The Christmas Song from Marty on Vimeo.
MBS- FNMA 4.5 price: 101-18
10-yr Treasury Yield: 3.50%
What Has Financial Innovation Ever Done for You?
This is a great article by Huffington Post contributor Eric Schurenberg (CBS MoneyWatch Editor in Chief) with this quote from Paul Volcker:
I hear about these wonderful innovations in the financial markets and they sure as hell need a lot of innovation. I can tell you of two – Credit Default Swaps and CDOs – which took us right to the brink of disaster: were they wonderful innovations that we want to create more of?
…. I wish that somebody would give me some shred of neutral evidence about the relationship between financial innovation recently and the growth of the economy, just one shred of information.
A few years ago I happened to be at a conference of business people, not financial people, and I was making a presentation. The conference was being addressed by a very vigorous young investment banker from London who was explaining to all these older executives how their companies would be dust if they did not realize the joys of financial innovation and financial engineering, and that they had better get with it.
I was listening to this and I found myself sitting next to one of the inventors of financial engineering who I did not know, but I knew who he was and that he had won a Nobel Prize, and I nudged him and asked what all the financial engineering does for the economy and what it does for productivity. Much to my surprise he leaned over and whispered in my ear that it does nothing. I asked him what it did do and he said that it moves around the rents in the financial system and besides that it was a lot of intellectual fun.
The most important financial innovation that I have seen in the past 20 years is the automatic teller machine… How many other innovations can you tell me of that have been as important to the individual?
Week 3, December 2009
I grew up in a family that celebrates Christmas. I was quite unusually blessed with a family that always wants Christmas Day to be bountiful with gifts, for the kids especially. My grandparents in particular were quite sincere about the importance of having many wrapped presents under the tree, and without question for me and my cousins arriving at Christmas morning was always a magnificent time. I still recall the year we got snowed-in at Lake Tahoe when I was around 8 or 9 years old as my favorite Christmas as a child. So, it’s without question that I am one who has a deeply rooted affection for Christmas, some of which I hope has been demonstrated by the videos I chose of Christmas lights over the last week or so in the Momentary Getaways. I love the Christmas cheer and I am happy to be a part of it. But this year I hope something far more important than wrapped gifts arrives from the reminder of Christmas. I hope those of us who see the relentless call to consumerism can weigh the value of our funding abilities, year round. I believe most any kid would agree that if we can help reduce some of the suffering some families are having during this recession then maybe that is where we’ll find our wrapped gifts this year— wrapped in the form of a smile from a human being who maybe will come to believe that some in the human family care more about preserving her life than about a flat screen t.v. Perhaps then, in the spirit of Christmas that’s most admirable to me, we maybe can teach our children how we value love first, and all else begins second.
See here for a reminder of how one American keeps hope alive.
To contact me about financing your dream-home click here.
Weekend Wanderer’s Events
…finding the treasures in your town and beyond.
Help Your Fellow Living Beings:
Make a Wish Foundation: First, see here for the story of the first “wish” in 1980. It’s amazing and heartwarming. From the website: “A network of nearly 25,000 volunteers enables the Make-A-Wish Foundation to serve children with life-threatening medical conditions. Volunteers serve as wish granters, fundraisers, special events assistants and in numerous other capacities.” Anyone can help make a wish for a terminally ill child come true.
Salvation Army: Imagine for a moment (I mean really take a moment) that you have lost your home. You also have no money and no one to turn to for help. Imagine you have a few kids who rely on you during this time too. If you really took a moment to imagine this you may have a tear welling up. Since 1865 this organization is where people have turned. And through the goodwill of people who support them they have managed to help an untold number of our fellow human beings to survive when hope had nearly extinguished. “When you make a donation, you can expect change.”
Glide Memorial Church: It was in 1963 that Cecil Williams took the reigns of this San Francisco landmark changing its course and the course of countless others who have benefited from it over its 40+ year run. 365 days a year they manage: Daily Free Meals Program, Health Services, Permanent Supportive Housing, Drop-in Center and Emergency Services, Family, Youth and Childcare Services, Women’s Center, Youth Education and Workforce Development. This is hope, faith, and charity in real life. Check ‘em out.
