A golden age of Subprime Mortgage securities?

After proving to be the best short opportunity during the housing bubble in 06-07,  the very same people who made millions on the short side are now long.  Why is this?  I can see 3 clear reasons why these bonds are trending:

1) First and foremost, the federal reserve's latest QEinfinity is implemented through buying these securities.  The fed has nearly unlimited authority to prop up this market as much as it likes.  For this reason these securities are practically bulletproof for as long as the fed maintains this authority.

2)  Housing market has already partially crashed.  Weather or home prices have further to fall, a lot of delinquent debt is currently out of the system, and it will take quite a bit more fed purchasing to reflate the bubble to levels where the bonds should be shorted again.

3)  Stricter lending guidelines and an interest rate that beats out most other debt/money markets making for very consistent returns.

An old investment strategy, Kyle Bass on nickels:

He still owned stacks of gold and platinum bars that had roughly doubled in value, but he remained on the lookout for hard stores of wealth as a hedge against what he assumed was the coming debasement of fiat currency. Nickels, for instance.

“The value of the metal in a nickel is worth six point eight cents,” he said. “Did you know that?”

I didn’t.

“I just bought a million dollars’ worth of them,” he said, and then, perhaps sensing I couldn’t do the math: “twenty million nickels.”

“You bought twenty million nickels?”

“Uh-huh.”

“How do you buy twenty million nickels?”

“Actually, it’s very difficult,” he said, and then explained that he had to call his bank and talk them into ordering him twenty million nickels. The bank had finally done it, but the Federal Reserve had its own questions. “The Fed apparently called my guy at the bank,” he says. “They asked him, ‘Why do you want all these nickels?’ So he called me and asked, ‘Why do you want all these nickels?’ And I said, ‘I just like nickels.’”

He pulled out a photograph of his nickels and handed it to me. There they were, piled up on giant wooden pallets in a Brink’s vault in downtown Dallas.

“I’m telling you, in the next two years they’ll change the content of the nickel,” he said. “You really ought to call your bank and buy some now.”

Trewfs

How soon we forget

http://www.youtube.com/watch?v=ca8Z__o52sk

How it All Unravels

The sheeple say nay we are in recovery, they say when does this impending doom you speak of start going into effect?  My answer:  it goes into effect the moment the Fed is pressured by cost-push inflation to raise interest rates.  The how is very simple, simple enough for even voters to understand.  Cost push inflation (or inflation in price of base materials such as metal or oil) will, by mathematical certainty based on the amount of new money introduced into the system, have an effect sooner or later.  In some countries (mostly producing nations), inflation is already hitting hard.  This will transfer to the consumer nations (the indebted nations...) as producing nations make attempts to stop the massive inflation they are experiencing (stronger currency of the producing nation means higher prices for the consumer). When cost push inflation hits the US (the ultimate consumer nation), it will put great pressure on the federal reserve to raise interest rates.  At this point the nation will either begin to experience massive inflation on imported goods (all our goods...) or be forced to start raising interest rates.  The problem is, raising interest rates will destroy the value of the bond market, significantly tighten credit, and certainly put a number of banks and publically traded companys out of business.  Asset prices could be in for a tumble too depending on their dependence on credit markets.  Lower tax revenues and higher interest payments on national debt will make the government debt grow faster and faster until massive spending cuts or a loss of confidence in dollar take place (more likely the latter).  In the event that the government cannot subdue the debt, interest rates will be forced higher as people lose confidence in the government's ability to pay back said debt, and eventually the dollar will have to be revalued or replaced.  That is how it unravels, it is not complicated.  History has presented this case numerous times in a number of countries.  From start to finish I think the unraveling is about a 10 year process.  May the exchange rates be with you my friends, the currency wars are well in progress.

Oil, Middle East, and Argentina speculation.

Argentina's stock market has been one the best performers in world this year....and just another example of how stock market strength does not equal economic strength... pls add Argentinian peso to laundry list of non-major currencies that are worthless.  They recently implemented some price fixing that will freeze all grocery prices for 2 months.  This should be effective at clearing all non-perishables off the shelf as people exchange spend now to avoid higher prices when the two month freeze is up.  I think its a matter of time until wal-mart closes shop and attempts to GTFO before its too late.  

In other news.... while everyone has forgotten about Egypt and friends, it appears they are on the verge of rekindling the unrest that brought about the oil madness earlier in 2012.  Compounding this with the present market sentiment means one thing to me:  Oil prices are not going down.  So with out further ado, I think I promptly add some oil derivatives to my portfolio, and add to my position on dips.  I'm initially targeting ~$100/barrel crude in the next month or two, and if I hit that target fast I may continue to look for 105-110.