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| | Page 1, 2, 3, 4, 5, 6, 7, 8, 9 | Fannie and freddie...govt taken over
| Anonymous Coward
User ID: 495109
9/7/2008 10:09 AM | | Re: Fannie and freddie...govt taken over | Quote |
The Great American Bailout:
Costs, Repercussions and the End
of U.S. Financial Domination
Inflate or die.
Inflate or die. That's the Federal Reserve's mantra since the sub-prime credit crisis first hit the investment scene last August.
Since then, this crisis has taken a destructive path and pummeled global equity and bond markets along the way. Global banks have also lost a combined US$1.6 trillion worth of stock market capitalization since last August. That makes this past year the worst year-over-year loss in history.
Before it's all over, Americans, Sovereign Wealth Funds (SWFs) and other investors will pay an astronomical price to rescue the battered U.S. financial system.
The Death of a 24-Year-Old Bull Market
The bull market for financial services stocks first began in 1982. And this bull market hit a crushing dead-end in August 2007. It will be years before this sector fully recovers.
Let's start with banks. Right now, large and small banks are desperate to recapitalize their smashed-out balance sheets. They continue to dilute shareholder equity through massive rights offerings and new issues. Dividends have been sliced and diced.
Since last August, banks have written off or lost a cumulative US$476 billion during the worst credit crisis in a generation.
Over the last 12 months, the Federal Reserve and the U.S. Treasury have dreamed up and orchestrated spectacular bailouts to preserve the financial system and avoid systemic risk.
But what are they really achieving? Long-term the consequences of the Fed's actions will be horrendous. In the not-too-distant future, you'll see existing and future generations of Americans paying dearly for our leaders rescuing one financial institution after another.
There is no "avoiding" systemic risk. The final consequence of Morale Hazard is a larger, more threatening financial panic down the road.
When the government bails out institutions and nationalizes failed enterprises, they only increase long-term inflation. For starters, they have to pay for those bailouts. So the government ultimately turns to taxpayers to fund the expansion of credit. By interfering with capitalism's natural progression, the government delays its own financial reckoning.
In my opinion, an insolvent institution must be allowed to fail.
Morale hazard has played a major role on Wall Street and at the Bernanke Fed since March. Investors and analysts have seriously questioned the Fed's unorthodox role as lender of last resort.
What business does the central bank have to collateralize a failed institution's almost worthless debt with Treasury securities? That's what the Fed did with Bear Stearns Cos. in March. The Fed did the same thing for other troubled but unnamed investment banks and banks over the same period.
Is Morale Hazard Justified?
Is a bailout justified if that institution mismanaged its business model? More importantly, should the government rescue a financial firm in the interest of deterring systemic risk?
It's true that the Bear Stearns bailout deflected a major financial panic. But what really happened there? Contrary to most financial news reports in March, several large hedge funds were in the process of liquidating their accounts at Bear Stearns (Bear Stearns was a leading prime broker for hedge funds).
One of the largest hedge funds in the world actually sparked a run by other hedge funds to get out of Bear Stearns. The entire gamut of players scrambled to get their assets out before it was too late. There's no doubt a major global financial panic would have ensued on March 17 without some sort of rescue.
In July, the government officially assured investors that Uncle Sam would guarantee GSEs or Government Sponsored Enterprises, Fannie Mae and Freddie Mac. Prior to Secretary Treasury Paulson's assurances in mid-July, markets were reeling at the prospects of a Fannie and Freddie collapse.
Again, a failure of both mortgage giants would have caused sheer panic in global markets because of the significant role they play in mortgage financing, debt issuance, and liquidity to banks. So some will argue it was a good short-term solution...but at what cost?
The Piper Will Come Calling - Eventually
Bailouts and Morale Hazard have been highly subjective topics among investors and policymakers since March.
In the end, the United States will have to finance these and future financial bailouts with enormous amounts of credit, mostly from taxpayers. It's inevitable that all this credit will eventually drain on the economy, American capital markets, and ultimately the dollar.
The United States is already losing its financial supremacy to London, Frankfurt, Hong Kong, Singapore, and Dubai this decade.
Capital flows to safe, tax-efficient shores. We're likely to see new regulations in the U.S. as a consequence of the sub-prime mortgage debacle and other banking oversights. As a result, the United States will increasingly lose more market share to other international financial capitals.
Eventually, other financial systems will also feel strained by America's slow but progressive financial dilution.
