http://market-ticker.denninger.net/archives/1577-Bubbles-The-Fed-And-Bankrupt-GSEs.html
And while Barney laughs and makes jokes Main Street dies a slow painful death from the incompetence of fools.
From The Wall Street Examiner comes this:
Another anomaly of note is the fact that 10 year Fannie paper is now yielding less than 10 year Treasuries. This is another sign of mass psychosis. Unfortunately, the source of the infection has been Bernanke’s insane policy of piling up risky MBS paper on the Fed’s balance sheet. Wave after weekly wave of Fed buying has created one of the most ridiculous market distortions in history. Unfortunately, the problem it was designed to solve, the housing market collapse, isn’t responding.
This is more than ridiculous. It is in fact outrageous.
The GSEs are in fact bankrupt. This is why they were taken into "conservatorship" and have required roughly $100 billion in direct taxpayer subsidy to remain "breathing", much like a brain-stem-only human requires thousands of dollars a day in direct input in the form of a ventilator and mechanical feeding (not to mention diaper changes and similar) to remain "alive."
This distortion allegedly is supposed to "help" the housing market.
It has done no such thing.
It has led Barney Frank to pronounce that intentionally making bad loans is a "policy", and the market laughs, knowing that The Fed is directly monetizing the very same debt - after saying it wouldn't
