An cop with the a BA in poli sci and no formal financial training goes all cash in the winter of 2007 (just prior to the Feb crash), he laughs at Greenspan as he calls the bottom in housing in Oct 06, he laughs at Bernanke as he says subprime is contained in summer of 07, he laughs at Don Luskin as he calls the bottom in financials in Nov 07, he has been saying the Fannie and Freddie are broke for about a year and stockholders will get nothing......think about this for a while.
I have.
I am so amazed at either how corrupt or how simply stupid those in power are.
If you wonder how a die hard Rush listening, Bush voting, Republican can become an America bashing, disgruntled cynic....wonder no more.
It is the simple loss of faith in those in power.
No one should be surprised at single digit approval ratings for Bush and Congress.
It's not even that I have some better alternative. I frankly have no idea how to fix the problem.
It's just the dishonesty, ignorance, and/or malice of it all.
I took a look but didn't find any explanation on why the both need to exist. I've asked around but no one has been able to explain this to me (including economists that worked formerly at fnma).
Thanks for the wiki link, Anon. I was familiar with the history, but freddie (ech) has the same charter currently as fannie, and they are both private corporations. I guess the key here is "monopoly":
"From 1938 to 1968, the secondary mortgage market in the United States was monopolized by the Federal National Mortgage Association (Fannie Mae), which was a government agency during that period. In 1968, to help balance the federal budget, part of Fannie Mae was converted to a private corporation. To provide competition in the secondary mortgage market, and to end Fannie Mae's monopoly, Congress chartered Freddie Mac as a private corporation."
So now we have a monopoly of two instead of one. Ok.
I don't understand. If the GSEs are insolvent the stock holders lose everything and the bond holders get anything that's left. Why does the taxpayer get involved at all? Can I be made whole from my disasterous futures trading that was torpedoed by insane Fed policy? If not why not and why doesn't the same logic apply to F&F.
F&F were consulted prior to their taking all that toxic crap from the banks and mortgage companies ~ One can only surmise that they were promised something cause they knew the crap was toxic.
This all goes back to the fraud and illegal activity @ Fannie and it shocked me the other day when I read this:
Fannie and Freddie are adequately capitalized at this point,'' James Lockhart, the director of the Office of Federal Housing Enterprise Oversight, said in an interview with Bloomberg Television today.They are fulfilling their function.''
OFEHO busted those crooks, and then Fannie was to come clean and run an honest business -- which they never did -- so this is a total scam with what's going on, and America needs to go back to the original audits which verified the illegal activity there a few years back -- the fraud was NEVER cleaned up and I'm disgusted with Lockhart pulling a Spitzer -- is he bought and paid for, like everyone else?
You know what I think is kinda ironic? If you asked this bunch of bears 12 or 24 months ago if this could have happened most would have said no... in fact i'd argue f' no....
This must be prepping everyone for the eventual socialization of F&F. Paulson's talk about bringing down "too big to fail" falls right in line. Could we call this a controlled collapse?
PS. Does anyone have some contacts so I can get in to the eventual private REIT that will be spun off?
In a settlement with OFHEO and the Securities and Exchange Commission, Fannie paid a record $400 million civil fine. Fannie, which is the largest American financier and guarantor of home mortgages, also agreed to make changes in its corporate culture and accounting procedures and ways of managing risk. [9]
In June 2008 Wall Street Journal reported that Franklin Raines was one of several politicians who got below market rates loans at Countrywide Financial because the corporation considered the officeholders "FOA's"--"Friends of Angelo" (Countrywide Chief Executive Angelo Mozilo)
Speaking of bear talk i tried to short Pyramid and Redhook today. The answer to both was that there were no shares to short. Dont get me wrong I love the micros but they are at $9 a sixer and that doesnt include deposit and tax. Add that to a shrinking demand, ouch!...
That being said I'm wondering how many other companies out there are that dont have any shares left to short....
Looks like some one will get paid... Just not me....
Yeah, I didn't include Switzerland. Now it's not. Not that I think avoiding illegal IRS taxes is bad (Super Colander Tin Foil Hat here), just saying these clowns get away with with far better than you or I do. And they run the looting system. Which is unfair.
Oh well...it shall continue this way. Most posters refuse to even recognize this, let alone do shite about it.
Whatcha gonna do. Many defend it. Say it needs to be.
sitting here with a $10/6 per each ipa beer in my hand i am... (granted it was my last masters class tonight so i thought i'd celebrate) i swear i am....
The doomsday scenario could cost taxpayers more than $1 trillion, says the S&P report. The report went so far as to say that a government bailout of Fannie or Freddie could force the agency to lower its rating on the creditworthiness of the United States.
"Yeah, I didn't include Switzerland. Now it's not. Not that I think avoiding illegal IRS taxes is bad (Super Colander Tin Foil Hat here), just saying these clowns get away with with far better than you or I do. And they run the looting system. Which is unfair."
There appears to be some disagreement regarding their capital position. Poole claims they are insolvent. The spokespeople indicate that they are solvent. The mysteries of future payment probabilities. The institutions don't like the marketplace's probability.
They can go through a prepackaged BK. The current bondholders can receive a claim on the future mortgage payments. The reorganized firms can begin writing paper based on traditional lending standards. The notion of making the bondholders whole is lunacy.
Oh...btw I've been signing off on message boards, since the development of Fallout2 and Klingon Academy with
Cheers,
As a polite goodbye. Which it is.
Those development boards are well over 10 years old. Further it is an old way to say "I don't care if we agree or not...thanks for the chat" something you don't seem to get.
Tom claim the title of the first "cheers" poster is the height of arrogance. Your following post commits that to memory.
Sir, you are an asshat. And you shall continue to be so, as I shall post this far and wide. good job asshat.
Last month, the House of Representatives passed the FISA Amendments Act of 2008, Congress's latest response to President Bush's demands for expanded eavesdropping authority. The Democratic leadership, seemingly intent on avoiding real debate on the proposal, scheduled the final vote just a day after the bill was introduced in the House. Touted by Democratic leaders as a "compromise," it was supported almost unanimously by House Republicans and opposed by a majority of Democrats. The New FISA Compromise: It's Worse than You Think | Timothy B. Lee | Cato Institute: Commentary
Fannie and Freddie insolvent was a foregone conclusion.....
The real question is whether these are sacrificial lambs (albeit very large) to distract the sharks from the real Wall Street prey. Citigroup, MER, and Morgan Stanley have been incredibly quiet. Looking at all the Lehman ratios they (LEH) have always looked to me to be in better health than the above names.
But my gut feeling all along was that they're all insolvent. You can't have 30-40x leverage and withstand a price drop of 15+%. Equity will be entirely wiped out in most situations.
Uh, news flash Fair E. That is old school thinking. In the new way of the street the risk reward ratio don't work like that. It's more like, you take the risk, we get the reward.
The thing is that Freddie, Fannie and Ginnie currently finanace about 95% of newly originated mortgages. 95%. Do you get it? If there is a severe hickup with them...there will be a housing crash way worse than anything so far.
Anyone associated with Fannie and Freddie, including SEC Chairman Christopher Cox, should be imprisoned. I do not allow my tax dollars or the value of my currency to be applied to any private company with a failed business model. Any politician that gives our money to these types of organizations will be guilty of conspiracy to commit fraud against the American Taxpayers.
perhaps we're in disagreement, about three or four months ago you said i jacked "Cheers" from you. i found humor in it. i've enjoyed your comments to date they've always been informative and interesting. if i've offend you in some way, well shit i dont know what it is...
Fed Reserve member William Poole was part of the problem when he was at the federal reserve giving our currency to the bankers. Nice try distancing yourself Poole, you will go to prison too, sir.
Here's something to delight the trade sceptics: The most recent Pew Global Attitudes survey found that, in a sample of twenty-four countries, the United States came dead last in terms of viewing trade favourably. While the US (barely) ekes out a majority of respondents who view trade as either very or somewhat good, this position is certainly tenuous. There's nothing much to add to the bullet point provided by Pew on this matter: "Support for international trade continues to decline in the United States - 53% of Americans say trade is good for their country, down from 59% last year and 78% in 2002. Support for trade is lower in the U.S. than in any other country included in the survey."
Glad to see you're still up. Congrats on finishing the graduate work. I started my masters when my oldest was 1 yr old and finished when he was 6 yrs, squeaking under the 5 yr deadline. It was brutal but one of the best things I've done.
Tomorrow I'm gonna buy a St Arnolds and tip it your way. Completion of part time grad stuff should always be celebrated. My completion even got my advisor to attend the graduation ceremony.
