Fannie Mae and Freddie Mac??

[Macquack]

hello,

lets shut the banks then and see how far they go

thankyou
robots

Thats what irks me with the financial system. The banking sector, the least productive (yet most profitable) hold all other industries to ransom.

 

[Trembling Hand]

car manufacturers do something productive for society.

I'm not so sure that is true. How can you say an industry that needs billions in tariffs and "grants" is productive??

 

[Temjin]

hello,

lets shut the banks then and see how far they go

thankyou
robots

Geez, robots, you definitely don't want THAT to happen. It wouldn't DO ANYONE GOOD as it would collapse the financial markets and deflate every known assets. Yes, that's including PROPERTIES IN AUSTRALIA. Credit market collapses, bye bye to all assets.

It's definitely a moral hazard issue, but it's the least evil of the two paths. Inflate the crap out of trouble and tank the US Dollars or die painfully through massive deflation and create a greater depression.

 

[robots]

Geez, robots, you definitely don't want THAT to happen. It wouldn't DO ANYONE GOOD as it would collapse the financial markets and deflate every known assets. Yes, that's including PROPERTIES IN AUSTRALIA. Credit market collapses, bye bye to all assets.

It's definitely a moral hazard issue, but it's the least evil of the two paths. Inflate the crap out of trouble and tank the US Dollars or die painfully through massive deflation and create a greater depression.

hello,

what moral issue?

and plod along like every other day, the world isnt doomed

thankyou
robots

 

[Macquack]

.....or die painfully through massive deflation.....

Deflation - "a decrease in the general price level" (Wikipedia) = Increased purchasing power.

I think I'm prepared to give this "evil" a try.

 

[explod]

hello,

lets shut the banks then and see how far they go

thankyou
robots

In Argentina some years ago all the banks did shut up shop and most ordinary folk never ever recovered thier savings. So we may not have to worry, they will do it for themselves.

Most of us dont' like history because it tells us clearly what is likely to occur again.

I am sure there many on the forums who know financial history better than I who can elaborate and or correct.

 

[robots]

hello,

wouldnt be an issue today Explod, as no-one saves anymore

thankyou
robots

 

[sassa]

As one financial blogger put it on Naked Capitalism-
"Today equities are going to fly.I cannot predict for how long.The crash is going to be spectacular."
Prediction,of course.

 

[wayneL]

The $64,000,000 question is:

What does this change?

 

[Aussiejeff]

The $64,000,000 question is:

What does this change?

Well-l-l-l.....the NEGATIVE side of all this seemingly POSITIVE action according to Bloomberg,

(a) "Freddie lost 83 percent to 88 cents, while Fannie Mae dropped 90 percent to 73 cents!!!

(b) Citigroup and Lehman Brothers Holdings Inc. lowered their recommendations on the shares.

(c) Merrill Lynch & Co. cut its share-price forecast for Fannie Mae to 50 cents (a further 32% fall in share "value") and its estimate for Freddie Mac to 25 cents (a further 72% fall in share "value" ).

(d) Banks with large holdings of Fannie Mae and Freddie Mac preferred shares have failed to join in the advance as the takeover eliminated the two companies' dividends!!

eg: Sovereign Bancorp Inc., the second-largest U.S. savings and loan, had stakes in Fannie and Freddie valued at $623 million as of June 30. Sovereign slid 6.6 percent to $9.02 (and will likely slide much more, given Citi, Lehman & Merrill's forecasts!). Gateway Financial Holdings Inc., based in Virginia Beach, Virginia, fell 25 percent to $5.35. Midwest Banc Holdings Inc., based in Melrose Park, Illinois, tumbled 25 percent to $4.48. Note: Gateway and Midwest aren't in the S&P 500.

The Bloomberg report also notes the following "Profound Effect' of the takeover -

"The dilution of common equity as well as preferred shares is going to have a pretty profound effect on other financial institutions that carried the preferred and convertible preferred shares as part of their capital base,'' Michael Mullaney, a Boston-based portfolio manager at Fiduciary Trust Co., which oversees $10 billion".


