First some definitions to get you on the page:
Here's the thing. If the RMBS market is the strongest it has ever been, why in the world does the RBA need to buy self-securitised mortgages from the banks? Can't banks just sell all their mortgage risk onto SPVs and through to institutional investors? Apparently not, and why? Because investors don't want to buy impaired, unrateable mortgages, they only want the good stuff.
So what happens to the "bad" mortgages if the banks can't repackage and sell them? They silently accrue on the banks balance sheet raising their weighted risk profile, impacting their reserve ratios and increasing their capital requirements. So, if they keep accruing they would ultimately reduce the banks lending ability, reducing the availability of credit and bring the whole housing Ponzi crashing down.
So what do they do? Change the rules, of course. They allow banks to "self-securitise" their unrateable and otherwise unsaleable mortgages and offload them to the RBA, which is set to establish a $300B, new, so called Committed Liquidity Facility in 2015 to "insure" this toxic RMBS paper that the banks need to offload.
So, here are a few questions:
1) Where does the $300B come from if not printed out of thin air?;
2) What happens to the losses associated with the already $200B of self-securitised RMBS packages ALREADY with the RBA? and
3) Just where did that $8.5B of Smokin' Joe Hockium go, if not to make good the losses already realised on the $200B worth of toxic RMBS at the RBA?
Some context:
I could be wrong, but I think this housing Ponzi has come to consume the entire economy as there is no alternative to Real Estate for conservative investors seeking yield and the government, RBA and Banks are all colluding together to ensure it doesn't crash in a heap.
In short, I reckon the RBA, as the RMBS buyer of last resort, is / will be monetising the sub-prime mortgage losses of the banks to ensure they can keep writing mortgages.
By the way, I did some analysis of the meaning of that $200B of toxic RMBS sitting at the RBA:
Does that mean that 4.21% of Australians are currently living in a house financed by the RBA?
Is that the new role of the central bank under the Libs? To support unsustainable house prices by financing and insuring the toxic mortgages of the banks so the banks can keep lending with impunity ... by monetising those toxic mortgages?
Here's the thing. If the RMBS market is the strongest it has ever been, why in the world does the RBA need to buy self-securitised mortgages from the banks? Can't banks just sell all their mortgage risk onto SPVs and through to institutional investors? Apparently not, and why? Because investors don't want to buy impaired, unrateable mortgages, they only want the good stuff.
So what happens to the "bad" mortgages if the banks can't repackage and sell them? They silently accrue on the banks balance sheet raising their weighted risk profile, impacting their reserve ratios and increasing their capital requirements. So, if they keep accruing they would ultimately reduce the banks lending ability, reducing the availability of credit and bring the whole housing Ponzi crashing down.
So what do they do? Change the rules, of course. They allow banks to "self-securitise" their unrateable and otherwise unsaleable mortgages and offload them to the RBA, which is set to establish a $300B, new, so called Committed Liquidity Facility in 2015 to "insure" this toxic RMBS paper that the banks need to offload.
So, here are a few questions:
1) Where does the $300B come from if not printed out of thin air?;
2) What happens to the losses associated with the already $200B of self-securitised RMBS packages ALREADY with the RBA? and
3) Just where did that $8.5B of Smokin' Joe Hockium go, if not to make good the losses already realised on the $200B worth of toxic RMBS at the RBA?
Some context:
I could be wrong, but I think this housing Ponzi has come to consume the entire economy as there is no alternative to Real Estate for conservative investors seeking yield and the government, RBA and Banks are all colluding together to ensure it doesn't crash in a heap.
In short, I reckon the RBA, as the RMBS buyer of last resort, is / will be monetising the sub-prime mortgage losses of the banks to ensure they can keep writing mortgages.
By the way, I did some analysis of the meaning of that $200B of toxic RMBS sitting at the RBA:
Does that mean that 4.21% of Australians are currently living in a house financed by the RBA?
Is that the new role of the central bank under the Libs? To support unsustainable house prices by financing and insuring the toxic mortgages of the banks so the banks can keep lending with impunity ... by monetising those toxic mortgages?