Okay, please help me understand that my mortgage is serviced by National City Mortgage, who sold it to Fannie Mae who are both in deep. My original LTV was 50% and has remained there as our little pocket of the world actually has not lost value . . . yet.
Who does Fannie Mae sell my loan to. It has to have value to someone else looking on the open market, however it would never benefit Fannie as they would have to discount it.
BTW, after 5 years of assisting in the sale of a company in receivership, I was let go in the 20% staff reduction after completion of the sale. Your welcome.
OHFEO blew its responsibilities first with FRE and then with FNM. OFHEO is supposed to be the "safety and soundness" regulator for FNM and FRE--where the heck were they?
Instead of watching the GSEs' credit and counterparty risks, OFHEO was carrying water for the hard core private market idealogues in the Bush administratuion and in Congress. They trumped up technical FAS breaches and weakened both GSEs.
Meanwhile the Fed pumped money into the system, keeping interest rates artificailly too low for far too long. Add in incompetent and venal mortgage brokers, investment bankers, and rating agencies and we created a real estate bubble that was destined to deflate quite painfully.
So, Bush's hardliners are getting what they wished for, but now theyr'e running scared--afraid of what the US economy would look like without a functioning secondary market.
The result is that the federal government cannot let the GSEs fail completely. So, when necessary, the government may need to expressly guarantee the debt of the GSEs, including their MBS. This will have the indirect effect of propping up the value of the preferred and equity shares of the GSEs.
We can do very nicely without Bear Stearns, but we can't have a functioning economy without a functioning secondary mortgage market. So, the government can't destroy the interests of equity holders or the government would de facto be obligated to operate the secondary mortgage market for perhaps a decade or more. As much as they loathe the GSEs, the free market purists could not abide the government directly running the whole country's secondary market.
Without the GSES, who would step in to securitize loans and provide the needed liquidity for that critical component of the US economy? Wall Street has lost credibility in this market and can, at best, slowly re-enter the mortgage securitization business in ways that rebuild national and international confidence.
Of practical necessity, the GSEs will be allowed to continue to operate with very little capital, but will have the government's backing to enable its securities to trade at prices close to US Treaturies. Even though the GSEs face perhaps $100= billion in losses over the next four years or so, they will begin to put solid business on their books at subtsantially higher guaranty fees. They will rebuild their capital position over time and the government will be able to reduce and ultimately eliminate its guarantee. Of course, the moral hazard will remain, but tighter regulations will be applied to all mortgage originations. This will add stability and confidence to the secondary market in the long run, but it looks like an increasingly bumpy ride!
"I used to work mornings at another coffee stand. I used to make $30 in the morning, but here I make four, five times that much, if not more, because I'm wearing a bikini and people pay more for that," said barista Nicole Corpuz.
you want a good story, there is a coffee shop that looks like those old film processing booths in a parking lot here in san diego ca. its got these brazilians.... dios mio... no bikini's but the accents and the personalties... the place does and absolute killing...
Thank you. Much appreciated. Deaths in the family have that sort of yin-yang pull. Not sure which side but that pulled the correct side. In other words...I enjoyed it. Thanks.
ades, btw I'm cutting back on the microbrews due to the price increases. also forgot to mention that my adviser described the full time work/part time ms route as the bataan death march of grad school.
gotta get some sleep. if i'm lucky i'll be able to view the show later today around lunch time....lot's of meetings in the morning.
Anyone listening to Rush has some screws very loose up there to begin with....he isn't even amusing. He is just super stupid, super ignorant, and very very Americano Stupido.
The US needs to nationalize large segments of the financial sector and put the operations in a regulatory straitjacket. A mixed economy, part private, part public, should be the future for the US. Stop this nonsense that everything has to be private.
Wachovia Corp, the fourth-largest U.S. bank, named Treasury Undersecretary Robert Steel chief executive on Wednesday, and said mortgage and legal problems will result in a $2.6 billion to $2.8 billion second- quarter loss, much larger than many analysts expected.
Well, gee, everyone's talking Bill Gross's book these days. If the Feds bail out FNM, maybe we should replace Geo Washington portrait on the dollar with Bill's picture -- the WSJ ought to have a nice engraved image of him.
(top five holdings at PIMCO are FNM)
NB. grain of salt, all details in this post are subject to reality. I think I have the names right, but...
By John Spence
Last update: 8:34 a.m. EDT May 23, 2008Comments: 1
BOSTON (MarketWatch) -- The widely respected manager of the world's largest bond fund, Bill Gross, has been buying beaten-down mortgage debt, and the contrarian bet appears to be paying off, the Financial Times reported Friday. Gross, managing director at Pacific Investment Management Co. or Pimco, has tripled his position in mortgage debt, which now represents more than 60% of Pimco Total Return fund, up from 20% a year ago, according to the report. Gross told the FT that Pimco was mainly buying mortgage-agency debt rather than "the subprime garbage." The bond manager said his call was based on the government's implicit guarantee to back mortgage giants Freddie Mac (FRE:Freddie Mac
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Last: 10.26-3.20-23.77%
4:02pm 07/09/2008
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FRE 10.26, -3.20, -23.8%) and Fannie Mae (FNM:Fannie Mae
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FNM 15.31, -2.31, -13.1%) , the report said. Pimco Total Return fund has gained 11.8% over the past year, well ahead of its peers, according to investment research firm Morningstar Inc. "
Interesting to see the yesterday's prices for FNM, FRE inside that May quote from marketwatch.
The bodies on the beach are mortgages, and what happens to the girl at the end of my 10 minute flick is whats going to happen to Fannie and Freddie. Scary stuff! YouTube
- UIILeo's Channel
76s, I found your thoughtful analysis a bit optimistic. In a perfect world, yeah...
But this caught my eye:
So, Bush's hardliners are getting what they wished for, but now they're running scared...
What's got them scared isn't the collapse of the secondary market.
What's got them scared is that total societal collapse may be imminent, and there is nowhere safe on the entire planet for them to hide from the enraged citizenry.
They know what happened in France and Russia under similar circumstances.
The doomsday scenario could cost taxpayers more than $1 trillion, says the S&P report. The report went so far as to say that a government bailout of Fannie or Freddie could force the agency to lower its rating on the creditworthiness of the United States
Okay, a FRE/FMA bailout could cost 1 trillion dollars--absolute disaster. Iraq has cost only about a quarter of an absolute disaster--but we have the upside of low oil and global stability in return.
I am so amazed at either how corrupt or how simply stupid those in power are.
Corruption. These guys knew the trajectory of things all along. It's been pretty much inevitable since the response to 9/11 was to cover up the economic consequences of the .com bomb. Probably since long before that, in terms of social trends, but the response to 9/11 was definitely when the Republican establishment sunk the dagger into America's back.
If you wonder how a die hard Rush listening, Bush voting, Republican can become an America bashing, disgruntled cynic....wonder no more.
It is the simple loss of faith in those in power.
Yah well, everyone gets duped. I voted for Bush the first time thinking he might reform an increasingly unsteady banking system. LOL! Suckered!
The second time, I voted for him so that people like you could see what the consequences of the policies you supported were.
It's not even that I have some better alternative. I frankly have no idea how to fix the problem.
It's just the dishonesty, ignorance, and/or malice of it all.
You know you're drawing a salary working as their rodeo clown, right?
"Hey America! Don't pay attention to the guys robbing that economy, the Keystone Kops are back for the attack! Look at us destroying the future of this black man! Ho! Ho! Ho! Hey, look at those funny Koppers getting ready to charge the crowd and fill up camps with people who boo when the show goes sour, what a laff riot!"
And it works, too. 30% of the country still approves of Bush. IMO, the best start you can make on fixing things is to first stop being part of the problem. You love America enough to die for it, but do you love America enough to lose your civil service pension for it?
(CNN) -- Iran test-fired more missiles overnight, Iranian news media reported Thursday, one day after it tested a long-range Shahab-3 and other missiles in the Persian Gulf region.
"If Washington and Tel Aviv are foolish enough to even consider attacking Iran, our initial response would be to target Israel and set U.S. interests in the Persian Gulf ablaze," Ali Shirazi, an aide to Iran's Supreme Leader Ayatollah Ali Khamenei, said Tuesday.
"But, the thing is, with the GSEs standing for 95% of current mortgages...they have the US economy by the balls."
So? Since foreigners own a lot of the bonds and will suffer much of the losses, it is obvious that it is better for the US Treasury to let the bonds default and then provide directly new financing for the housing market.
Where basically it was saying that GDP will drop to .5% in the 4th qtr after the rebates wear off, and it got me thinking.