The United States still plays a vital role in global finance. So it would be naïve to think Dubai or Singapore won't be affected by another major U.S. financial crisis in the future. That's why I continue to buy gold. All governments are tied in one form or another to each other as global trade and capital flows have grown increasingly inter-connected. There's no safe-haven overseas ahead of the next major crisis.
[link to www.sovereignsociety.com] |
| Anonymous Coward
User ID: 492546
9/7/2008 10:11 AM | | Re: Fannie and freddie...govt taken over | Quote |
this is huge....I believe the two entities control
over 1.5 trillion in real estate...this is gonna hurt Quoting: Anonymous Coward 494206
Yep, making it so the "peon" can no longer afford to own land and screwing the middle class at the same time - THIS IS A TREND, AND UNLESS SOMEONE STEPS IN, THIS WILL BE A CONTINUED TREND - despicable! |
| Anonymous Coward
User ID: 276543
9/7/2008 10:14 AM | | Re: Fannie and freddie...govt taken over | Quote |
this is huge....I believe the two entities control
over 1.5 trillion in real estate...this is gonna hurt
Yep, making it so the "peon" can no longer afford to own land and screwing the middle class at the same time - THIS IS A TREND, AND UNLESS SOMEONE STEPS IN, THIS WILL BE A CONTINUED TREND - despicable! Quoting: Anonymous Coward 492546
The number I have been hearing is 5 trillion backed mortgages. Been trying to scope out news about this
Found someone who says Paulson will be speaking at 11am EST to whoever about the plan--should know more soon. |
| Anonymous Coward
User ID: 444738
9/7/2008 10:14 AM | | Re: Fannie and freddie...govt taken over | Quote |
I think that here many people don't understand the magnitude of what this event. Don't get the proportions, the number and the mess.
Tomorrow Average Joe (and future generations) will be hit really really hard. It doesn't matter if the DOW will go up. What the goverment will do is to send a receipt of $5trillion + INTERESTS to the American people.
This is huge.
The thing that gets me above and beyond the lying from Bernanke, Freddie and Fannie, if you step back one more step and look at the whole situation...
They "help" generate massive buying power by insuring loans.
This, in turn, raises housing prices. It also raises property taxes! So, it is government fraud to finance government, which some would say is more fraud.
The little guy coming in late just get high taxes and high mortgage payments. In the end, Fannie and Freddie FUCK THE PEOPLE for the benefit of the corporations...AGAIN! But wait, the people get to pay for being fucked by bailing out the corporate stuffed pigs...AGAIN!
Wave a flag if you like getting fucked. |
| Anonymous Coward
User ID: 495109
9/7/2008 10:15 AM | | Re: Fannie and freddie...govt taken over | Quote |
look at this....
next shoe to drop....
A sovereign wealth fund (SWF) is a state-owned investment fund composed of financial assets such as stocks, bonds, property, precious metals or other financial instruments. Sovereign wealth funds have gained world-wide exposure by investing in several Wall Street financial firms including Citigroup, Morgan Stanley, and Merrill Lynch. These firms needed a cash infusion due to losses resulting from the credit crunch.
Some sovereign wealth funds are held solely by central banks, who accumulate the funds in the course of their fiscal management of a nation's banking system; this type of fund is usually of major economic and fiscal importance. Other sovereign wealth funds are simply the state savings which are invested by various entities for the purposes of investment return, and which may not have significant role in fiscal management.
The accumulated funds may have their origin in, or may represent foreign currency deposits, gold, SDRs and IMF reserve positions held by central banks and monetary authorities, along with other national assets such as pension investments, oil funds, or other industrial and financial holdings. These are assets of the sovereign nations which are typically held in domestic and different reserve currencies such as the dollar, euro and yen. Such investment management entities may be set up as official investment companies, state pension funds, or sovereign oil funds, among others.
There have been attempts to distinguish funds held by sovereign entities from foreign exchange reserves held by central banks. The former can be characterized as maximizing long term return, with the latter serving short term currency stabilization and liquidity management. Many central banks in recent years possess reserves massively in excess of needs for liquidity or foreign exchange management. Moreover it is widely believed most have diversified hugely into assets other than short term, highly liquid monetary ones, though almost no data is available to back up this assertion. Some central banks even have begun buying equities, or derivatives of differing ilk (even if fairly safe ones, like Overnight Interest rate swaps).
[link to en.wikipedia.org] |
| Lester 
User ID: 498878
9/7/2008 10:20 AM | | Re: Fannie and freddie...govt taken over | Quote |
WonbyOne is correct.
The change.
The greatest change of All History is already in process.
