Grant's Current Yield Podcast PARALLELS TO HISTORY
24 snips
Jan 23, 2025 In this discussion with Christopher Whalen, chairman of Whalen Global Advisors and financial history expert, fascinating insights unfold regarding the modern banking landscape. Whalen analyzes the overvaluation of banking equities and the transition of Fannie Mae and Freddie Mac out of government control. The conversation highlights the impact of changing mortgage rates on market dynamics and critiques the Federal Reserve's current challenges, drawing parallels to historical financial missteps. They also emphasize the need for improved oversight in American finance.
AI Snips
Chapters
Transcript
Episode notes
Mortgage Credit Quality
- Mortgages held by Fannie and Freddie are currently in pristine condition, with low default rates.
- FHA delinquency rates, while around 11%, are likely understated due to forbearance and modifications.
Federal Reserve Solvency
- The Federal Reserve, despite a large balance sheet, has significant losses and relies on a line of credit from the Treasury.
- This raises questions about its solvency and the appropriateness of dividend payments to member banks.
Fragile Treasury Market
- The primary dealer market, crucial for Treasury financing, has become increasingly fragile since 2008.
- The Fed's intervention by printing money in 2020 led to inflation, highlighting the market's vulnerability.