Why don't we have a real GDP metric that removes the debt component? Why does a loan to ourselves count towards GDP?
If we are borrowing $2b/day, shouldn't we have a "real GDP" metric that removes that? Or maybe there is there one.
I think we can create this metric easily and we have the historical data to take it all the way back.
Then we could see how well we are really doing.
The way it is now, it is sorta like ignoring inflation.
I was lowballing the cost of the Iraq adventure at 250 billion dollars (some estimates take it as high as 1.5 trillion...). For that price, I sarcastiacally pointed out that our ROI is low oil prices and global stability--both of which were promised at the beginning of the invasion.
As bad as a trillion dollar bailout of the GSEs would be, at least we might get a somewhat less apocalyptic economic shock in the results. In other words, we might have a better outcome than the Iraq debacle.
It was moderately OT, and I apologize to the board for that.
July 10 (Bloomberg) -- Dow Chemical Co., the biggest U.S. chemical maker, agreed to buy Rohm & Haas Co. for about $18.8 billion to add specialty chemicals that are less vulnerable to economic cycles.
Rohm & Haas investors will receive about $78 in cash for each share they hold, Midland, Michigan-based Dow Chemical said today in a statement. Financing for the transaction includes a $3 billion equity investment from Berkshire Hathaway Inc., the company said.
This should perk up the markets, watch out bears here comes the bulls.
Clearly I slept too late. Good God. And good point about SHAME thing -so who is calling Poole a Schumer?
hmm....
AbuMae
DabiMac
And Average Joe, I thought your post was great and sad, too -- Jim try re-reading it. One thing this crisis did is get people religion (in a good way) -- if there's anything that'll destroy the chance to start a real converstion now about how to fix things now, it's gonna be us lording it over about how we were so smart and everyone else so stupid.
Costco and Walmart have positive same store sales numbers......and this is both good and a surprise?
If we sent everyone a check for $1,000,000, sales would skyrocket, forclosures would virtually stop in their tracks, credit losses for financial institutions would go to zero, fannie and freddie would be solvent as losses would vanish.....
Why is no one suggesting this?
Because we all know we'd trade short-term problems for long-term ones.
So what's the difference between a check of $600 and $1million....only the size of the mistake.
Don't expect the average joes to think stimulus checks are a positive sign of the future. They'll spend them, but they wont be happy about it.
76s Well, I think that the current head of the OFHELO can look at what happened to Armando Falcoln as an object lesson. HE put out a report on systemic risk and was booted out the next day. That COULD explain OFHELOs hands off approach.
I think alot of us have speculated on the possible failure of the GSEs. My cloudy crystal ball shows something like this: The failure of one of 'em become immanate. The other one is "persuaded" to buy them out in return for government guarantees a la Bear Sterns writ large. Hey, the bondholders will probably be made whole. What will piss me off is the pay off to the equity holders of the failing GSE.
So i want to know this, If there is too much housing supply and houses are not selling, why are mortgage rates not 2,3% now? In retail if you want to clear shelves this is how you do it. Banks are getting the TAF money so why not?
I forgot to mention Poole is also a wife beater. Like Nemo. So what if Nemo is not married? It doesn't make any difference. You just can not trust these wife beaters.
Q.E.D.
I have had some dealings with Freddie Mac. The have an expansive campus in Tysons Corner, VA with more employees than they know what to do with. They have great cafeterias, top of the line facilities, and they have been growing in size by 10% annually for many years.
The overhead that they have is incredible. I suspect they could cut their workforce in half without a problem. I would hate to see my tax dollars go to keep them workig in excess and luxury.
Fannie and Freddie will become the defacto lenders for housing.
They will continue to lend at below market rates and the losses will just be covered by the taxpayer. It will be the cost of maintaining a peaceful society.
Just like the huge expense for the Government, the military, the FBI, the IRS, NASA, local courts, local police, and on and on. All of these employees, all their pensions, all the buildings, are 100% funded with taxpayer money.
Just add homelending to the considerable list. It will be expensive in down markets, and not so expensive in the up ones....
I like the comment about talking Gross's book here. Pretty on the money at this point if you ask me.
There is a long, long way between here and endgame for these two. The first thing that will be cut are the dividends. The next thing is the workforce. They will raise a very, very dilutive round at some point. There is nothing that will happen, in the form of any government action, until after the next administration takes over. There is no political will to deal with this from either party.
The shareholders are going to take it in the shorts here. Which is exactly what should happen. I don't understand why all the posts here. Isn't this the way capitalism is supposed to work? All that equity is going to evaporate. If you don't like these two, don't hold their stock. I don't. And now I'll just eat a bag of Cheetos as these two pull back.
The only bad thing is the effect on the mortgage market but, you know, someone will step up and fill the void here if there is real money to be made. Someone is probably planning that right now...and they'd be very, very smart.
What is this I want a pony? I want a pony? Don't you get it. You are the pony. Taste the bridle in your mouth? It's about to come to a bloody froth, and some spurs are going to punch deep into your sides. Yeah, you're a pony that going to be ridden like an Arabian and worked like a water buffalo until you drop dead in your traces.
Everybody can relax; all this doomsday recession stuff is just in our heads. Phil Gramm just set things straight:
In an interview with the Washington Times today, former senator Phil Gramm, who is Sen. John McCains (R-AZ) econ brain, blamed the state of the economy on the conviction of many Americans that economic conditions are the worst in two or three decades. Youve heard of mental depression; this is a mental recession, said Gramm.
We have sort of become a nation of whiners, he said. You just hear this constant whining, complaining about a loss of competitiveness, America in decline despite a major export boom that is the primary reason that growth continues in the economy, he said.
Weve never been more dominant; weve never had more natural advantages than we have today, he said. We have benefited greatly from the globalization of the economy in the last 30 years....Thank God the economy is not as bad as you read in the newspaper every day.
The value of my home has already gone up 25% since he unveiled the truth. God bless Phil Gramm!
Just like the huge expense for the Government, the military, the FBI, the IRS, NASA, local courts, local police, and on and on.
You know averagejoe, I used to wonder where your comments came from, but after your admission up-thread about Rush now I know.
You need to get some de-progamming bud. They're not out to get you. If you think that the government has its act together enough for some sort of grand conspiracy then you're putting too much stock in their abilities. They can't legislate out of their own ways, nevermind concoct come sort of coordinated black operation.
Tension between competing interests is what keeps us a pseudo-democracy. Wall street vs the government vs all the special interest groups. Learn to love big brother or you'll get a bullet in the back of the head And for God's sake start hanging out with liberal democrats. You'll find that the age-old maxim that extremems meet is true, there is practically no difference between them and the right-wing nutcases. It will push you to being apolitical and towards enlightened self-interest which, frankly, is the only place to be.
"what would do that our credit rating! at least currently the bad guys dont know were're how you say...
insolvent...
nades"
No. We are not. Why do you think Abu Dhabi wants to buy all this property in the US ? because the real value is here not in the sdand dunes of the middle east.
What is unclear about Poole's logic is how he intends to fix this without even more financing by the taxpayer.
The entertaining thing is that his statements about solvency are so blunt that they absolutely demand a response... but is anybody in the US still stupid enough to deny what he said? I guess we will find out today. Whoever steps up to defend the agencies might as well wear a shirt that says 'stupid".
Our business has collapsed, cliff-dived since December. we have no, NO access to credit. Our vendors are dropping like flies. We come to work each week and wonder if we can keep it going through Friday.
Wachovia Corp on Thursday said new Chief Executive Robert Steel could be awarded more than $38 million in salary, bonus and other awards in his first year running the fourth-largest U.S. bank.
Poole:Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules . . . Congress ought to recognize that these firms are insolvent [blah blah blah] Mr. Market: Fannie Mae sold $3 billion of two-year notes yesterday to yield 74 basis points more than Treasuries.
A mere 74bps over risk-free doesn't smell like insolvent to me.
Would somebody please clarify or reconcile these two statements for me?
Otherwise I'll leave this issue with a great feeling of relief that Poole is no longer a St. Louis Federal Reserve President and, I warn you, I might even start suspecting the system works.
Holy COW. I saw Lockhart on teevee Tues when he claimed GSEs are "well capitalized". I think we need lie detectors for bubblevision interviews. He's not a very good liar.
At any rate, Poole & Lockhart are at odds. Both can't be right. Let's see if Paulson & and that generous nice guy, Mr Bernanke clear this mess up.
How Gramm grew up does not matter. It is nice that he got money, but not that he locks the door behind him. He is clearly, at this point, not understanding the privilege he now enjoys.
