I honestly don't care what happens in the short term at this point, this crap has to just stop whatever the cost so this generation can build a new foundation. There's no way hyperinflation and socializing losses is a better long-term solution. The illusory asset value of those homes is already gone, you may as well let the people who loaned it out get stuck with the losses and sell them to savers rather than debasing the value of the money in order to prop it up home prices nominally. The moral hazard and incentivization of risk should be obvious with that. If the costs aren't realized now, they will be later.
I'd rather have another 'Great Depression' right now than a 'Super Holy Fuck Depression' when I'm ready to retire because we decided to postpone our Great Depression with even more credit..
The amount of credit available is going to be a driving force for economic trends that follow no known rules. The irresponsible are rewarded; the responsible are screwed.. Certain sectors will be swimming in cash and others will be crumbling despite market demand..
The amount of credit available is going to be a driving force for economic trends that follow no known rules. The irresponsible are rewarded; the responsible are screwed.. Certain sectors will be swimming in cash and others will be crumbling despite market demand..
Just wait until the entitlement programs start to kick in one after another in full swing in coming decades.
Thump553
Lifer
- Jun 2, 2000
- 12,839
- 2,625
- 136
The questionable thing to me is that both Freddie Mac and Fannie Mae appeared to be turning things around already. Both have been effectively selling their debt instruments at a lower cost (thus showing the market's belief in their continued viablility). Their stock prices had stablilized and even risen appreciably. Both Freddie Mac and Fannie Mac had very successful bond auctions just his week, showing investor confidence in their continuing viability. There was no immediate liquidilty crisis. As far as I could tell from my real estate practice, FNMA was functioning normally (with several significant reforms in place to prevent future defaults, including more rigorous underwriting and pre-loan manadatory borrower education).
It looked to me like both Fannie Mae and Freddie Mac had-with the backing of the federal government clearly behind them by the actions earlier this year-the ability to "muddle through" and solve their problems without the necessity and expense of a full-fledged governmental takeover.
It will be interesting to see how much politics was involved in this decision. If the takeover was eventually inevitable, the decision at the highest levels could have been made to do it now, get the bad news out well before the election so the public anger fades by election time. I have no evidence of this, it's just that the entire timing is suspect to me.
Disclosure-I hold a modest amount of FNMA stock (ironically bought earlier this week), now probably made worthless by this decision.
It looked to me like both Fannie Mae and Freddie Mac had-with the backing of the federal government clearly behind them by the actions earlier this year-the ability to "muddle through" and solve their problems without the necessity and expense of a full-fledged governmental takeover.
It will be interesting to see how much politics was involved in this decision. If the takeover was eventually inevitable, the decision at the highest levels could have been made to do it now, get the bad news out well before the election so the public anger fades by election time. I have no evidence of this, it's just that the entire timing is suspect to me.
Disclosure-I hold a modest amount of FNMA stock (ironically bought earlier this week), now probably made worthless by this decision.
Lose a thousand dollars, and it's your problem. Lose a trillion dollars, and it's everybody else's problem.
I am just glad this bailout is happening. Now the credit crisis is over and we can all go home.
I am just glad this bailout is happening. Now the credit crisis is over and we can all go home.
It did more than this. The $7,500 is misleading as people who get their home through a HFA don't qualify for this.
sandorski
No Lifer
- Oct 10, 1999
- 70,785
- 6,345
- 126
At the very least some Banks should be allowed to Fail. Only those deemed too damaging should get any Bailouts. The bar to determine what's too damaging needs to be raised ever higher as more and more Banks Fail. Unfortunately, every Bank in danger is going to Lobby Politicians and cook the Books to try to be the one to get bailed out.
Originally posted by: alchemize
Yes, let's make the Great Depression look like a tea party. GO RON PAUL!Originally posted by: mAdMaLuDaWg
Originally posted by: alchemize
You do realize that the so called "$6 trillion liability" is backed up by some lesser amount of assets, right? And the variance between the two is the net exposure to the taxpayers.
Which of course is a trifling amount compared to the $53 trillion liabilities, backed up by zero assets, for medicare and SS.
And what, pray tell, would be your solution be - let Fannie Mae and Freddie Mac fail?