The Return of Christ Jesus to take possession of earth from God's enemy.
Yet, before this occurs in about 3.5yrs, God's enemy, satan, will attempt to destroy all life on earth to thwart God's plan.
satan controls/appoints power and wealth on this earth. he offered such even to Christ Jesus, if The Lord would only worship him. The power and wealth is the enemy's domain to appoint.
the minions of satan operate at different levels.
those who have betrayed America believe they will have the greatest payday in all history. Yet satan is not called "the deceiver" for nothing. America is Mystery Babylon the city/state that will fall/be-gone in one hour per Revelation ch 18.
Point is, all the financial machinations are deliberate.
America will be finished and not only in the financial sense.
All will happen suddenly.
Unless you have given your life to God, you will be on your own.
Doesn't matter what you "believe".
All that matters is what you Know.
If you are not prepared to provide Shelter/Warmth, Food/Water, and Security to your loved ones; you will suffer.
If your aren't Guided by God's Holy Spirit, Abiding With HIM, you will suffer the failures of self. The failures of self in prior history have been the cause of all human suffering. It will be no different in the days ahead, only the scale will be worldwide and on levels beyond imagination.
Just realize that there is no accidental cause to this financial debacle which will trigger nuclear war and America's demise. All has been planned for and carried out purposefully. Our Nation looted, scuttled, wrecked with deliberate purpose and profit was the motive. |
| Anonymous Coward
User ID: 497082
9/7/2008 10:25 AM | | Re: Fannie and freddie...govt taken over | Quote |
THIS IS SERIOUS... AND REAL
Reuters
US Treasury sets news conference; GSE plan expected
[link to www.forbes.com] |
| Anonymous Coward
User ID: 497161
9/7/2008 10:42 AM | | Re: Fannie and freddie...govt taken over | Quote |
I think that here many people don't understand the magnitude of what this event. Don't get the proportions, the number and the mess.
Tomorrow Average Joe (and future generations) will be hit really really hard. It doesn't matter if the DOW will go up. What the goverment will do is to send a receipt of $5trillion + INTERESTS to the American people.
workers have been paying taxes for years sir.. this is nothing new.. if this is the danger then grow up really ,, |
| Anonymous Coward
User ID: 495173
9/7/2008 11:00 AM | | Lester
User ID: 498878
9/7/2008 11:22 AM | | Re: Fannie and freddie...govt taken over | Quote |
Plan has been announced.
It is a Fait Accompli |
| Anonymous Coward
User ID: 427590
9/7/2008 11:24 AM | | Re: Fannie and freddie...govt taken over | Quote |
Plan has been announced.
It is a Fait Accompli Quoting: Lester
In normal speak, please. |
| Anonymous Coward
User ID: 276543
9/7/2008 11:34 AM | | Re: Fannie and freddie...govt taken over | Quote |
Paulson Takeover
Preferred get half
Common shares get last
Opens 2-3
Taxpayers get it in the AZZ |
| Anonymous Coward
User ID: 375101
9/7/2008 11:52 AM | | Re: Fannie and freddie...govt taken over | Quote |
ALL UR LAND R BELONG 2 US! |
| Anonymous Coward
User ID: 482140
9/7/2008 11:57 AM | | Anonymous Coward
User ID: 494823
9/7/2008 11:59 AM | | Re: Fannie and freddie...govt taken over | Quote |
Plan has been announced.
It is a Fait Accompli Quoting: Lester
Sit down and Shut up Mo-Lester! |
| Lester
User ID: 498878
9/7/2008 12:02 PM | | Re: Fannie and freddie...govt taken over | Quote |
A fait accompli is a done deal.
If the USA hadn't been deliberately looted, with all possible assets of production relocated abroad, and if USA job markets and consumer segments were vital; then possibly some form of rescue could have merit.
Yet, Govt has admitted debt of $9T and unrecognized liabilities of another $80T. States, local govt entiies and businesses have liabilities of another $500-$700T. American citizens maybe another $100T??
Job closings, markets faltering, industries failing, financial system teetering and only remaining due to Govt/quasi-Govt agency bailouts. There is no money to fund these emergencies, to retool for production, or to bail US out.
The world is in similar straits.
The bolder the plans, the more desperate the situations.
At some point, there has to be some transfer of "wealth". Money is not wealth.
Government is a finite entity and despite its powers, cannot decree reality.
The reality is without wealth, money cannot be generated.
At some point others will see this and the merry go round stops.
