"To say this portfolio is a pile of junk is being unkind to junk"
Chuck Butler of EverBank who writes the Daily Pfennig is back and had this to say last Friday the 2nd:
"There's a good story in the Wall Street Journal this morning that talks about what I've been telling you for a few months now... That the Fed's program of buying troubled mortgage backed securities is over now, as it came to an end on March 31st... Now... The Fed knows what it's like to be a bank that owned these stinkin' bonds! Here's a snippet of the report...
"The Federal Reserve Bank of New York doesn't have to look far to understand the woes of banks and investors that hold loans and securities underpinned by real estate.
It can look at its own books.
A review of the portfolios the regional Fed bank assumed as part of two financial bailouts in 2008 shows a complex hodgepodge of souring commercial-property loans, securities backed by U.S. subprime loans, credit insurance written on troubled bond and mortgage insurers and loans tied to struggling hotels in Georgia and California.
The takeover of the Bear assets effectively leaves the New York Fed as holder of credit-default swaps on bonds issued by the states of Nevada, California, and Florida.
To say this portfolio is a pile of junk is being unkind to junk," David Zervos, Jefferies & Co. global fixed-income strategist, wrote in a note Thursday."
Wow. Now I know why so many analysts are discussing how to “short” the bond market (to bet against it). What is one of the best ways to short the bond market? Buy gold, my friend. Gold coin dealers are your ally in a washout of the biggest market in the world – bonds. Chuck Butler has it right with this assessment. Gold coins as investment right now makes sense.