On December 16, 2008 I wrote the following about Mortgages and the Fed’s $500 Billion Mortgage Purchase Program –
"Buy Mortgage Backed Securities
The Markets are simply calling the Fed’s bluff. The Fed will have to pony up another chunk of dough very quickly.
Today we also had Meredith Whitney telling us how bad of an ideal the “Bad Bank” is. The “Bad Bank” is now estimated to cost the Taxpayer an additional $2 to $4 Trillion. I’ve got an idea – give the Shareholders the “Bad Bank” and the Taxpayers the “Good Bank”.
The numbers of Dollars that the US Government is going to end up printing to buy all of the toxic mortgages off of the balance sheets of US Banks and Foreign Central Banks is truly staggering.
Now back to the Markets
Most Indexes pulled back into the breakout points of yesterday. That is normal and is Bullish if those breakout levels hold. It is obviously Bearish if they fail to hold.
Let’s see what the next few days bring. The Fed has done a lot of big things over the weekends. I’m sure that they will be busy at work this weekend too, hammering out a “Bad Bank” model to force feed to the taxpayer.