WOW. Among some fanfare, the financial reform bill was signed into law this morning.
The 2200 page bill has been criticized for not addressing any of the items that "caused" the financial meltdown in the first place and is putting controls in place that are so convoluted that there are thousands of attorneys dissecting it for the financial companies who are wondering how it will really affect them.
For now, mortgage backed securities are up. The FNMA 4.0% coupon we watch is 19 basis points up trading at $101.75
Interestingly with all the glut of US dollars that we have literally "printed up" and sold to the world: we needed a parking spot for them. The financial reform bill is creating a need for banks to have MORE funds on reserve. This keeps money off the streets and will control inflation in the short term.
Watch for more info soon. China alone is holding 2.5 TRILLION in US debt in the form of Mortgage Backed Securities and US treasury bonds. Remember that it takes 3400 YEARS spending ONE MILLION dollars a day to reach ONE trillion dollars. This is a MASSIVE holding.
Talk of the "super sovereign" currency is still buzzing. If something is reached or leaked to create one: the US dollar will dissipate overnight and values could be SO low for each dollar (hyper inflation) that "stuff" or "produce" will become very valuable. (This has happened in other countries...and is not a myth.)
With a super sovereign currency, we will likely see a very QUICK unwinding or conversion process. It is the conversion and the quickness that worries me.
I see the "financial" reform bill as a charade at this point and am trying to learn more about it to report to my readers.
Cheers,
Chad
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Chad Schauers
Montana Mortgage Lender, Bozeman, Montana
Personal Cell: 406 799 8613
Personal Email: metchad@gmail.com
