patrick.net

I insist that the Fed charter includes the guaranteed supply of foie gras and Caspian caviar.

If Fed cuts further now what are they going to do when the shit hits the fan? Negative fed rates?

The Fed's Charter includes protecting the dollar/peso parity.

"basically garbage loans"

Thank you Captain Obvious! Uh, you wouldn't be holding any of those $250 bil. in soon to be worthless paper now would ya'? What was he saying? 3.5% before year's end? Sure. Anything else?

So... what exactly is the thinking here? If we lower rates (cause Lord knows they're nose bleed high) then as FB's get their resets the loan rates available to them will be lower and payment shock and jingle mail will be prevented? Is that where he's going with this?

If that's the case he's way off. BG doesn't understand the sick mind of the FB. The only reason an FB would stay in a house is a) outrageously cheap payments (teaser/min. payments) OR... b) the home is appreciating so quickly they can access the HATM at will.

Anything else is just so much BS in their minds and preferential tax treatment and having a paid off home some day are just arguments they throw out when asked to defend their pillage. FB's don't believe their own BS. They're not that stupid, but they KNOW you are!

@DinOR,

Not to mention bread will be about $100/loaf by year's end if the Fed adopts ZIRP. Hard to make even the neg-am payment on your NINJA when the cost of everything else is skyrocketing much faster than incomes. Zimbabwe here we come!

Re ZIRP: One slight difference between the U.S. and Japan is, Japan was (and still is) a nation of inveterate savers. During their ZIRP period, they technically didn't need to attract huge amounts of foreign capital to support government & domestic consumer spending. Perhaps Bernanke is hoping that the USD will become the world's next "carry trade" currency of choice.

It's pretty darn interesting how quickly Gross has moved from being the darling of the housing/economy bears to their villain. My interpretation is that he's way more exposed to a housing downturn and credit crunch that he thought he would be. He is trying to save his own ass.