{"id":4648,"date":"2008-09-24T19:19:12","date_gmt":"2008-09-25T02:19:12","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=4648"},"modified":"2008-09-24T19:19:12","modified_gmt":"2008-09-25T02:19:12","slug":"you-know-i-was-wondering","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4648\/you-know-i-was-wondering\/","title":{"rendered":"You know, I was wondering…."},"content":{"rendered":"
\n

All of the talking heads and all of the politicians keep talking about how we aren\u2019t just giving $700 Billion to Wall Street, we\u2019re investing in mortgage backed securities that we\u2019ll eventually be able to resell and earn a good portion of that $700 Billion back, heck we might even make a profit on it.<\/p>\n

Let me lay out a couple of things that I know:<\/p>\n

    \n
  1. Chairman Bernanke said that the $700 Billion number was determined in that they feel they need to buy 5% of the mortgages that are \u201cout there.\u201d<\/li>\n
  2. They are going to buy the mortgages that no one is able to sell today because the price that they would have to sell them at would require that the seller immediately goes into bankruptcy.<\/li>\n
  3. At this point (9:45 PM EST on Thursday), it appears that there is a very good chance that the amount that the Treasury will be paying for these assets is above \u201cwhat they are worth.\u201d\u00a0 (It\u2019s hard to know what they are really worth, but it sounds like the price the government will pay is way more than what they could get on the market right now).<\/li>\n<\/ol>\n

    Now let me attempt to make a conclusion from this:<\/p>\n

      \n
    1. The Treasury is going to buy 5% of the mortgage market and I think that it\u2019s a safe assumption they aren\u2019t going to get the highest quality portion of the market.<\/li>\n
    2. According to the Federal Reserve\u2019s own report<\/a>, (just taking that snapshot in time) delinquency ratios for residential mortgages at commercial banks were running approximately 4.2%.<\/li>\n
    3. That means that there is a very good chance that the portion of the mortgage backed securities market that the Treasury is going to buy is the \u201cgarbage\u201d that\u2019s currently part of the delinquency ratios.<\/li>\n
    4. So, if the 4.2% delinquent portion becomes 84% of the the pipeline that the Treasury buys and 80% of that portion becomes essentially worthless, that means that we\u2019d, as tax payers, take on approximately $470,400,000,000 in additional debt that won\u2019t be \u201cpaid off\u201d any time soon by the sale of assets.<\/li>\n<\/ol>\n

      I\u2019d love it if I was missing something here, but I have a feeling that Read more<\/a><\/div>\n","protected":false},"excerpt":{"rendered":"

      All of the talking heads and all of the politicians keep talking about how we aren\u2019t just giving $700 Billion to Wall Street, we\u2019re investing in mortgage backed securities that we\u2019ll eventually be able to resell and earn a good portion of that $700 Billion back, heck we might even make a profit on it. […]<\/p>\n","protected":false},"author":44,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[29,26],"tags":[],"class_list":{"0":"post-4648","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-group-therapy","7":"category-lending","9":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":3335,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/3335\/an-introduction-from-the-banking-pup\/","url_meta":{"origin":4648,"position":0},"title":"An introduction from the banking “Pup”","author":"Tom Vanderwell","date":"July 9, 2008","format":false,"excerpt":"Hi, First I want to thank all of you for making me feel so welcomed as one of the newest members of the Bloodhounds.\u00a0\u00a0 I've felt very welcomed and I appreciate that.\u00a0\u00a0 I've also learned a lot. As Greg said when we kicked off Project Bloodhound, he'd let all of\u2026","rel":"","context":"In "Disintermediation"","block_context":{"text":"Disintermediation","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/disintermediation\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":5244,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/5244\/arthur-laffer-the-age-of-prosperity-is-over\/","url_meta":{"origin":4648,"position":1},"title":"Arthur Laffer: “The Age of Prosperity Is Over”","author":"Greg Swann","date":"October 27, 2008","format":false,"excerpt":"The author of the Laffer Curve in the Wall Street Journal:When markets are free, asset values are supposed to go up and down, and competition opens up opportunities for profits and losses. Profits and stock appreciation are not rights, but rewards for insight mixed with a willingness to take risk.\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":4692,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4692\/promoting-affordable-housing\/","url_meta":{"origin":4648,"position":2},"title":"Promoting Affordable Housing","author":"Brian Brady","date":"September 27, 2008","format":false,"excerpt":"I didn't believe it when I read it; the bailout bill is \"earmarked\" and ACORN is one of the beneficiaries of the largesse. \u00a0 ACORN may control up to 20% of the $700 billion proffered by the Bush\/Obama Bailout Plan. ACORN?\u00a0 Are you kidding me?\u00a0 THIS is what ACORN really\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":4578,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/4578\/the-vanderwell-proposal-project-rebuild-banking\/","url_meta":{"origin":4648,"position":3},"title":"The Vanderwell Proposal – “Project Rebuild Banking”","author":"Tom Vanderwell","date":"September 22, 2008","format":false,"excerpt":"Since Secretary Paulson put his proposal in three pages, I'm going to lay out my proposal in less space than that.\u00a0\u00a0 Here goes: Point #1 - The Treasury is hereby authorized to spend up to $700 Billion to stabilize the banking and financial services sector in such manner as it\u2026","rel":"","context":"In "General"","block_context":{"text":"General","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/general\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":7404,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/7404\/why-fha-loans-wont-be-getting-cheaper-or-easier\/","url_meta":{"origin":4648,"position":4},"title":"Why FHA Loans won’t be getting cheaper or easier…..","author":"Tom Vanderwell","date":"March 9, 2009","format":false,"excerpt":"When the subprime market imploded and people starting rushing to FHA, the \"chant\" was that FHA is the new \"subprime.\"\u00a0\u00a0 FHA originations skyrocketed and anyone who didn't have a 700 credit score and a downpayment of 5 to 10% was quickly led into FHA.\u00a0\u00a0 I remember reading statistics of different\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":5071,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/5071\/mortgage-market-week-in-review-12\/","url_meta":{"origin":4648,"position":5},"title":"Mortgage Market Week in Review","author":"Tom Vanderwell","date":"October 17, 2008","format":false,"excerpt":"Well, here we are and it\u2019s time for another Mortgage Market Week in Review.\u00a0\u00a0 This week, we\u2019re going to talk about consumer spending, consumer confidence, the new normal, where\u2019s the bottom?\u00a0and why interest rates have had a 1 percent up and half percent down swing since last week Wednesday. Consumer\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/4648","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/44"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=4648"}],"version-history":[{"count":2,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/4648\/revisions"}],"predecessor-version":[{"id":4650,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/4648\/revisions\/4650"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=4648"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=4648"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=4648"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}