When? Who Knows? |
| Anonymous Coward
User ID: 491996
9/7/2008 12:06 PM | | Re: Fannie and freddie...govt taken over | Quote |
Another privatization sucess story!  |
| Lester
User ID: 498878
9/7/2008 12:22 PM | | Re: Fannie and freddie...govt taken over | Quote |
Didn't even mention the USA has originated over $1 Quadrillion of the $1.5Q outstanding in worldwide derivatives.
If you remove government spending and its impact on Gross National Product, the USA has an economy of around $7T annually.
Consider the existing debt & liability level at about 100 times annual income. Government creates no wealth at any level, only spends what it takes and prints money for the extras.
Where does the system-wide bailout funding come from?
Farming, Mining, Timber, Fishing, Ranching, Production, Intellectual Properties? What other activities actually "create wealth"?
The insanity is that with derivatives and mortgage backed securities and securitized debt obligations, all these vehicles are supposed to have underlying assets; and many do.
Yet with bankers & finance men having played loose & free with loan requirements and accounting actualities; they stand poised to have losses on the securities and therefore they will be bailed out. Yet, what all this grounds on is fraud.
Derivatives are a massive fraud, designed to be so and fully intended to be a wrecking ball for the USA financial system. A low-cost neutron bomb that destroys nothing in the physical realm, takes no life, but wrecks all. Lower cost and more effective than nuclear weapons!
If TPTB did not intend to takedown the USA, then Govt would employ other solutions to maintain home values and jobs.
If you haven't paid attention, and this is catching you by surprise, you are about out of time. |
| Anonymous Coward
User ID: 495109
9/7/2008 12:28 PM | | Re: Fannie and freddie...govt taken over | Quote |
Fannie Mae and Freddie Mac provide liquidity in the mortgage market by investing in home loans made by banks and other financial institutions, insuring payment of those loans, and selling them into the secondary market.
End of an era
Fannie Mae was created in 1938 as Congress attempted to grow the secondary mortgage market and expand home financings after the Great Depression.
Freddie Mac was formed in 1970 as a competitor and with the same intention in mind.
=========================
Fannie and Freddie hold roughly $1.5 trillion in direct debt, guarantees on which could be as large as $5 trillion as well as possible off-balance sheet obligations that could reach $3 trillion, according to recent estimates from Ladenburg Thalmann & Co.
Word of the Treasury Department takeover first came out late Friday, and sent the shares of both companies plunging in after-hours trading, with Fannie Mae giving up 25% of its value and Freddie Mac falling by about 20%.
Those losses only added to the misery that has already wiped out approximately 80% of the companies' share values this year. And the takeover plans, while leaving Fannie and Freddie able to continue operating, would leave the remaining shareholders with nearly nothing, diluting the companies' common stock but not wiping it out.
Fannie Mae's market capitalization stands at $7.5 billion and Freddie Mac's is about $3.3 billion.
Some reports estimated the government's cash injection ultimately could be between $15 billion and $20 billion.
====================
big banks make home loans, they sell them to Fannie and Freddie, who then package the loans into pools and resell them to investors, or hold them themselves.
The rise of the securitization market means some of the most toxic debt securities backed by risky loans have made their way around the global banking system.
Fannie and Freddie are owned by shareholders, but have long enjoyed the implied support of the federal government that has allowed them access to capital in the market at advantageous terms. In fact, some observers have likened their unraveling to a game of cat-and-mouse between markets and the government. Investors banking on a government bailout were wary of throwing good money after bad at Fannie and Freddie, while the government tried to reassure markets about their solvency without tipping its hand on a potential bailout.
Banks and thrifts are in the business of making loans, and there is no bigger loan the U.S. consumer will take on than a mortgage. If banks could not sell these loans to Freddie or Fannie, the danger of bank failures would rise sharply, economists feared.
Banks and thrifts also hold more than $1 trillion in Fannie and Freddie bonds because they are considered as good as cash. Without a bailout, banks and thrifts would have to raise more capital because GSE debt would have to be written down or sold.
In early August, chances that Fannie and Freddie might require a bailout grew when Freddie reported an $821 million second-quarter loss and said it might have to dilute current shareholders to raise new capital. Investors were particularly worried about rising delinquencies and the company's rapidly thinning capital base.
In response, experts said the company would struggle to raise the capital it needed by selling new common stock and preferred securities in the private market, and that that would likely force the Treasury to lend more money to Freddie and buy equity in the company
[link to www.marketwatch.com] |
| ShowMe State of Mind
I support the science of research.
