The mortgage markets are imploding.
This is not the sort of action we might have expected given the panic story that Hank and Ben presented to Congress when they originally asked for the emergency $750 Billion to immediately buy troubled assets to 'save the system.' Well, from the looks of these charts those assets have become a lot more 'troubled.'
On the surface it appears as though they have washed their hands of the larger financial system, particularly the mortgage markets, after they supplied a select group of banks with no-strings equity investments.
Paulson and Bernanke need someone with experience in crisis management on their team. At this point the broader market can trust nothing that they say since it is inconsistent, opaque, and without principle to the point of seeming arbitrary. Suspicion of favoritism and insider dealing is clouding all that they do.
Bill Poole Thinks the Fed is Confusing the Markets with a Lack of Transparency and Clarity of Intent
The ABX indices are based on credit default swaps (CDS) for tranches of subprime mortgage-backed securities(MBS).
The CMBX is a Commercial Mortgage-Backed Securities credit default index. CMBX is quoted as credit spreads, whereas ABX is quoted as bond prices.
