Quote:
Originally Posted by Rickm505
Almost a good post sailaway.....
Email me your address and I'll send ya a new calculator for your birthday. What does 6% of all real estate transactions add up to? How many trillions? Now multiply that times a number between 30 and 50. This is the leverage the investment houses use when they borrowed against the MBS's. Your number should be between $500 and $775 Trillion.
Now if you want those to default, you better buy a generator, a gun and a couple of thousand rounds of ammo.
Do you really think Bernacke has a choice?
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Off by a factor of a bit, the below is a bit old (2004 data) says the ENTIRE market, not just the 6% defaulting is oh, 1000 times smaller than the 775 TRILLION you quote:
The MBS market:
The high liquidity of most mortgage-backed securities means that any investor wishing to take a position need not deal with the difficulties of theoretical pricing described above; the price of any bond is essentially quoted at fair value, with a very narrow bid/offer spread.
Reasons (other than speculation) for entering the market include the desire to hedge against a drop in prepayment rates. (This is a critical business risk for any company specializing in refinancing.)
Total market value of all outstanding MBS at the beginning of 2004 was reported to the National Secondary Market Conference ([1]) at over USD 2.75 trillion. This is much larger than the market value of outstanding asset-backed securities The MBS market overtook the market for US Treasury notes and bonds in 2000.
According to Thomson Financial League Tables, US issuance was:
· 2004: USD 729 billion (1,121 issues)
· 2003: USD 904 billion (1,203 issues)
· 2002: USD 767 billion (980 issues)
· 2001: USD 586 billion (837 issues)
Mortgage Backed Securities – Definition and Other Information
I'll go with these numbers vs pie in the sky estimates. Still bad, but not expecting sky chunks to behead me.