Many times NOTES FROM UNDERGROUND warned that Chancellor Merkel had made a grave error by failing to push for Axel Weber to assume the Presidency of the ECB after Jean-Claude Trichet. I argued that the German populace would be a more willing participant in an enhanced bailout facility if a strong anti-inflationist from Germany was at the helm of the mechanism of financial bailouts for the PIIGS. It seemed that President Sarkozy had “bested” Merkel and the German Chancellor was forced to abandon Weber and agree to a compromise, ECB President Mario Draghi. Friday’s announcement by Juergen Stark that he was resigning his position on the ECB Executive Board and Governing Council gave the markets a scare and led to a large selloff in the EURO and global equity markets.
Posts Tagged ‘GSEs’
Notes From Underground: A STARK Reminder of Merkel’s bad decision
September 11, 2011Notes From Underground: I will “Badger” Andy Stern on the issue of Undefunded pensions
February 18, 2011No real surprises on the data releases yesterday. The U.S. inflation numbers were much as expected but all the DEBT futures markets rallied as it seems the shorts in the markets are nervous about new uncertainties in the Middle East. One would think that the equities would have been sold and the DOLLAR bought for safe-haven purposes, but this was not to be the case. The DOLLAR safe-haven status is breaking down on a correlative basis, throwing all the “talking heads” into a confused state. As I continually warn the readers of NOTES, markets are dynamic in data usage and always in flux and for those who stay static in thought, I merely offer a shoulder on which to cry. What is bothering the markets?
Notes From Underground: Bill Gross calls for “full nationalization”of the mortgage finance system
August 17, 2010The housing confab was the big story Tuesday as the Obama administration was trying to figure out how to put the biggest slush fund to work. Last Christmas Eve, the U.S.Treasury–under the spell of eggnog and mistletoe–nationalized Fannie Mae and Freddie Mac by removing the caps on the losses that the two GSEs would be allowed to absorb.We don’t know where “PIMCO’s” Bill Gross was but we had assumed that the removal of loss caps was nationaliztion by stealth. Now as the largest holders of MBSs next to the FED, he is openly calling for outight government control of the mortgage market because Gross doesn’t believe there is room for the private sector. Yes, he is correct if the mortgage market reverts to NINJA loans and other zero-down types of nonsense. However, if the originate-to-distribute model were to be restructured so that only deserving loans were made, private lenders would be lining up to get into that business. We caution our readers to understand that today’s conference on GSEs was meant to give some type of cover to an already conceived plan of how Fannie and Freddie can absorb more losses and for the Obama team to gain some political advantage.