FRE and FNM might be insolvent, but why anyone would give any weight to Poole's view on this subject is beyond me. It is bizarre that the market seems to be reacting to his comments.
"I'm going with corrupt. Nobody is that stupid..."
Then how do you explain bush getting elected twice. Never underestimate the American peoples ability to be sold a bill of goods.
"Iraq is an immediate threat..."
"Tax cuts will pay for themselves..."
"Oil will pay for the war..."
"Debts don't matter. Reagan proved that..."
"Ownership society..."
The list goes on and on. The ability of the American people to be dooped is breath taking. So stupidity is a big player in this mess we have, with a healthy dose of corruption thrown in.
Fortune say this could cause a trillion dollar bail out from tax payers. You could see it coming. They were over-leveraged, nobody understood their derivatives, and didn't file financial statements for 2 years.
Weve never been more dominant; weve never had more natural advantages than we have today, he said. We have benefited greatly from the globalization of the economy in the last 30 years....
It's worked for Phil and Wendy. As for the rest of US suckers..not so much.
Charlie Poole: "... but why anyone would give any weight to Poole's view ..."
The reason is that Bill the Butcher has consistently worked to head off the systemic threat from the GSEs' "too big to fail" status and the implicit guarantee on agency debt for many years. He is truly the most important and grown-up voice in America on this issue.
Does anyone know why we have both of them to begin with?
Tanta knows! and I think it was explained in an Ubernerd post...
An cop with the a BA in poli sci and no formal financial training goes all cash in the winter of 2007 (just prior to the Feb crash), he laughs at Greenspan as he calls the bottom in housing in Oct 06, he laughs at Bernanke as he says subprime is contained in summer of 07, he laughs at Don Luskin as he calls the bottom in financials in Nov 07, he has been saying the Fannie and Freddie are broke for about a year and stockholders will get nothing......think about this for a while.
I have.
I am so amazed at either how corrupt or how simply stupid those in power are.
If you wonder how a die hard Rush listening, Bush voting, Republican can become an America bashing, disgruntled cynic....wonder no more.
It is the simple loss of faith in those in power.
No one should be surprised at single digit approval ratings for Bush and Congress.
It's not even that I have some better alternative. I frankly have no idea how to fix the problem.
It's just the dishonesty, ignorance, and/or malice of it all.
Average Joe,
I'm going with corrupt. Nobody is that stupid...
It's in the History here:
Federal Home Loan Mortgage Corporatio - Wikipedia, the free encyclopedia
What was that bang?
A gang bang!
Freddy and Fannie are on bottom. Choo Choo!
I took a look but didn't find any explanation on why the both need to exist. I've asked around but no one has been able to explain this to me (including economists that worked formerly at fnma).
404 Not Found
And Ginnie Mae has been far too quiet lately. What is she up to anyway? Not a peep about her in the news from what I remember.
Pile on by all means, the lord knows that they deserve it.
Wow, those are ugly links, CR.
Those, with a bad unemployment claims report and WB's unanticipated loss; maybe tomorrow will be a fun day.
I think I'll have my daughter place an order for a short sale of SSO, now.
Thanks for the wiki link, Anon. I was familiar with the history, but freddie (ech) has the same charter currently as fannie, and they are both private corporations. I guess the key here is "monopoly":
"From 1938 to 1968, the secondary mortgage market in the United States was monopolized by the Federal National Mortgage Association (Fannie Mae), which was a government agency during that period. In 1968, to help balance the federal budget, part of Fannie Mae was converted to a private corporation. To provide competition in the secondary mortgage market, and to end Fannie Mae's monopoly, Congress chartered Freddie Mac as a private corporation."
So now we have a monopoly of two instead of one. Ok.
Finally....finally....someone besides the proles posting on these bubble/econ blogs for the past_three_years has uttered the word Insolvent.
And a Federal Reserve guy at that. And about our own dear Fannie and Freddie, may they rest in peace.
It's the end of the world as we know it
And I feel fine....
I don't understand. If the GSEs are insolvent the stock holders lose everything and the bond holders get anything that's left. Why does the taxpayer get involved at all? Can I be made whole from my disasterous futures trading that was torpedoed by insane Fed policy? If not why not and why doesn't the same logic apply to F&F.
Now what? This may confuse PPT!
Huh. So much for Fannie and Freddie being the saviors of the housing market or the path to a smooth landing.
I wonder how much the "jumbo conforming" idea hurt them?
Now we will find out what an implied Government Backed security really is worth. Mysteries solved.
Wow.
Just, wow.
Cheers,
prat
This isn't in any way going to affect me getting the pony I was promised, right?
Rob Dawg
F&F were consulted prior to their taking all that toxic crap from the banks and mortgage companies ~ One can only surmise that they were promised something cause they knew the crap was toxic.
OMFG, and yeah I'll pull the video. Won't be long before they shut the internet down any way.
Oh and not in totalitarian reasons...they just couldn't keep the lights on:
YouTube - Hey There Delilah It's the End of the world as we know it..And I DO still Love YOU, Yes I DO
Cheers,
Whew. All clear. He's just disgruntled ex-Federal Reserve President.
RRA - its in the mail, its an addendum to the stimulus check...
...............
Wow, Poole is really burning his bridges ...
Or maybe he was asked to to cover up something else that will transpire tomorrow.
This all goes back to the fraud and illegal activity @ Fannie and it shocked me the other day when I read this:
Fannie and Freddie are adequately capitalized at this point,'' James Lockhart, the director of the Office of Federal Housing Enterprise Oversight, said in an interview with Bloomberg Television today.They are fulfilling their function.''
OFEHO busted those crooks, and then Fannie was to come clean and run an honest business -- which they never did -- so this is a total scam with what's going on, and America needs to go back to the original audits which verified the illegal activity there a few years back -- the fraud was NEVER cleaned up and I'm disgusted with Lockhart pulling a Spitzer -- is he bought and paid for, like everyone else?
You know what I think is kinda ironic? If you asked this bunch of bears 12 or 24 months ago if this could have happened most would have said no... in fact i'd argue f' no....
funny.... (sorta)
..........
This must be prepping everyone for the eventual socialization of F&F. Paulson's talk about bringing down "too big to fail" falls right in line. Could we call this a controlled collapse?
PS. Does anyone have some contacts so I can get in to the eventual private REIT that will be spun off?
Well let's see.
$. Money for the connected made hand over fist.
Am I close?
Cheers,
I hate shorties!
.......
ades,
"If you asked this bunch of bears 12 or 24 months ago if this could have happened most would have said no"
What kind of pseudo-bear were you talking to?
Cheers,
Maybe Jamie Dimon can save us.
Franklin Raines - Wikipedia, the free encyclopedia
In a settlement with OFHEO and the Securities and Exchange Commission, Fannie paid a record $400 million civil fine. Fannie, which is the largest American financier and guarantor of home mortgages, also agreed to make changes in its corporate culture and accounting procedures and ways of managing risk. [9]
In June 2008 Wall Street Journal reported that Franklin Raines was one of several politicians who got below market rates loans at Countrywide Financial because the corporation considered the officeholders "FOA's"--"Friends of Angelo" (Countrywide Chief Executive Angelo Mozilo)
U.S. may need to bail out Fannie Mae and the smaller Freddie Mac
"Don't worry ma'am, I've got you"
"You've got me? Who's got you?"
Misean,
A few perhaps... This is pretty far fetched i think...
I hope this doesnt make me an optimist...
I'm still appreciating the early gold call... Kudos....
~
Well, what would Brian Boitano do? Somebody find him.
Speaking of bear talk i tried to short Pyramid and Redhook today. The answer to both was that there were no shares to short. Dont get me wrong I love the micros but they are at $9 a sixer and that doesnt include deposit and tax. Add that to a shrinking demand, ouch!...
That being said I'm wondering how many other companies out there are that dont have any shares left to short....
Looks like some one will get paid... Just not me....
..........
You're shorting beer?
ades,
"This is pretty far fetched i think... "
Yeah, I didn't include Switzerland. Now it's not. Not that I think avoiding illegal IRS taxes is bad (Super Colander Tin Foil Hat here), just saying these clowns get away with with far better than you or I do. And they run the looting system. Which is unfair.
Oh well...it shall continue this way. Most posters refuse to even recognize this, let alone do shite about it.
Whatcha gonna do. Many defend it. Say it needs to be.
Cheers,
sitting here with a $10/6 per each ipa beer in my hand i am... (granted it was my last masters class tonight so i thought i'd celebrate) i swear i am....
pretty nuts huh...
............
Lefty,
I would NEVER short beer. And would die to defend it. Beer shall reign supreme...at some time...it doesn't matter.
