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Old 05-11-2010, 02:10 PM   #61
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Don't you find the coincidence of Fannie Mae asking for more bailout funds and this "troubling graph" a little handy?

Bottom line, Fannie and Freddie have been held to zero accountability, ZERO!! Compared to what GM and Chrysler had to go through, they have suffered NO pain in getting mucho govt slush funding.............
All true.

Perhaps I am just gullible, but to me, that graph looks like a pretty good explanation of why Fannie and Freddie are in trouble. However, it doesn't excuse them from any of the criticisms you have levied, or make any argument that Uncle Sam's bailout was the correct thing to do.
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Old 05-12-2010, 08:14 AM   #62
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Originally Posted by FinanceDude View Post
Don't you find the coincidence of Fannie Mae asking for more bailout funds and this "troubling graph" a little handy?

Bottom line, Fannie and Freddie have been held to zero accountability, ZERO!! Compared to what GM and Chrysler had to go through, they have suffered NO pain in getting mucho govt slush funding.............
The difference being that Fannie and Freddie sold debt with a wink and a nod from Uncle Sam that their obligations would be backed by the government. Uncle Sam is now making good on that wink and nod, as I think it has to.

Part of the delinquency story here is that Fannie & Freddie are now being run as a housing market subsidy machine instead of as a business. I think it will be impossible to tell how bad the book of business would have been had the companies just wound down. Whatever the losses would have been, they're going to be worse because of government intervention.
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Old 05-12-2010, 08:44 AM   #63
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The difference being that Fannie and Freddie sold debt with a wink and a nod from Uncle Sam that their obligations would be backed by the government. Uncle Sam is now making good on that wink and nod, as I think it has to.

Part of the delinquency story here is that Fannie & Freddie are now being run as a housing market subsidy machine instead of as a business. I think it will be impossible to tell how bad the book of business would have been had the companies just wound down. Whatever the losses would have been, they're going to be worse because of government intervention.
Agreed.

Weren't Fannie and Freddie always intended to subsidize the housing market? The implicit government backing allowed them to borrow at artificially low rates.

In some ways, it worked. Almost all of us benefited from those government backed mortgages, either directly, or through our parents. OTOH, the final result (though not entirely Fannie and Freddie's fault) was ugly.

I am not a small government idealist, nor a believer in big government, but one thing that I am always suspicious of is private/public partnerships. The public almost always gets screwed. I prefer government intervention to be clear and separate from business interests.
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Old 05-12-2010, 08:51 AM   #64
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I am not a small government idealist, nor a believer in big government, but one thing that I am always suspicious of is private/public partnerships. The public almost always gets screwed.
Also known as "privatize the gains, socialize the losses...."
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Old 05-12-2010, 09:11 AM   #65
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Old 05-12-2010, 11:57 AM   #66
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Weren't Fannie and Freddie always intended to subsidize the housing market? The implicit government backing allowed them to borrow at artificially low rates.
Yup. But presumably in the past those artificially low rates were the extent of the subsidy. Now I think it extends to either making questionable loans or doing other things that a private company wouldn't do.
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Old 05-12-2010, 12:47 PM   #67
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And now I see this
backdoor bank bailout fannie and freddie may be "losing money as a matter of policy": Tech Ticker, Yahoo! Finance
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Old 05-12-2010, 01:10 PM   #68
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That's what I meant by this . . .

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Now I think it extends to either making questionable loans or doing other things that a private company wouldn't do.
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Old 05-12-2010, 01:14 PM   #69
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It was the backdoor bailout part that grossed me out. That is different from merely supporting the housing market. This may be conspiracy theory on the part of Ritholtz and Baker, but using the GSEs and supporting the housing market as a cover for funneling yet more billions into the big banks is pretty ugly.
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Old 05-24-2010, 09:00 AM   #70
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Good news?
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Old 05-24-2010, 11:28 AM   #71
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Also known as "privatize the gains, socialize the losses...."
To varying degrees, just about everyone has been holding their noses over these "bailouts". But I think deflation was such a bogeyman that everyone in positions of power was scared shiteless... Though it's an attractive "idea" to let the chips fall where they may, I wonder just how bad it could have gotten, or may still get. I'm not confident this course is better, but if you think 10% unemployment is bad, wait until you get 40-50%...
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Old 05-24-2010, 11:46 AM   #72
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Bad news? Has the recovery stalled?
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Old 05-24-2010, 02:56 PM   #73
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To varying degrees, just about everyone has been holding their noses over these "bailouts". But I think deflation was such a bogeyman that everyone in positions of power was scared shiteless... Though it's an attractive "idea" to let the chips fall where they may, I wonder just how bad it could have gotten, or may still get. I'm not confident this course is better, but if you think 10% unemployment is bad, wait until you get 40-50%...
The idea that these bailouts could prevent debt implosion has just nationalized the problems, the US government is not capable of backing the amount of paper necessary to prevent the deflation. Fannie and Freddie are the tip of a very large iceberg the FED has purchased.
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Old 05-24-2010, 03:10 PM   #74
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Bad news? Has the recovery stalled?
It seems like we're getting closer to "stall speed". Financial conditions have worsened a lot in the past few weeks, with a bunch of credit market indicators flashing yellow. I think we're carrying enough momentum to get us through this rough patch, though.
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Old 05-25-2010, 12:28 PM   #75
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Wasn't the jobless stats helped by the 48000 census takers?
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Old 05-25-2010, 12:33 PM   #76
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Wasn't the jobless stats helped by the 48000 census takers?
Must have been, but when was that?
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Old 05-27-2010, 10:01 AM   #77
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Must have been, but when was that?
The last two sets of results.
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Old 05-30-2010, 12:35 AM   #78
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Maybe things aren't as bad as they seem:
http://finance.yahoo.com/tech-ticker/altucher-%22relax%22-we%27ve-been-through-much-worse-than-this-496311.html?tickers=^gspc,^dji,spy,XLF,^ixic,EEM,F XE
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Old 05-30-2010, 02:58 PM   #79
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Altucher is an unusually useless pundit, in a generally useless field. His comment implying that 1982 was worse than the present from an investor's viewpoint shows extreme misunderstanding of finance. Then we had 15% long term treasury rates, and an extremely depressed stock market. Times were bad, right? No doubt about it, they were. But the S&P sold at a PE10 of about 7 versus today's 20+. And long term governments would return $15,000 or so on a $100,000 investment. Contrast either of those metrics with today's. The situation was was serious. Whether it was worse than today IMO is highly debatable. What is not debatable is that then we were well paid to run those risks, and today we eat grass.

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Old 05-30-2010, 04:19 PM   #80
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Altucher is an unusually useless pundit, in a generally useless field. His comment implying that 1982 was worse than the present from an investor's viewpoint shows extreme misunderstanding of finance. Then we had 15% long term treasury rates, and an extremely depressed stock market. Times were bad, right? No doubt about it, they were. But the S&P sold at a PE10 of about 7 versus today's 20+. And long term governments would return $15,000 or so on a $100,000 investment. Contrast either of those metrics with today's. The situation was was serious. Whether it was worse than today IMO is highly debatable. What is not debatable is that then we were well paid to run those risks, and today we eat grass.
But then again, maybe they are!
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