msnbc reports fannie and freddie are to be taken over
by gov`t and top execs dismissed...
There are a number of Central Banks that are going to be going ape sh*t over this and their bonds..............
Quoting: Enlilson
Enlilson, it's not entirely clear yet is it whether the government will protect the preferreds? I guess we will have to wait for the full details of the plan. I remember reading somewhere over this past week that the Chinese have at least a 500 billion investment in Fannie and Freddie.
Now wait! - will I find the links to that story yesterday that the Chinese have called a halt to foreign financial investment. No wonder!; must have known what was coming down the pike?
Here you go - here's the link. There was anothe one published yesterday along the same lines with more info' but I can't find the wretched thing because I left the article at work and I need the headline to find the article on google
msnbc reports fannie and freddie are to be taken over
by gov`t and top execs dismissed...
There are a number of Central Banks that are going to be going ape sh*t over this and their bonds..............
Enlilson, it's not entirely clear yet is it whether the government will protect the preferreds? I guess we will have to wait for the full details of the plan. I remember reading somewhere over this past week that the Chinese have at least a 500 billion investment in Fannie and Freddie.
Now wait! - will I find the links to that story yesterday that the Chinese have called a halt to foreign financial investment. No wonder!; must have known what was coming down the pike?
Here you go - here's the link. There was anothe one published yesterday along the same lines with more info' but I can't find the wretched thing because I left the article at work and I need the headline to find the article on google
There was a great pinned thread last week about this called the credit crisis phase 2 and it went into details about this and it seemed to me if the preferred's get fu*ked so does everyone else.....I am going to read the FT article now thanks..
edit
I makes sense...........and the one to watch is the Central Bank of Spain.....from what I recall and that was before this Fannie/Freddy debacle. __O__/
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Outside OUTSIDE ......Surf it now.....
Anonymous Coward User ID: 487325 9/6/2008 12:01 AM
There was a great pinned thread last week about this called the credit crisis phase 2 and it went into details about this and it seemed to me if the preferred's get fu*ked so does everyone else.....I am going to read the FT article now thanks..
edit
I makes sense...........and the one to watch is the Central Bank of Spain.....from what I recall and that was before this Fannie/Freddy debacle.
Quoting: Enlilson
I posted the credit crisis 2 thread...I'll link it for ya soon as I find it.
Anonymous Coward User ID: 459712 9/6/2008 12:11 AM
Fannie and Freddie rescue dilemma- their stocks and debt are held by other banks
Another perfect example of the impossible state of affairs in the world credit crisis is Fannie/Freddie. And that means that if the Fed/Treasury does a bailout, their stocks collapse in value, and all the other financial institutions take losses on that because they hold lots of Fannie and Freddie stock. Of course the stock is already in the tank, but the issue is still there and shows the interlinkages.
Then there is the question of the Fannie and Freddie bonds out. That is another can of worms, and the Chinese just stated this week that a collapse of Fannie-Freddie could lead to an economic catastrophe – their Central Bank advisor Yu Yongding stated. The Chinese hold hundreds of billions ($376 billion mostly in US agency bonds) of Fannie and Freddie debt and stock.
In many respects, because of all these cross holdings of the Fannie Freddie bonds and stocks by banks everywhere, and by Central Banks, it would seem that the losses cannot really be removed from the financial system – ie purged. If Fannie and Freddie are bailed out, their stocks collapse and those losses now translate to all these other banks and central banks that hold them. It’s virtually a no win situation.
These cross linkages reveal that it is virtually impossible, even with bailouts, to purge the ever growing $500 billion and counting losses of capital from the banking/financial system. The latest numbers being speculated on are the losses will be over $1 trillion (IMF) and $2 trillion or more (Roubini).
Now, maybe $2 trillion doesn’t sound like a lot compared to the entire world economy. The trouble is, that capital is leveraged anywhere from 10 to 50 times by the financial system. Fannie and Freddie have 60 to 1 leverage.
Losing $2 trillion of capital will totally wipe out the entire world financial system for a decade because of the leverage at 60 to 1. Basically, unless those losses can be purged in some way, it has to be earned back over a period of years/decades. That essentially cripples the entire world financial system.