This is starting to smell Ron-paulish
I for one wouldn't mind starting out with a clean slate. Yes, I say let it go bankrupt and another financial institution absorb the assets along with the debt, and have it truly privatized. No more of this GSE nonsense and their free wheeling access to US taxpayer money... thats what caused the whole problem in the first place.
Right keep believing that as you pay off someone else debt to china.
+1 Exactly right.
Of course, we wouldn't have even had this serious a credit bubble had Greenspan hiked interest rates much earlier than 4Q04 and removed the froth that was so obviously building. Nobody wanted to face the music back then and now look at the size of the problem we have as a result.
BoberFett
Lifer
- Oct 9, 1999
- 37,562
- 9
- 81
Hehe, he called the housing crash and resulting recession 5 years ago.
He must be a loon. Only loons can tell the future.
BoberFett
Lifer
- Oct 9, 1999
- 37,562
- 9
- 81
Not to mention that propping up home prices artificially actually hurts those that the Democrats think they're "helping". People already in their homes get a present. Middle Americans who currently rent? Well they're fucked, they'll never get to own a home.
IronWing
No Lifer
- Jul 20, 2001
- 72,896
- 33,993
- 136
Holy crap, it looks like they're really going to do it. This deserves the whole song.
:music:
Oh the price of gold is rising out of sight
And the dollar is in sorry shape tonight
What the dollar used to get us
Now won't buy a head of lettuce
No the economic forecast isn't right
But amidst the clouds I spot a shining ray
I can even glimpse a new and better way
And I've demised a plan of action
Worked it down to the last fraction
And I'm going into action here today
CHORUS:
I am changing my name to Chrysler
I am going down to Washington D.C.
I will tell some power broker
What they did for Iacocca
Will be perfectly acceptable to me
I am changing my name to Chrysler
I am headed for that great receiving line
So when they hand a million grand out
I'll be standing with my hand out
Yes sire I'll get mine
When my creditors are screaming for their dough
I'll be proud to tell them all where they can all go
They won't have to scream and holler
They'll be paid to the last dollar
Where the endless streams of money seem to flow
I'll be glad to tell them what they can do
It's a matter of a simple form or two
It's not just renumeration it's a liberal education
Ain't you kind of glad that I'm in debt to you
CHORUS
Since the first amphibians crawled out of the slime
We've been struggling in an unrelenting climb
We were hardly up and walking before money started talking
And it's sad that failure is an awful crime
Well it's been that way for a millenium or two
But now it seems that there's a different point of view
If you're a corporate titanic and your failure is gigantic
Down to Congress, there's a safety net for you
- Tom Paxton
:music:
Oh the price of gold is rising out of sight
And the dollar is in sorry shape tonight
What the dollar used to get us
Now won't buy a head of lettuce
No the economic forecast isn't right
But amidst the clouds I spot a shining ray
I can even glimpse a new and better way
And I've demised a plan of action
Worked it down to the last fraction
And I'm going into action here today
CHORUS:
I am changing my name to Chrysler
I am going down to Washington D.C.
I will tell some power broker
What they did for Iacocca
Will be perfectly acceptable to me
I am changing my name to Chrysler
I am headed for that great receiving line
So when they hand a million grand out
I'll be standing with my hand out
Yes sire I'll get mine
When my creditors are screaming for their dough
I'll be proud to tell them all where they can all go
They won't have to scream and holler
They'll be paid to the last dollar
Where the endless streams of money seem to flow
I'll be glad to tell them what they can do
It's a matter of a simple form or two
It's not just renumeration it's a liberal education
Ain't you kind of glad that I'm in debt to you
CHORUS
Since the first amphibians crawled out of the slime
We've been struggling in an unrelenting climb
We were hardly up and walking before money started talking
And it's sad that failure is an awful crime
Well it's been that way for a millenium or two
But now it seems that there's a different point of view
If you're a corporate titanic and your failure is gigantic
Down to Congress, there's a safety net for you
- Tom Paxton
Lemon law
Lifer
- Nov 6, 2005
- 20,984
- 3
- 0
--------------------------------------------------------------------------------
At least Engineer seems to get it, what we have is a failure of government regulation of markets in the first place. The people who abused the system got in and got out packaging dubious loans as AAA risks. And that never should have been allowed to occur.
