Thursday, May 7, 2009

The Reverse Engineering Of Greenspan Continues

The chart below shows that in real terms we have virtually reverted back to the cheap housing conditions of the early 1990's, as the spread between the 10 year UST and the 30 year FN current coupon index will soon take out even the 1992 lows.

"Cheap" credit [to those lucky enough to be eligible] - check
Push credit cards to everyone [at 29.95% APR] - check
PPIP to get $1 trillion in securitization back [this one may be tough] - check
CNBC mantra of consumer to buy, buy, buy [thanks Bob Pisani] - check

Truly, those rocket scientists in the Fed and Treasury have figured out everything that made Greenspan such a hit with the ladies.

And just for those who care about maturity more than duration match, here is the 30 - 30 comparison. Yep, you are seeing it right - mortgages trade tight to securities, compliments of Paulson, Bernanke, Fannie and Freddie.

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