I remember a very well put quote from a banker last Fall 07 about the credit crisis then. (I’m sorry, I don’t remember his name.) He stated “The credit deleveraging will not be denied.” I think that sums things up very well.
It appears that a relentless unwinding of the world credit/finance bubble with many dimensions and twists and turns cannot be avoided, even if the central banks were willing to try. The issue is the cross linkages and the fact that the capital losses in every corner of the world will not and maybe cannot be purged from the financial system, even with big public bailouts. There is possibly no way to do it other than to allow things to just unwind and try to re earn it all back the hard way.
Even if it appeared the central banks could figure out a way to purge the losses from the financial system, and take them on their books, then their currencies are in danger. The capital losses are there – period. The deleveraging of 60 to 1 credit is happening – period. The financial institutions don’t trust each other – period.
The Fannie – Freddie bailout proposals are being discussed in the light that the US government/Treasury can just about double the so called national debt from $9 trillion by possibly adding another $5 plus trillion, as they effectively have to guarantee those GSE bonds. That is now playing into a debate on the US fiscal situation….as if the USD needed another problem.
In short, once again, we see that it appears impossible to purge the effects of so much lost capital to the world financial system. The deleveraging will not be denied. We see this a year after the Credit Crisis I exploded worldwide Aug 07.
End of a huge world bubble
If that is true, then the theory I laid out above, that we are witnessing a peak in a parabolic finance/asset/stock bubble of world proportions, is going to pan out. I think the entire credit crisis can be looked at from that perspective. We are merely witnessing the relentless unwinding of the biggest financial bubble in history. And, ominously, this particular bubble has grown from the end of WW2 to the present. That is one HUGE economic bubble, and this one envelops the entire world. This is not just a bubble in one country’s economy.
The point of emphasizing it’s from the end of WW2 is that we are not talking merely about a banking crisis, or whatever. We are talking about the deleveraging of the greatest economic/finance bubble in history. Once the level of leverage reached 60 to 1, it becomes impossible to stay ahead of the deleveraging, even for central banks. The implications are staggering. Every major economy in the world is involved. The outcomes of deleveraging this monster bubble, represented by the green oval, will be what I term Credit Crisis II. At 60 to 1 leverage, a loss of 1 to 2% wipes out the capital.
Whether it’s the Chinese Central Bank (BOC), the Fed, the ECB, and then all the other world financial institutions of every type, insurance companies, gigantic retirement funds, other banks, you name it, the present losses of capital to the world financial system is pervasive worldwide.
Nobody will escape the wrath of this deleveraging, and that is why I call it Credit Crisis II. Credit Crisis I was only the preliminary round…Credit Crisis II is characterized by the realization that the gigantic losses of capital cannot be purged from the financial system, even with big public bailouts. And that this deleveraging cannot be stopped. There are too many interlinkages. And, without writing a book on this, the next victim when Credit Crisis II unfolds, will be massive world currency instability. This will make any of the banking and currency crises we have seen since WW2 look like child’s play. It is not clear when Credit Crisis II begins but it is threatening already.
The section before that was about the Spanish banks and Frankfurt having to hold up the Spanish bank.
(apparently Freddie and Fannie happened first --so lets go with that part of it. Alt+F4 Allows GodLikeProductions User to Check Current score in Thread Dialog.
"GLP has some batty shit, but yours takes the fucking biscuit "-Disputed-
Hurray for Anarchy! This is the happiest moment of my life.
So what this means is because of the interconnectivity--- the Fed is proping up the mortgage end so that the bonding market doesnt collaspse --so the system "appears " to maintain some integrity and LOOKS like the staus quo...
(to laymen the bonds insure loans when they go bad)
While the rest of the sytem will appear to "be stabilized" it will cause a Giant deleveraging of currency value---
So the things we should look out for are gold going up--a EU major bank failing like spains or japans and the value of ALL currencies dropping like stones---
In the meantime go get food and access to water if you already haven't because this crawl down may take up to what would anyone suggest-- 1 month to a year to crawl down?
By this guys estimate?
