So far the Fed has Bailed Out Banks $3.6Trillion and yet we can't raise the Minimum Wage

[A HERETIC I AM]

74. "I don't know why people are so clueless on this issue "

Perhaps it's because the people you are referring to don't take a term denoting a SPECIFIC CLASS of bonds in popular usage 4 years ago to mean every single mortgage backed security still in existence today.

I'm wondering FreakinDJ, if you can actually describe what you THINK you are referring to and then describe what an "Agency Backed MBS" is and means.

For you to suggest that every single mortgage backed security (bond) is "Toxic" means that you are of the opinion that the overwhelming majority of mortgages currently written will default.

That is hardly the case.
http://www.federalreserve.gov/releases/chargeoff/delallsa.htm
Residential mortgage defaults are falling, from a high of 11.28% in the 1st quarter of 2010 to 8.59% in the 3rd quarter of last year (2013).

This is, in fact, not news at all, as this article from Bloomberg.com written back in May illustrates;

http://www.bloomberg.com/news/2013-05-06/housing-crash-fades-as-defaults-decline-to-2007-levels.html


Ever since you (And I am sure you are not alone, as in "I don't know why people are so clueless on this issue&quot first heard about failing mortgages being bundled into new bonds and being offered for sale, I'm betting you automatically have assumed that every MBS out there was toxic and continues to be.

It's bullshit and indicates to me again, that you don't understand completely what it is you are talking about. You used the term "Mortgage Derivatives" in your response to me above. Tell me, oh sage of the derivatives market, what EXACTLY is the derivative being bought by the Treasury? The article says nothing in that regard. What it says is;

Thus, Federal Reserve purchases of mortgage-backed securities (MBS), for example, should raise the prices and lower the yields of those securities; moreover, as investors rebalance their portfolios by replacing the MBS sold to the Federal Reserve with other assets, the prices of the assets they buy should rise and their yields decline as well. Declining yields and rising asset prices ease overall financial conditions and stimulate economic activity through channels similar to those for conventional monetary policy.

A security that is based on mortgages is NOT a "derivative". A derivative of such a security would be a futures contract or similar.

I know it must give you some sort of smug satisfaction to impugn the vast majority of US homeowners who regularly pay their mortgages on time, but that does not change the facts. The overwhelming number are paid on time and that in turn keeps the securities based on those mortgages far from being toxic.

I apologize for taking so long in my response, but I have been under the weather for the last 48 hours.