Now we have almost no choice but to bail out some of the major institutions who trusted an unregulated system.
bamacre
Lifer
- Jul 1, 2004
- 21,029
- 2
- 81
It seems to me that the problem isn't a "lack of regulation," but government intervention in the market.
But this is typical mentality from the Left and the Right. Intervene in the market, and when it creates a problem, say the answer is more intervention. Health care is another perfect example.
"Holders of bonds have to be made good, as the $1.4 trillion worth is a key asset in institutions all over the world. Preferred stock? Same deal. The cutoff decision will be precedent for the bank failures to come: Who, exactly, is TBTF (too big to fail), and when one tanks, who gets paid?"
"There are $5 trillion in GSE mortgage-backed securities out there, and F&F own only $1.4 trillion. The principal owners of the other $3.6 trillion are giant institutions in desperate trouble. If anybody began to bid aggressively for MBS, trying to drive price up and yield down, those owners would dump their massive holdings in the same market mechanism holding rates up where they are. Any slide to 6.5 percent, and they elbow new borrowers out of the way. Neither F&F nor the U.S. Treasury could possibly borrow enough money to buy them out.
Maybe, just maybe, the authorities will get the following equation. Normal MBS holdings are maintained with leverage of capital. With capital mostly gone, every big outfit is trying to reduce leverage. So, rates have to be high to attract unleveraged buyers: mutual funds and such. The only way to restore leveraged buyers is to restore capital by federal injection and/or accounting mirrors. Until the authorities make that leap, the real economy will deteriorate in gradual credit starvation."
http://www.inman.com/news/2008...ddie-deathwatch-begins
"There are $5 trillion in GSE mortgage-backed securities out there, and F&F own only $1.4 trillion. The principal owners of the other $3.6 trillion are giant institutions in desperate trouble. If anybody began to bid aggressively for MBS, trying to drive price up and yield down, those owners would dump their massive holdings in the same market mechanism holding rates up where they are. Any slide to 6.5 percent, and they elbow new borrowers out of the way. Neither F&F nor the U.S. Treasury could possibly borrow enough money to buy them out.
Maybe, just maybe, the authorities will get the following equation. Normal MBS holdings are maintained with leverage of capital. With capital mostly gone, every big outfit is trying to reduce leverage. So, rates have to be high to attract unleveraged buyers: mutual funds and such. The only way to restore leveraged buyers is to restore capital by federal injection and/or accounting mirrors. Until the authorities make that leap, the real economy will deteriorate in gradual credit starvation."
http://www.inman.com/news/2008...ddie-deathwatch-begins
Mission accomplished.
I said this was the plan at the time of the Bear Stearns bail out. Push all the crap on the tax payers and bail out Wall Street et al.
Next step is to tell the taxpayers there is no money for pensions and medical services etc.
Rich 2 Suckers 0
I said this was the plan at the time of the Bear Stearns bail out. Push all the crap on the tax payers and bail out Wall Street et al.
Next step is to tell the taxpayers there is no money for pensions and medical services etc.
Rich 2 Suckers 0
Thump553
Lifer
- Jun 2, 2000
- 12,839
- 2,625
- 136
There was a news article in the financial sections Friday AM about China's central bank having a liquidity problem and having to negotiate with the Finance Minister of China. The article mentioned the billions of Freddie Mac and Fannie Mae debt and securities held by that central bank.
I wonder if this whole thing is coming about now because the US government is being strong-armed by our Chinese creditors? It wouldn't surpise me in the least, quite frankly, because I'm still not seeing any reason the US govenment is pulling the plug now on institutions that were technically solvent and actually recovering.
I wonder if this whole thing is coming about now because the US government is being strong-armed by our Chinese creditors? It wouldn't surpise me in the least, quite frankly, because I'm still not seeing any reason the US govenment is pulling the plug now on institutions that were technically solvent and actually recovering.
sunzt
Diamond Member
- Nov 27, 2003
- 3,076
- 3
- 81
Yeah, I wonder how much influence China had in the decision. I think the Chinese own like 10-20% of Fannie or Freddie, or even both. A sizable percent at least.
Oh BTW, not as big as Freddie or Fannie, but.... Silver State Bank of Nevada PWNED!
Which President signed into law the looser restrictions?
Oh, thats right, your white knight, President Clinton...
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