We know what the indicators are now--- so that should pretty much tell us what is what.. Alt+F4 Allows GodLikeProductions User to Check Current score in Thread Dialog.
"GLP has some batty shit, but yours takes the fucking biscuit "-Disputed-
Hurray for Anarchy! This is the happiest moment of my life.
Anonymous Coward User ID: 487325 9/6/2008 12:35 AM
Paulson gathered with Federal Reserve Chairman Ben S. Bernanke, FHFA director James Lockhart, Syron and Mudd in Washington. The Treasury plans to brief Democratic presidential candidate Barack Obama's campaign team tomorrow and has contacted Republican contender John McCain's staff about its intentions.
So, if the government is only *now* taking them over, what was the bail out that happened back in July? Can someone explain the difference between these two things?
Paulson gathered with Federal Reserve Chairman Ben S. Bernanke, FHFA director James Lockhart, Syron and Mudd in Washington. The Treasury plans to brief Democratic presidential candidate Barack Obama's campaign team tomorrow and has contacted Republican contender John McCain's staff about its intentions
**********************************************
extremely ominous...msm will get off the hook telling us because this will be thoroughly buried under all this hurricane shit Highway to Hell
Paulson gathered with Federal Reserve Chairman Ben S. Bernanke, FHFA director James Lockhart, Syron and Mudd in Washington. The Treasury plans to brief Democratic presidential candidate Barack Obama's campaign team tomorrow and has contacted Republican contender John McCain's staff about its intentions
**********************************************
extremely ominous...msm will get off the hook telling us because this will be thoroughly buried under all this hurricane shit
Quoting: 383623
I agree - this is extremely ominous that they would need to inform everyone concerned, and doubtless they will also inform foreign central banks of their plans. Remember last weekend when NOLA mayor Nagin said that Gustav was "the mother of all storms"? Well this thing is shaping up to be the "mother of all market movers" regardless of Wall Street's reaction on Monday.
For traders it's good to the square (not short or long) and on the sidelines until the flack dies down? Imagine yourself with a position - short or long over this weekend and how nervous you would be ahead of the opening of Wall Street Monday.
I think it is a lethal idea to safe all these bankrupt American banks, and also the endless support of loans and more loans from countries like China, Russia and Saudi Arabia
I think the only thing that can 'safe' the US economy is to have a full blown crash, up to the bottom, and then to start new on realistic terms
fcours ethis would mean that the US would be bankrupt and every American would be poor to the bone, the dollar would not be worth anything anymore and the psychological effect of the total destruction of 'The American Dream', 'Kapitalism' and 'Free Trade' would be devastating to the US people who still believe money & oil == God.
Nevertheless it is the only way. This will not end for generations if they don't.
It would mean that the US has to cut down 90% of its defense budget for starters, and a UN emergency plan could try and organize some sort of 'Masrahll Plan' for the US to maintain schools, healthcare, housing and foodsupplies. But frankly that would be about all teh world could and should do for the US.
The USA needs to learn from its mistakes and learn soem humility. It has played way over its hand for decades, especially under Bush & Cheney. It should immediately close the 800+ military bases, stop the Star Wars projects and spend money on educating its people, feeding the people and start some sort of healthcaresystem that is at least on the level of a civilized country. It would mean the first 10 years the US would have to spend all its energy on rebuilding itself and keep quiet and modest. That would be new for Americans but very healthy (and good for world peace!)
Monday will be the day... So if you can still go out to shop and get supplies, by all means: DO IT NOW!!!
Tuesday your money will be sand in the sea...
msnbc reports fannie and freddie are to be taken over
by gov`t and top execs dismissed...
Quoting: Anonymous Coward 494206
Didn't mean to double post this. Sorry OP. I looked and missed your thread We will never have great leaders as long as we mistake education for intelligence, ambition for ability, and lack of transgression for integrity
So now the Government will demand those higher taxes as a pay back from the people. Next these will be Government homes, condos, apartments. So where do the poor live? I guess we end up in Concentration Camps, because if Marshal Law is enforced that means you are taken off the street.
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We will never have great leaders as long as we mistake education for intelligence, ambition for ability, and lack of transgression for integrity
