Jesus, at the behest of U.S. Treasury Gods, is coming to a town near you to save mortgages. Now if I have my theology correct, the appearance of Jesus is usually followed by all hell breaking loose on the remaining sinners of the world.
Perhaps that is why I am not particularly enthused by this effort by the government to keep the average overextended homeowner from being punished for their sins. Forgiving sins is a tricky business, and especially when the sinner class is reveling in victim mode, blaming everyone from pitched forked mortgage brokers to their nagging wives who just had to have that house over on Apple Lane. "Honey, the mortgage guy says we can't sit here waiting for Godot, we have to act!" says the wife.
Someone is going to get crucified and if the government is not using tax dollars for it's act of deity-like forgiveness, then you should be looking around to see who is going to be the counter-party.
If Jesus, (birthday coming up, by the way, shout out!) got stuck with the sins of you and me in retro-future physics defying fashion, and we have largely learned nothing from the act (sin being generally fun or at minimum, convenient), one can be sure that the home owners will learn very little at the expense of those who will be made to suffer.
And who is that counter-party, that Jesus returned?
Well that would be various Wall Street firms and other investors in mortgage backed securities. The N.Y. Times suggests they are balking at the plan, not entirely thrilled with taking the hit by being the invisible Jesus that saves and gets killed.
Granted it's not really death. It's taking a shave here, less interest there, a write down or two perhaps. We can be sure that in no time at all, like 3 days, or three years, (or five years) such firms will be reborn and live to provide happy profits years into the future for their respective shareholder believers. Meh bee.
In any case, the market seemed to take this coming of Christ with a certain amount of euphoria. This bailout, or freeze or whatever it is, combined with a possible Fed rate cut at the next meeting, had financial stocks levitating like the rapture was upon us.
Are they assuming that greater stability in the housing market should raise the value of mortgage assets on the books overall, and in a manner that supercedes any stalled or reduced payment flow? And are they assuming that people foolish enough to get themselves into a tight spot will use the extra latitude to change their behavior? Are they assuming there won't be lawsuits when the mortgage backed securities you bet yay or nay on get slain in the spirit of the Hope Now project?
I don't know. But the nature of man is, uhm, sinful and sinfully repetitive. Or as Dylan once said, "We do what's most convenient, and then repent".
We certainly don't know how these complicated situations will play out for stockholders. In our effort to grow our little pot (of money), we take each investment one month at a time, trying to get a general range of price movement for certain stocks over a 20 day period or so. With financials that is increasingly difficult, not knowing what is revealed, what is hidden, and what news will come out of nowhere to lift or tank the sector.
The only concrete thing we can gather from this recent news is that if Paulson met with Countrywide, among others involved in the process, there is probably little reason to assume immediate collapse of that company.
Machinations by Gods, saviors and sinners does not help our process.
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