Here I was up early on my vacation day and reading across the web at my usual stops when I came across a post (via Naked Capitalism) that seemed familiar in title, but very different in content to a post of mine from last week. This offers a chance to see a real contrast is opinion and so I will post them both.
Bronte Capital weighs in this morning on the March expiration of FED MBS purchases:
The Ides of March and the FED Exit Strategy
You should read the whole article. It is well written and many angles are thought out. I would summarize (my words) that the writer's idea is that the Banking system will be ready, willing, and able to buy back all the MBS paper the FED took off their hands next year as risk appetite increases, thus making the FED exit from this space relatively smooth. The crisis of last year was one of liquidity, and not solvency.
Now contrast with my post from last Thursday:
Beware the Ides of March (Maybe)
Here I argue that not only will the banks not want the impaired paper, but the FED will have to extend the MBS plan early next year due to severe aversion to these instruments as well as a monster move up in mortgage rates should actual banks offer to by this stuff.
I left a comment at the authors post that we will only have to wait until about February to see which view is more in line with the reality on the ground. Let me know what you, the readers, think about this great study in contrasts.