Economics and Investing:

Monday, Mar 11, 2013

John Michael Greer: The Hard Road Ahead. (A piece recommended by Jeremy M. in New Zealand.)

The new Dodd-Frank rules on collateral requirements for derivatives were scheduled begin in January, 2013. This legislation was passed in 2010, in reaction the 2008 Mortgaged Backed Securities (MBS) fiasco that had triggered the global credit market collapse of 2008. Perhaps this in part explains why the U.S. Treasury and the Federal Reserve selected MBSes as their junque de jour for Quantitative Easing Round 3 (QE3) "out of thin air" purchases. MBSes will remain solid as long as Uncle Sugar keeps buying them, month in, and month out. I have some suspicions about the quality of the MBSes that are being bought up. So QE3 is propping up three sectors: the bond market (directly), the stock market (indirectly), and the real estate market (indirectly), and the derivatives casino (directly). How incredibly convenient for the folks on Wall Street. Your (inflated) tax dollars at work: boosting the bottom line at the brokerage houses. OBTW, any bets on the collateral level of the MBS paper that is being bought up? Hmmmmm? The Fed plans to buy up $40 billion worth of MBSes per month, indefinitely. OBTW, the derivatives collateral requirements are briefly explained in a Business Week article: A Shortage of Bonds to Back Derivatives Bets.

Items from The Economatrix:

Average Americans Are Feeling Pain of US Debt

Business Spending Improves as US Profits Grow

January Factory Orders Confirm Manufacturing Slump Continues


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