Agency Agony Again
July 10th, 2008 8:26 am | by John Jansen |Agency spreads are opening dramatically wider. In the 2 year sector spreads are about 8 basis points wider and in the 5 year sector they have moved about 12 basis points. Ten year paper is 8 basis points to 10 basis points wider.
The Wall Street Journal has a lead story about more active contingency planning for the demise of the GSEs by the Bush Administration. That certainly does not inspire confidence nor did the poole story which I linked to earlier.
JJJ
3 Responses to “Agency Agony Again”
By alex on Jul 10, 2008 | Reply
Thanks for providing this great blog. In a recent interview Buffet was asked about his greatest investing errors. He immediately mentioned NOT BUYING Fannie Mae in the 80’s when it was considered insolvent.
Could history be repeating itself? Is this an opportunity? Surely not an investment for the faint of heart. I’m struck by the lack of comment from major investors and management.
By John Jansen on Jul 10, 2008 | Reply
I think not. I am off to the dentist so I will offer a succint one sentence comment.
Since this crisis unfolded with a vengeance nearly a year ago, there have been a series of crisis and in each instance I would suggest that the worst outcome has always ensued. Two sentences. It feels as if we are heading for a climax and then a eery denoumnent
By joe on Jul 10, 2008 | Reply
Buffett sold his investment in FRE in the late 90s because he no longer could figure out the balance sheet. I would say that the opacity has dramatically increased from that time.