So, I wouldn't be at all surprised if the current "market euphoria" subsided just a tad, once all the holders of Fannie & Freddie shares tote up their stunning losses going forward!


aj

 

[pepperoni]

What is really troubling me is fannie may and freddie mac have about 5.2 bil in loans a percentage of which are bad and making them insolvent. Not good.

BUT the US treasury itself has only 5.5 bil loans some of which must also be bad so they must already be a bit sick if not insolvent like the others???

BUT THEN if the treasury bails out fannie and freddie its really gonna have to be one very sick puppy from this moment until god knows when? Esp having already bailed out Bear Stearns and some rates and mice?

I would think things have fundamentally gone from very bad to potential doomsday scenarios.

Any yet our market jumped over 3% already?



ONE OTHER FACTOR ... the fin review says china has been pumping tonnes of its reserves into US bonds and the like ... what happens when the US struggles with those commitments? Do they try to honor them and have China foreclose and put the Entire US of A up for sale?

Or do they wipe the obligations out and let the simmering tensions turn into some real drama?


Dunno how this wil unfold but Im tending to think the US might have been better off in the long run letting the failures die and cop the recession.

Can nationalising huge bankruptcies lead to anything good without the sudden rebirth of a boom envirnment for 5-10 years????

(And yes all this is on a very superficial understanding of the facts_

 

[Happy]

My take on it is just pure assumption.

What if government after taking over will be softer on homeowners?

Scale of people just walking off from impossible to pay mortgages might be greatly reduced.
Hope it doesn’t create boom, but also hope it will avert or at least delay the bust.

 

[dhukka]

What is really troubling me is fannie may and freddie mac have about 5.2 bil in loans a percentage of which are bad and making them insolvent. Not good.

I think you mean $5.2 trillion?

 

[pepperoni]

I think you mean $5.2 trillion?

Sorry thats correct ... they are both in the 5 trillion range. Not a number I type often

 

[robots]

The $64,000,000 question is:

What does this change?

hello,

not one thing for the average joe, people will continue to lose money on companies,

today its fannie and freddie, tomorrow someone else

its been going for a century

give us a shout when that property goes to 0 or loses 90% in a day

more certificates for the drawer

thankyou
robots

 

[cuttlefish]

The $64,000,000 question is:

What does this change?

I see you've already adjusted it from 64,000 to 64,000,000 to account for inflation but I suspect it might need to be elevated to the 64,000,000,000 question after this is all over.

"Who wants to be a millionaire" will need to be renamed "who wants to be a billionaire".

I think we're in for hard times having to live through all these nomenclature changes and the rewording of some of our common idioms and phrases to adjust for the inflationary impact.

But apart from that I'd say everthing should be fine really ... yes ... just fine ...

 

[explod]

hello,

not one thing for the average joe, people will continue to lose money on companies,

today its fannie and freddie, tomorrow someone else

its been going for a century

give us a shout when that property goes to 0 or loses 90% in a day

more certificates for the drawer

thankyou
robots

Agree in your idea of advancement, but what a dreadful way to achieve it.

Only someone sick could be impartial to the innocent majority who have been condition to be robbed without any understanding.

 

[cuttlefish]

give us a shout when that property goes to 0 or loses 90% in a day

Already happened in Detroit

Foreclosure fallout: Houses go for a $1

http://www.detnews.com/apps/pbcs.dll/article?AID=/20080813/METRO/808130360/&imw=Y

 

[robots]

Already happened in Detroit

Foreclosure fallout: Houses go for a $1

http://www.detnews.com/apps/pbcs.dll/article?AID=/20080813/METRO/808130360/&imw=Y

hello,

and australia?, you wont find anything because you dont need a 9mm in your pocket to walk down the street here

now lets see, bond, HIH, Allco, B&B (and all associates dropped how much?) one I got hit on MSC, its all a sick joke

thankyou
robots

 

[pepperoni]

Its like allco bailing out centro.

Only way it works is by printing money in zimbabwean proportions???

So just when we thought inflation might abate ...