Beer Uber Alles!.
Cheers,
ades
Congrats, must feel good! Having beer for you...
glug, glug...
Whatcha gonna do. Many defend it. Say it needs to be.
ha!
I thought i read greed is good....
I'll be ok in a different place... heck i might even like it... 90% are like that...
I'm originally from a small town, two stop lights and 2k people so i can appreciate the other side of the coin tho...
I do hope we all do well...
honestly....
.......
From the Doomsday article:
The doomsday scenario could cost taxpayers more than $1 trillion, says the S&P report. The report went so far as to say that a government bailout of Fannie or Freddie could force the agency to lower its rating on the creditworthiness of the United States.
The Fannie and Freddie doomsday scenario - Jul. 9, 2008
andy,
thanks! it was part time and brutal... i wouldnt wish it on my enemies....
here's to the future...
as Misean (which I claim stole from me) says: Cheers!
...................
Congrads on your last Masters class, but you already know the most important lesson, don't depend on anyone else. You already know how to make money.
WTF! Did the visitor count just go up at 1:30 ET.
gold
it's not just for breakfast anymore
a buck sixty over here...
silver
the other white meat
ades,
Unfair. I also said:
"Yeah, I didn't include Switzerland. Now it's not. Not that I think avoiding illegal IRS taxes is bad (Super Colander Tin Foil Hat here), just saying these clowns get away with with far better than you or I do. And they run the looting system. Which is unfair."
Good way to piss off allies. But whatever.
Cheers,
Lefty, thanks!
You know the kicker, I graduated undergrad in 01, great timing, and have graduated again looking to get in to the debt markets....
how does it go fool me once.... fool me twice....
There appears to be some disagreement regarding their capital position. Poole claims they are insolvent. The spokespeople indicate that they are solvent. The mysteries of future payment probabilities. The institutions don't like the marketplace's probability.
They can go through a prepackaged BK. The current bondholders can receive a claim on the future mortgage payments. The reorganized firms can begin writing paper based on traditional lending standards. The notion of making the bondholders whole is lunacy.
They could just nationelize the holding of Abu Dabi, Saudi Arabia in GSE bonds instead.
and...
Forgive the payment for all the mortgagees that are associated with these bonds....
Boyz will be having a talk with Poole in the morning...seems putting him out to pasture not taking so well.
Good way to piss off allies. But whatever.
and i'm sure i riled up a few locals with the beer short!
oh well! what can one do...
Forgive the payment for all the mortgagees that are associated with these bonds....
Yal,
what would do that our credit rating! at least currently the bad guys dont know were're how you say...
insolvent...
Re: Boyz will be having a talk with Poole in the morning
I think Poole needs to work with Volcker and do a road show
I'm calling it a night, but everynight I wonder what will tomorrow be like. I have never seen markets like these, and I started trading in '72.
Yah know, that sounds like aprayer:
"Forgive the payment for all the mortgagees that are associated with these bonds...."
What about (at The Confessional): Father, forgive my late payment for all the mortgagees that are associated with thee...
Lefty
I'd think that the age of information would dampen out market swings / volitity... perhaps its the new global economy counter acting it.....
interesting times as you mentioned....
over and out....
right nades,
Oh...btw I've been signing off on message boards, since the development of Fallout2 and Klingon Academy with
Cheers,
As a polite goodbye. Which it is.
Those development boards are well over 10 years old. Further it is an old way to say "I don't care if we agree or not...thanks for the chat" something you don't seem to get.
Tom claim the title of the first "cheers" poster is the height of arrogance. Your following post commits that to memory.
Sir, you are an asshat. And you shall continue to be so, as I shall post this far and wide. good job asshat.
Cheers,
Last month, the House of Representatives passed the FISA Amendments Act of 2008, Congress's latest response to President Bush's demands for expanded eavesdropping authority. The Democratic leadership, seemingly intent on avoiding real debate on the proposal, scheduled the final vote just a day after the bill was introduced in the House. Touted by Democratic leaders as a "compromise," it was supported almost unanimously by House Republicans and opposed by a majority of Democrats.
The New FISA Compromise: It's Worse than You Think | Timothy B. Lee | Cato Institute: Commentary
Did the liquor store come before or after the trading began, Lefty?
There might be some correlation in there somewhere
A July 2007 article with Poole quotes --> Poole Says Subprime Investors Deserved to Lose Money (Update3) - Bloomberg.com
Fannie and Freddie insolvent was a foregone conclusion.....
The real question is whether these are sacrificial lambs (albeit very large) to distract the sharks from the real Wall Street prey. Citigroup, MER, and Morgan Stanley have been incredibly quiet. Looking at all the Lehman ratios they (LEH) have always looked to me to be in better health than the above names.
But my gut feeling all along was that they're all insolvent. You can't have 30-40x leverage and withstand a price drop of 15+%. Equity will be entirely wiped out in most situations.
Does anyone know who the political appointees are at fannie & frodo?
I knew something was up when I was in Copenhagen and saw Poole and Keith of HousingPanic downing Mai Tai's together.
BILL POOLE IS FOR SHAME! HE IS SHAMEFUL!
I remember reading that Mr. Poole now works for Axel Merk. Any chance he is talking the Merk anti-dollar book? hmm...
The company's credit-default swaps show traders are treating the AAA rated debt as if it were five steps lower.
Have I heard this one before?
That's an argument against making bondholders whole - they're already getting paid for the default risk. We shouldn't pay them twice.
Uh, news flash Fair E. That is old school thinking. In the new way of the street the risk reward ratio don't work like that. It's more like, you take the risk, we get the reward.
The thing is that Freddie, Fannie and Ginnie currently finanace about 95% of newly originated mortgages. 95%. Do you get it? If there is a severe hickup with them...there will be a housing crash way worse than anything so far.
They've got a ticket to Rob ..well ok..
Tunage :
YouTube -
Cheers,
Anyone associated with Fannie and Freddie, including SEC Chairman Christopher Cox, should be imprisoned. I do not allow my tax dollars or the value of my currency to be applied to any private company with a failed business model. Any politician that gives our money to these types of organizations will be guilty of conspiracy to commit fraud against the American Taxpayers.
Misean,
perhaps we're in disagreement, about three or four months ago you said i jacked "Cheers" from you. i found humor in it. i've enjoyed your comments to date they've always been informative and interesting. if i've offend you in some way, well shit i dont know what it is...
..........
But, the thing is, with the GSEs standing for 95% of current mortgages...they have the US economy by the balls.
republicans are traitors,
"do not allow my tax dollars or the value of my currency to be applied to any private company "
as if you have a choice whomever holds the reins of power. Nut job.
Hmmm. Ok, so in an effort to see who's running fnma, and who was appointed to do so, I ran into a little wikipedia omission:
Here it tells us that Daniel the current CEO is the son of Roger Mudd of Face the Nation fame.
Daniel Mudd - Wikipedia, the free encyclopedia
But when you look at Roger's page it tells you that Roger has a son named Jonathan -- no mention of Daniel.
From Daniel's bio, it looks like he was a spook for much of his career.
Fed Reserve member William Poole was part of the problem when he was at the federal reserve giving our currency to the bankers. Nice try distancing yourself Poole, you will go to prison too, sir.
From International Political Economy Zone blog:
Pew: US is the Least Sanguine Country on Trade
Here's something to delight the trade sceptics: The most recent Pew Global Attitudes survey found that, in a sample of twenty-four countries, the United States came dead last in terms of viewing trade favourably. While the US (barely) ekes out a majority of respondents who view trade as either very or somewhat good, this position is certainly tenuous. There's nothing much to add to the bullet point provided by Pew on this matter: "Support for international trade continues to decline in the United States - 53% of Americans say trade is good for their country, down from 59% last year and 78% in 2002. Support for trade is lower in the U.S. than in any other country included in the survey."
ades,
Honestly,
I heard in that that time frame some ass hat was running my title...
I've nee criticized someone for signing off
jacked "Cheers" from you.
At leesed the cheers bit. As i said, its common. However, I have heard there were asshats saying they were me during a several month leave.
If this is so or not so...It matters not. Use it as you feel free.
Cheers,
ades,
Glad to see you're still up. Congrats on finishing the graduate work. I started my masters when my oldest was 1 yr old and finished when he was 6 yrs, squeaking under the 5 yr deadline. It was brutal but one of the best things I've done.
Tomorrow I'm gonna buy a St Arnolds and tip it your way. Completion of part time grad stuff should always be celebrated. My completion even got my advisor to attend the graduation ceremony.
Congrats again.