World Food Program: On December 26, 2004 when the Tsunami hit the Indian Ocean communities killing over 283,000 and displacing over 1.1 million people, the World Food Program loaded up its planes and got to work. Potable water, nourishing food, and medical supplies were brought in as rapidly as possible, and it’s impossible to quantify how many lives were saved by their efforts. That’s just one of the stories of the World Food Program. They’re operating 365 days a year and they are supported from around the world by millions of people who care.
Pic of the Week… from my phone camera:
Christmas morning in 2007
MBS- FNMA 4.5 price: 101-10
10-yr Treasury Yield: 3.61%
MBS- FNMA 4.5 price: 101-00
10-yr Treasury Yield: 3.56%
MBS- FNMA 4.5 price: 100-26 closed.
10-yr Treasury Yield: 3.59% closed.
Quite interesting to read that the House of Representatives is considering a bill to reinstate the Glass-Steagall Act, whose repeal in 1999 enabled banking institutions who take in deposits to combine with insurers and investment banks who underwrite securities. I doubt it’s a panacea for the industry, but it’s interesting nonetheless. Particularly striking was the following quote in the article:
Former Citibank Chairman John S. Reed apologized in a Nov. 6 interview for helping engineer the bank’s merger with Travelers and for his role in building a company that took $45 billion in U.S. assistance. Reed also recanted his advocacy of the repeal of Glass-Steagall.
The 1998 merger depended on Congress repealing Glass- Steagall before a five-year deadline that otherwise would have required Travelers to sell its insurance underwriting business.
“We learn from our mistakes,” Reed said in the interview. “When you’re running a company, you do what you think is right for the stockholders,” Reed said. “Right now, I’m looking at this as a citizen.” Link to article…
MBS- FNMA 4.5 price: 100-28
10-yr Treasury Yield: 3.60%
With record foreclosures and 50 million going hungry…
Top executives at troubled insurer American International Group have been struggling financially after taking personal losses in the wake of the near-collapse of the company last year, AIG’s chief executive Robert Benmosche told the Wall Street Journal in an interview. Link to article…
Conditions have worsened for mortgage rates both yesterday and today, so far. Will keep an eye on the changes in the market today and will update more later…
Lake Tahoe from Patrick Lawler on Vimeo.
MBS- FNMA 4.5 price: 101-06 closed.
10-yr Treasury Yield: 3.55% closed.
In my opinion, this should have been at the forefront of the first draft of financial reform. I don’t think it’s lost on anyone that businesses need credit to fuel innovations and to fund new hires to implement said innovative strategies. Been needing it quite a while now, but I guess better late than never:
President Obama met Monday with the nation’s biggest bankers, hoping to jawbone them into providing more small-business loans. Previous administration efforts to boost credit have not yet paid off, and cash-starved business owners are growing impatient. Link to article…
Australia’s Westpac Banking Corporation is returning to the market, after an over 2-year hiatus, offering close to $1 billion in MBS notes. Interesting and good news, indeed, to have another world player return to the market in response to promising demand for these securities. Ultimately, this is good for the American market as well because the investor demand for MBS is a primary driver for good rates on mortgage loans. I laughed (and winced) out loud when I read the quote below regarding how the average loan-to-value ratio of the package is 58%. Jeez… is that a safe investment??? It better be.
The loans underlying Westpac’s notes have an average age of almost three years, and the weighted average loan-to-value ratio, which measures the size of a mortgage against the value of the house it’s secured over, stands at 58 percent, according to Moody’s. Link to article…
MBS- FNMA 4.5 price: 101-10
10-yr Treasury Yield: 3.52%
MBS- FNMA 4.5 price: 101-05 closed.
10-yr Treasury Yield: 3.55% closed.
Well, it appears SOMEBODY in Washington gets it:
House Passes Far-Reaching Bill Tightening Financial Rules:
The vote is the most significant legislative act to confront the financial crisis that exploded last year since the vast and costly bailout that was rammed through Congress at the peak of the emergency. It was an effort to address comprehensively what many of the bill’s supporters have called the underlying causes of the collapse — reckless risk-taking unrestrained by regulation. Link to article…
But was the legislation mutilated by industry lobbying, leaving it ”riddled with loopholes“?