Re: China & The Dollar
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Liquidity in the mortgage market is mostly due to the securitization of loans where investors can buy bonds and such that are backed by mortgages. As I've stated before I trust the ratings of MBS by the agencies more than I trust the ratings on corporates.
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In my opinion, the agency ratings are a sham. Why do Fannie Mae bonds carry the highest investment grade when, as you said, their debt to equity ratio is so high and they are having so much trouble maintaining their already absurdly low reserve requirements? That is hardly worth whatever paltry rate they are offering. They should be in the junk heap with Ford and GM.
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