Best,
Okay, please help me understand that my mortgage is serviced by National City Mortgage, who sold it to Fannie Mae who are both in deep. My original LTV was 50% and has remained there as our little pocket of the world actually has not lost value . . . yet.
Who does Fannie Mae sell my loan to. It has to have value to someone else looking on the open market, however it would never benefit Fannie as they would have to discount it.
BTW, after 5 years of assisting in the sale of a company in receivership, I was let go in the 20% staff reduction after completion of the sale. Your welcome.
ades,
I'm blasted so if that made no sense I'm sorry. Bad things tomorrow to deal with.
Sorry,
Cheers,
Oh deary. If you want to see who runs fnma, you can look here. A warning though: they have 47 vice presidents.
http://www.fanniemae.com/ir/pdf/annualreport/2007/2007_annual_report.pdf
OHFEO blew its responsibilities first with FRE and then with FNM. OFHEO is supposed to be the "safety and soundness" regulator for FNM and FRE--where the heck were they?
Instead of watching the GSEs' credit and counterparty risks, OFHEO was carrying water for the hard core private market idealogues in the Bush administratuion and in Congress. They trumped up technical FAS breaches and weakened both GSEs.
Meanwhile the Fed pumped money into the system, keeping interest rates artificailly too low for far too long. Add in incompetent and venal mortgage brokers, investment bankers, and rating agencies and we created a real estate bubble that was destined to deflate quite painfully.
So, Bush's hardliners are getting what they wished for, but now theyr'e running scared--afraid of what the US economy would look like without a functioning secondary market.
The result is that the federal government cannot let the GSEs fail completely. So, when necessary, the government may need to expressly guarantee the debt of the GSEs, including their MBS. This will have the indirect effect of propping up the value of the preferred and equity shares of the GSEs.
We can do very nicely without Bear Stearns, but we can't have a functioning economy without a functioning secondary mortgage market. So, the government can't destroy the interests of equity holders or the government would de facto be obligated to operate the secondary mortgage market for perhaps a decade or more. As much as they loathe the GSEs, the free market purists could not abide the government directly running the whole country's secondary market.
Without the GSES, who would step in to securitize loans and provide the needed liquidity for that critical component of the US economy? Wall Street has lost credibility in this market and can, at best, slowly re-enter the mortgage securitization business in ways that rebuild national and international confidence.
Of practical necessity, the GSEs will be allowed to continue to operate with very little capital, but will have the government's backing to enable its securities to trade at prices close to US Treaturies. Even though the GSEs face perhaps $100= billion in losses over the next four years or so, they will begin to put solid business on their books at subtsantially higher guaranty fees. They will rebuild their capital position over time and the government will be able to reduce and ultimately eliminate its guarantee. Of course, the moral hazard will remain, but tighter regulations will be applied to all mortgage originations. This will add stability and confidence to the secondary market in the long run, but it looks like an increasingly bumpy ride!
hiker90, many thanks, i also enjoy hearing peoples struggles. i think thats what carries us along, the grind.
Misean,
No worries, as you say its been 'tini time for a while over here.... god bless SoCal, (i'm not from here) i love it...
Fannie Mae acts like she got oil wells in her back yard.
My question is:
the debt is paying pretty well right now. is it safe? is there default risk or just fear???
...........
Misean,
Go here in the morning:
Bikini-clad baristas open shop near Space Needle
'Bikini baristas' open shop near Space Needle |
KVAL CBS 13 - News, Weather and Sports - Eugene, OR
- Eugene, Oregon
| National & World News
"I used to work mornings at another coffee stand. I used to make $30 in the morning, but here I make four, five times that much, if not more, because I'm wearing a bikini and people pay more for that," said barista Nicole Corpuz.
Anonymous
you want a good story, there is a coffee shop that looks like those old film processing booths in a parking lot here in san diego ca. its got these brazilians.... dios mio... no bikini's but the accents and the personalties... the place does and absolute killing...
maybe they need a website....
...........
Anonymous | 07.10.08 - 2:25 am | # ,
Thank you. Much appreciated. Deaths in the family have that sort of yin-yang pull. Not sure which side but that pulled the correct side. In other words...I enjoyed it. Thanks.
Cheers,
I'm out.
Cheers,
ades, btw I'm cutting back on the microbrews due to the price increases. also forgot to mention that my adviser described the full time work/part time ms route as the bataan death march of grad school.
gotta get some sleep. if i'm lucky i'll be able to view the show later today around lunch time....lot's of meetings in the morning.
later,
I live near the Space Needle...I'll have to check that place out. For the coffee, of course.
For the record, I'm short vodka but long beer, gin, and vermouth.
"dk writes:
What was that bang?
A gang bang!
Freddy and Fannie are on bottom. Choo Choo"
ROFL that about sums it up dk.
Holy Jesus. This could start an elevator ride to Hell.
Why didn't he just scream "Fire!"
Ok, we have this to refer back to a few months down the line:
http://banking.senate.gov/public/_files/ashley.pdf
Poole is the top story on Bloomberg TV in the UK this morning.
a die hard Rush listening...
Anyone listening to Rush has some screws very loose up there to begin with....he isn't even amusing. He is just super stupid, super ignorant, and very very Americano Stupido.
The US needs to nationalize large segments of the financial sector and put the operations in a regulatory straitjacket. A mixed economy, part private, part public, should be the future for the US. Stop this nonsense that everything has to be private.
Other interesting news:-
Wachovia Names Robert Steel as Chief
Wachovia Names Robert Steel as Chief - CNBC
Wachovia Corp, the fourth-largest U.S. bank, named Treasury Undersecretary Robert Steel chief executive on Wednesday, and said mortgage and legal problems will result in a $2.6 billion to $2.8 billion second- quarter loss, much larger than many analysts expected.
Well, gee, everyone's talking Bill Gross's book these days. If the Feds bail out FNM, maybe we should replace Geo Washington portrait on the dollar with Bill's picture -- the WSJ ought to have a nice engraved image of him.
(top five holdings at PIMCO are FNM)
NB. grain of salt, all details in this post are subject to reality. I think I have the names right, but...
Nevermind, here's a link:
Bill Gross Wants PIMCO Bailout-Minyanville
"Bill Gross Wants PIMCO Bailout
Mike Mish Shedlock Aug 24, 2007 1:15 pm"
and more lately:
"Pimco's Gross scoops up mortgage debt: FT
By John Spence
Last update: 8:34 a.m. EDT May 23, 2008Comments: 1
BOSTON (MarketWatch) -- The widely respected manager of the world's largest bond fund, Bill Gross, has been buying beaten-down mortgage debt, and the contrarian bet appears to be paying off, the Financial Times reported Friday. Gross, managing director at Pacific Investment Management Co. or Pimco, has tripled his position in mortgage debt, which now represents more than 60% of Pimco Total Return fund, up from 20% a year ago, according to the report. Gross told the FT that Pimco was mainly buying mortgage-agency debt rather than "the subprime garbage." The bond manager said his call was based on the government's implicit guarantee to back mortgage giants Freddie Mac (FRE:Freddie Mac
News, chart, profile, more
Last: 10.26-3.20-23.77%
4:02pm 07/09/2008
Delayed quote dataAdd to portfolio
Analyst
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Financials
Sponsored by:
FRE 10.26, -3.20, -23.8%) and Fannie Mae (FNM:Fannie Mae
News, chart, profile, more
Last: 15.31-2.31-13.11%
4:03pm 07/09/2008
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Sponsored by:
FNM 15.31, -2.31, -13.1%) , the report said. Pimco Total Return fund has gained 11.8% over the past year, well ahead of its peers, according to investment research firm Morningstar Inc. "
Interesting to see the yesterday's prices for FNM, FRE inside that May quote from marketwatch.
Pimco's Gross scoops up mortgage debt: FT - MarketWatch
Latest from CNN:
Iran has test-fired more missiles during war games in the Persian Gulf, according to Iran's Press TV. Details soon.
The bodies on the beach are mortgages, and what happens to the girl at the end of my 10 minute flick is whats going to happen to Fannie and Freddie. Scary stuff!
YouTube
- UIILeo's Channel
76s, I found your thoughtful analysis a bit optimistic. In a perfect world, yeah...
But this caught my eye:
So, Bush's hardliners are getting what they wished for, but now they're running scared...
What's got them scared isn't the collapse of the secondary market.
What's got them scared is that total societal collapse may be imminent, and there is nowhere safe on the entire planet for them to hide from the enraged citizenry.
They know what happened in France and Russia under similar circumstances.
My thoughts goes to all those who dollar cost averaged feddie and fannie all the way down to 0.
