial system after the 2008 crises and during the next crises we will be at 0 interest rates.

And if there is a choice between 556 nato rounds and going back to gold standard and returning back to some sort of stability for the world economy, gold would be much preferred to the anarchy and shots being fired.

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

#95

Post by mc32 »

landryraccoon wrote: post #92
awinder wrote: post #58

Earlier quoted context omitted.

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

If China has enough real money to bend the NBA and Activision doesn’t that imply that the bookkeeping isn’t fake - CN’s success is real, not imagined?

No, it’s like a car dealership not extending credit to someone with bad credit but who will gladly take a bank check.

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

#96

Post by skybrian »

dragonwriter wrote: post #82
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.

> I would like to understand when the inflation happens and where it comes from. More money chasing fewer goods, sure It comes from weakening the perceived future security of the currency, which reduces demand for it; once you monetize fiscal needs, your currency is perceived as one more at risk of being devalued to monetize fiscal needs, which itself devalues it.

So it's all about perception? The Bank of Japan has been trying to credibly promise 2% inflation for a while and failing [1]. Maybe if they monetized some of the debt, people would take them seriously?

[1] https://www.japantimes.co.jp/news/2019/08/23/business/econom...

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

#98

Post by H8crilA »

blakes wrote: post #50
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…

Same experience here. Constant small business loan offers. Not as many as you, mostly we get mail offers. At least 1-2/week.

Many people are warning about the growth in corporate credit, even Jerome Powell admits that it's not rosy there. Fully 45% of BBB rated bonds (lowest and largest in investment grade spectrum) should be junk rated today if judged by leverage ratios alone:

Morgan Stanley, The Nature of the BBBeast https://www.sec.gov/spotlight/fixed-income-advisory-committe...

And then you have non-systemic but ridiculous things like Brex which issues credit on revenue data alone. Revenue is meaningless, Moviepass had great revenue. And those robocalls you're mentioning. Try a Google search on "revenue based credit" on a mobile phone from the US and read what are the ads saying ...

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

#99

Post by to11mtm »

jstewartmobile wrote: post #55
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…

I'd put my bets on student loan debt. The push for forgiveness is so strong, there must be some other force at play--something more than just pandering to millenials.

It's more than just pandering to millenials. This is also about pandering to Academia.

Depending on how the student loan bubble bursts, it could wind up with a number of institutions being forced to shut their doors, or make large cuts to staff/programs/etc.

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

#100

Post by jstewartmobile »

to11mtm wrote: post #99
jstewartmobile wrote: post #55

Earlier quoted context omitted.

I'd put my bets on student loan debt. The push for forgiveness is so strong, there must be some other force at play--something more than just pandering to millenials.

It's more than just pandering to millenials. This is also about pandering to Academia. Depending on how the student loan bubble bursts, it could wind up with a number of institutions being forced to shut their doors, or make large cuts to staff/programs/etc.

Definitely a factor. Not just a coincidence that Warren was a professor, Sanders' wife was a college administrator, Buttigieg's dad is a professor...
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