?Zen International?? International Economics-(Fed Stuck With MBS)
Posted in International Economic on June 17th, 2010 by mbotee – Be the first to comment
Sources close to analysts at “Zen International” suggest that the toxic assets held on the US Federal Reserve’s balance sheet will be very difficult to sell when the central bank decides to withdraw liquidity from the financial system as part of its exit strategy.
The Fed acquired large quantities of mortgage-backed securities as part of its effort to provide US banks with access to liquidity at the height of the credit crunch but “Zen International” believes that the dire state of the housing market and the rising delinquency rate of US mortgage holders will see investors giving the assets a wide berth when the time comes to sell.
The Federal Reserve also purchased up to $1 trillion-worth of newly-issued agency debt in an effort to provide more funding for mortgage lenders as part of its quantitative easing program and “Zen International” analysts are thought to feel that it may be forced to hold on to these for years to come if, as expected, the US economy’s recovery is slow and laborious.