Good night. Leaves 1 online.
there is nowhere safe on the entire planet for them to hide from the enraged citizenry.
Dubai will host them. Even re-created a mini-earth environment for their soirees.
REBear writes:
My thoughts goes to all those who dollar cost averaged feddie and fannie all the way down to 0.
It should spike up a little when the bailout comes.
Can they watch the fireworks in the Gulf from their balconies?
Sipping dirty martinis watching the sahabs slam into our fleet and arc over on their way to Israel and the incoming from the Polaris'
good times
The Fannie and Freddie doomsday scenario
The Fannie and Freddie doomsday scenario - Jul. 9, 2008
The doomsday scenario could cost taxpayers more than $1 trillion, says the S&P report. The report went so far as to say that a government bailout of Fannie or Freddie could force the agency to lower its rating on the creditworthiness of the United States
Okay, a FRE/FMA bailout could cost 1 trillion dollars--absolute disaster. Iraq has cost only about a quarter of an absolute disaster--but we have the upside of low oil and global stability in return.
kurtyboy writes:
Iraq has cost only about a quarter of an absolute disaster--but we have the upside of low oil and global stability in return.
Kindly elaborate on that statement.
Average Joe writes:
I am so amazed at either how corrupt or how simply stupid those in power are.
Corruption. These guys knew the trajectory of things all along. It's been pretty much inevitable since the response to 9/11 was to cover up the economic consequences of the .com bomb. Probably since long before that, in terms of social trends, but the response to 9/11 was definitely when the Republican establishment sunk the dagger into America's back.
If you wonder how a die hard Rush listening, Bush voting, Republican can become an America bashing, disgruntled cynic....wonder no more.
It is the simple loss of faith in those in power.
Yah well, everyone gets duped. I voted for Bush the first time thinking he might reform an increasingly unsteady banking system. LOL! Suckered!
The second time, I voted for him so that people like you could see what the consequences of the policies you supported were.
It's not even that I have some better alternative. I frankly have no idea how to fix the problem.
It's just the dishonesty, ignorance, and/or malice of it all.
You know you're drawing a salary working as their rodeo clown, right?
"Hey America! Don't pay attention to the guys robbing that economy, the Keystone Kops are back for the attack! Look at us destroying the future of this black man! Ho! Ho! Ho! Hey, look at those funny Koppers getting ready to charge the crowd and fill up camps with people who boo when the show goes sour, what a laff riot!"
And it works, too. 30% of the country still approves of Bush. IMO, the best start you can make on fixing things is to first stop being part of the problem. You love America enough to die for it, but do you love America enough to lose your civil service pension for it?
Reports: Iran test-fires more missiles
U.S. source disputes Iran missile tests - CNN.com
(CNN) -- Iran test-fired more missiles overnight, Iranian news media reported Thursday, one day after it tested a long-range Shahab-3 and other missiles in the Persian Gulf region.
"If Washington and Tel Aviv are foolish enough to even consider attacking Iran, our initial response would be to target Israel and set U.S. interests in the Persian Gulf ablaze," Ali Shirazi, an aide to Iran's Supreme Leader Ayatollah Ali Khamenei, said Tuesday.
"But, the thing is, with the GSEs standing for 95% of current mortgages...they have the US economy by the balls."
So? Since foreigners own a lot of the bonds and will suffer much of the losses, it is obvious that it is better for the US Treasury to let the bonds default and then provide directly new financing for the housing market.
I was just reading "U.S. Economy to Stall at Year-End as `Perfect Storm Returns'" on Bloomberg U.S. Economy to Stall as `Perfect Storm Returns' (Update1) - Bloomberg.com
Where basically it was saying that GDP will drop to .5% in the 4th qtr after the rebates wear off, and it got me thinking.
Why don't we have a real GDP metric that removes the debt component? Why does a loan to ourselves count towards GDP?
If we are borrowing $2b/day, shouldn't we have a "real GDP" metric that removes that? Or maybe there is there one.
I think we can create this metric easily and we have the historical data to take it all the way back.
Then we could see how well we are really doing.
The way it is now, it is sorta like ignoring inflation.
CR - Do you have any "real GDP" charts?
BB:
I was lowballing the cost of the Iraq adventure at 250 billion dollars (some estimates take it as high as 1.5 trillion...). For that price, I sarcastiacally pointed out that our ROI is low oil prices and global stability--both of which were promised at the beginning of the invasion.
As bad as a trillion dollar bailout of the GSEs would be, at least we might get a somewhat less apocalyptic economic shock in the results. In other words, we might have a better outcome than the Iraq debacle.
It was moderately OT, and I apologize to the board for that.
WaPo 2008/03/07...
The Iraq War Will Cost Us $3 Trillion, and Much More
Disaster X3
Poole is a racist, capitalist pig. All we need is more regulations and more regulations and...You get the picture. LOL
Dow Chemical to Acquire Rohm & Haas for $18.8 Billion
Dow Chemical to Acquire Rohm & Haas for $18.8 Billion (Update4) - Bloomberg.com
July 10 (Bloomberg) -- Dow Chemical Co., the biggest U.S. chemical maker, agreed to buy Rohm & Haas Co. for about $18.8 billion to add specialty chemicals that are less vulnerable to economic cycles.
Rohm & Haas investors will receive about $78 in cash for each share they hold, Midland, Michigan-based Dow Chemical said today in a statement. Financing for the transaction includes a $3 billion equity investment from Berkshire Hathaway Inc., the company said.
This should perk up the markets, watch out bears here comes the bulls.
Clearly I slept too late. Good God. And good point about SHAME thing -so who is calling Poole a Schumer?
hmm....
AbuMae
DabiMac
And Average Joe, I thought your post was great and sad, too -- Jim try re-reading it. One thing this crisis did is get people religion (in a good way) -- if there's anything that'll destroy the chance to start a real converstion now about how to fix things now, it's gonna be us lording it over about how we were so smart and everyone else so stupid.
I didn't realize Poole was a Senator.
On a funnier note, Devaney lost everything, and all his investors' money, too.
Hedge Fund Manager Describes Rock Bottom - NY Times
Devaney's Funds Wiped Out After United Capital Gets Margin Call - Bloomberg.com
Costco and Walmart have positive same store sales numbers......and this is both good and a surprise?
If we sent everyone a check for $1,000,000, sales would skyrocket, forclosures would virtually stop in their tracks, credit losses for financial institutions would go to zero, fannie and freddie would be solvent as losses would vanish.....
Why is no one suggesting this?
Because we all know we'd trade short-term problems for long-term ones.
So what's the difference between a check of $600 and $1million....only the size of the mistake.
Don't expect the average joes to think stimulus checks are a positive sign of the future. They'll spend them, but they wont be happy about it.
76s Well, I think that the current head of the OFHELO can look at what happened to Armando Falcoln as an object lesson. HE put out a report on systemic risk and was booted out the next day. That COULD explain OFHELOs hands off approach.
I think alot of us have speculated on the possible failure of the GSEs. My cloudy crystal ball shows something like this: The failure of one of 'em become immanate. The other one is "persuaded" to buy them out in return for government guarantees a la Bear Sterns writ large. Hey, the bondholders will probably be made whole. What will piss me off is the pay off to the equity holders of the failing GSE.
So i want to know this, If there is too much housing supply and houses are not selling, why are mortgage rates not 2,3% now? In retail if you want to clear shelves this is how you do it. Banks are getting the TAF money so why not?
I forgot to mention Poole is also a wife beater. Like Nemo. So what if Nemo is not married? It doesn't make any difference. You just can not trust these wife beaters.
Q.E.D.
My balls itch.
I have had some dealings with Freddie Mac. The have an expansive campus in Tysons Corner, VA with more employees than they know what to do with. They have great cafeterias, top of the line facilities, and they have been growing in size by 10% annually for many years.
The overhead that they have is incredible. I suspect they could cut their workforce in half without a problem. I would hate to see my tax dollars go to keep them workig in excess and luxury.
Fannie and Freddie will become the defacto lenders for housing.
They will continue to lend at below market rates and the losses will just be covered by the taxpayer. It will be the cost of maintaining a peaceful society.
Just like the huge expense for the Government, the military, the FBI, the IRS, NASA, local courts, local police, and on and on. All of these employees, all their pensions, all the buildings, are 100% funded with taxpayer money.
Just add homelending to the considerable list. It will be expensive in down markets, and not so expensive in the up ones....
We should be screaming that any bailout we do means we own Fannie and Freddie. Nationalize them or let them hang.
Not a word of this on the front pages of the Washington Post, NY Times, LA Times, or the Chicago Tribune.
The Fourth Estate has been assimilated.
Thank god for the internets tubes.
I like the comment about talking Gross's book here. Pretty on the money at this point if you ask me.
There is a long, long way between here and endgame for these two. The first thing that will be cut are the dividends. The next thing is the workforce. They will raise a very, very dilutive round at some point. There is nothing that will happen, in the form of any government action, until after the next administration takes over. There is no political will to deal with this from either party.
The shareholders are going to take it in the shorts here. Which is exactly what should happen. I don't understand why all the posts here. Isn't this the way capitalism is supposed to work? All that equity is going to evaporate. If you don't like these two, don't hold their stock. I don't. And now I'll just eat a bag of Cheetos as these two pull back.
The only bad thing is the effect on the mortgage market but, you know, someone will step up and fill the void here if there is real money to be made. Someone is probably planning that right now...and they'd be very, very smart.
What is this I want a pony? I want a pony? Don't you get it. You are the pony. Taste the bridle in your mouth? It's about to come to a bloody froth, and some spurs are going to punch deep into your sides. Yeah, you're a pony that going to be ridden like an Arabian and worked like a water buffalo until you drop dead in your traces.
Jobless Claims
4-week moving average 380.2 K
New Claims
Previous Week 404 K
Consensus 399 K\t
Consensus Range 390 K to 400 K
Actual 346 K
Not a word on ABC, CBS, NBC...
Everybody can relax; all this doomsday recession stuff is just in our heads. Phil Gramm just set things straight:
In an interview with the Washington Times today, former senator Phil Gramm, who is Sen. John McCains (R-AZ) econ brain, blamed the state of the economy on the conviction of many Americans that economic conditions are the worst in two or three decades. Youve heard of mental depression; this is a mental recession, said Gramm.
We have sort of become a nation of whiners, he said. You just hear this constant whining, complaining about a loss of competitiveness, America in decline despite a major export boom that is the primary reason that growth continues in the economy, he said.
Weve never been more dominant; weve never had more natural advantages than we have today, he said. We have benefited greatly from the globalization of the economy in the last 30 years....Thank God the economy is not as bad as you read in the newspaper every day.
The value of my home has already gone up 25% since he unveiled the truth. God bless Phil Gramm!
Just like the huge expense for the Government, the military, the FBI, the IRS, NASA, local courts, local police, and on and on.
You know averagejoe, I used to wonder where your comments came from, but after your admission up-thread about Rush now I know.
You need to get some de-progamming bud. They're not out to get you. If you think that the government has its act together enough for some sort of grand conspiracy then you're putting too much stock in their abilities. They can't legislate out of their own ways, nevermind concoct come sort of coordinated black operation.
Tension between competing interests is what keeps us a pseudo-democracy. Wall street vs the government vs all the special interest groups. Learn to love big brother or you'll get a bullet in the back of the head
And for God's sake start hanging out with liberal democrats. You'll find that the age-old maxim that extremems meet is true, there is practically no difference between them and the right-wing nutcases. It will push you to being apolitical and towards enlightened self-interest which, frankly, is the only place to be.
"what would do that our credit rating! at least currently the bad guys dont know were're how you say...
insolvent...
nades"
No. We are not. Why do you think Abu Dhabi wants to buy all this property in the US ? because the real value is here not in the sdand dunes of the middle east.
"bastions of privilege, financed by the taxpayer"
What is unclear about Poole's logic is how he intends to fix this without even more financing by the taxpayer.
The entertaining thing is that his statements about solvency are so blunt that they absolutely demand a response... but is anybody in the US still stupid enough to deny what he said? I guess we will find out today. Whoever steps up to defend the agencies might as well wear a shirt that says 'stupid".
"“the conviction of many Americans that economic conditions are the worst in two or three decades.”"
-Gramm
More evidence of the growing divide in the American class society. Gramm lives a good life. It shows. He knows of no other.
@Someone is probably planning that right now...and they'd be very, very smart.
Who could this someone be... I wonder? This is how rumors get legs.
Our business has collapsed, cliff-dived since December. we have no, NO access to credit. Our vendors are dropping like flies. We come to work each week and wonder if we can keep it going through Friday.
Whiners?
Go Fuck Yourself Gramm.
Wachovia Corp on Thursday said new Chief Executive Robert Steel could be awarded more than $38 million in salary, bonus and other awards in his first year running the fourth-largest U.S. bank.
New Wachovia CEO could get more than $38 mln
| Reuters
Let the fleecing continue.
wally writes:
What is unclear about Poole's logic is how he intends to fix this...
You can't fix a train wreck.
Bull market in Tampons.
Poole:Freddie Mac owed $5.2 billion more than its assets were worth in the first quarter, making it insolvent under fair value accounting rules . . . Congress ought to recognize that these firms are insolvent [blah blah blah]
Mr. Market: Fannie Mae sold $3 billion of two-year notes yesterday to yield 74 basis points more than Treasuries.
A mere 74bps over risk-free doesn't smell like insolvent to me.
Would somebody please clarify or reconcile these two statements for me?
Otherwise I'll leave this issue with a great feeling of relief that Poole is no longer a St. Louis Federal Reserve President and, I warn you, I might even start suspecting the system works.
Holy COW. I saw Lockhart on teevee Tues when he claimed GSEs are "well capitalized". I think we need lie detectors for bubblevision interviews. He's not a very good liar.
At any rate, Poole & Lockhart are at odds. Both can't be right. Let's see if Paulson & and that generous nice guy, Mr Bernanke clear this mess up.
"Gramm lives a good life. It shows. He knows of no other."
Phil Gramm grew up dirt poor. Try again.
Lotsa folks grew up dirt poor- doesn't mean you can't become Marie Antoinette later.
And then there is his UBS oops:
Phil Gramm's UBS problem. - By Daniel Gross - Slate Magazine
Not a wise move, the "whiner" thing.
How Gramm grew up does not matter. It is nice that he got money, but not that he locks the door behind him. He is clearly, at this point, not understanding the privilege he now enjoys.
quit ur whining!
think happy thoughts and catch some falling daggers.. i need to sell!
sell! sell! sell!
"Wachovia Corp on Thursday said new Chief Executive Robert Steel could be awarded more than $38 million in salary,"
Just for comparison - IMB's current market Cap is $ 37.33M .
Phil Gramm economic advisor to McDepends whose wife Wendy Gramm was on Enron Board of Directors that was connected to major graft and price fixing.
The definition of modern day GOP i.e. greedy immoral scumbags !
But Ken Lay passed away just in time
devaney
nice catch
so many people who saw the skills I have
roflmao
FRE and FNM might be insolvent, but why anyone would give any weight to Poole's view on this subject is beyond me. It is bizarre that the market seems to be reacting to his comments.
FRE and FNM both down 20% in the opening
hour of trading
"I'm going with corrupt. Nobody is that stupid..."
Then how do you explain bush getting elected twice. Never underestimate the American peoples ability to be sold a bill of goods.
"Iraq is an immediate threat..."
"Tax cuts will pay for themselves..."
"Oil will pay for the war..."
"Debts don't matter. Reagan proved that..."
"Ownership society..."
The list goes on and on. The ability of the American people to be dooped is breath taking. So stupidity is a big player in this mess we have, with a healthy dose of corruption thrown in.
OT--are there any equivalents to SKF for the U.K. ? Tx-- dave
Yahoo community sentiment:
Yahoo! Finance - Business Finance, Stock Market, Quotes, News
Bullish
Freddie Mac (FRE)
Fortune say this could cause a trillion dollar bail out from tax payers. You could see it coming. They were over-leveraged, nobody understood their derivatives, and didn't file financial statements for 2 years.
Weve never been more dominant; weve never had more natural advantages than we have today, he said. We have benefited greatly from the globalization of the economy in the last 30 years....
It's worked for Phil and Wendy. As for the rest of US suckers..not so much.
Charlie Poole: "... but why anyone would give any weight to Poole's view ..."
The reason is that Bill the Butcher has consistently worked to head off the systemic threat from the GSEs' "too big to fail" status and the implicit guarantee on agency debt for many years. He is truly the most important and grown-up voice in America on this issue.
The ability of the American people to be dooped is breath taking
30% of the voters in 2000 and 2004 were voting their interests (lower capital gains, law & order, or pro-life judges & laws).
The remaining 20% were in fact duped to some extent, but that's par for the course in any country.
Speaking of Enron ... why weren't they bailed out?
I guess bailouts are reserved for NY and DC financial institutions?
Then how do you explain bush getting elected twice.
The devil you know?
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