User ID: 461916
9/7/2008 12:49 PM
 | | Re: Fannie and freddie...govt taken over | Quote |
So does this mean if my business were to fail that I can now turn to the FEDs to save it?
IF NOT, WHY?
"If this were a Dictatorship, it'd be a heck of a lot easier. Just so long as I'm the Dictator."
George W. Bush - December 18, 2000
***Question Authority*** |
| Anonymous Coward
User ID: 414936
9/7/2008 12:53 PM | | Re: Fannie and freddie...govt taken over | Quote |
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 Quoting: Anonymous Coward 495173
Here is your new start:
He also forced everyone, small and great, rich and poor, free and slave, to receive a mark on his right hand or on his forehead, 17so that no one could buy or sell unless he had the mark, which is the name of the beast or the number of his name.
Revelation Chapter 13
Got God?
 |
| Anonymous Coward
User ID: 490435
9/7/2008 12:57 PM | | Re: Fannie and freddie...govt taken over | Quote |
This is huge...
In the end, Fannie and Freddie FUCK THE PEOPLE for the benefit of the corporations...AGAIN! But wait, the people get to pay for being fucked by bailing out the corporate stuffed pigs...AGAIN! Quoting: Anonymous Coward 444738
Yeah, it works like a charm and people fall for it every time. That was the plan from the very beginning.
|
| Anonymous Coward
User ID: 476538
9/7/2008 1:06 PM | | Re: Fannie and freddie...govt taken over | Quote |
Will it mean martial law????!!!! Quoting: Anonymous Coward 426925
Yes start learning martial arts |
| Anonymous Coward
User ID: 498979
9/7/2008 1:12 PM | | Re: Fannie and freddie...govt taken over | Quote |
THIS IS FUCKING IT!!!!!!! I am, going to start working under the table for cash only.........FUCK THE TAX MAN |
| Anonymous Coward
User ID: 498979
9/7/2008 1:14 PM | | Re: Fannie and freddie...govt taken over | Quote |
Oh yea I forgot.I hope the hell that Brother Ike completely smashes the fuck out of this shit hole because I'm beginning to fucking HATE this country!!!!!!!!!!! |
| starlight_afar
User ID: 489136
9/7/2008 1:28 PM
 | | Re: Fannie and freddie...govt taken over | Quote |
So does that mean rent will go up now? In other words just how will they get it from the tax payers, rent, food, utilities would be my guess. How about more taxes on booze and cigarettes. Why not tax the rich now, then it would get paid off quicker. |
| Anonymous Coward
User ID: 495109
9/7/2008 1:29 PM | | Re: Fannie and freddie...govt taken over | Quote |
where is media on this story.....
[link to news.yahoo.com]
WASHINGTON – Regulators on Friday shut down Silver State Bank, saying the Nevada bank failed because of losses on soured loans, mainly in commercial real estate and land development.
It was the 11th failure this year of a federally insured bank.
Nevada regulators closed Silver State and the Federal Deposit Insurance Corp. was appointed receiver of the bank, based in Henderson, Nev. It had $2 billion in assets and $1.7 billion in deposits as of June 30.
Andrew K. McCain, a son of Republican presidential nominee John McCain, sat on the boards of Silver State Bank and of its parent, Silver State Bancorp, starting in February but resigned in July citing "personal reasons," corporate filings with the Securities and Exchange Commission show. Andrew McCain also was a member of the bank's audit committee, responsible for oversight of the company's accounting.
The younger McCain, who is the chief financial officer of Hensley & Co., the beer distributorship of which Cindy McCain is chairwoman, is the Arizona senator's adopted son from his first marriage.
Andrew McCain's position on the Silver State board and departure were first reported Friday by The Wall Street Journal online.
Silver State Bank ran into difficulty because of a substantial amount of "poor-quality loans primarily related to real estate development" in southern Nevada and other distressed markets, FDIC spokesman David Barr said |
| Anonymous Coward
User ID: 498989
9/7/2008 1:37 PM | | Re: Fannie and freddie...govt taken over | Quote |
Just proves again.. the financial industry is FULL OF THIEVES
Wealth redistribution is real and has been going on for decades in the country. Only it is transference from the poor and middle class to the rich not the other way around. How do you think they got and stay rich anyway? |
| Anonymous Coward
User ID: 283256
9/7/2008 2:35 PM | | Re: Fannie and freddie...govt taken over | Quote |
In their unrestrained quest for evermore riches they restricted the terms of bankruptcy the average American can use to firgive debt, leaving many saddled with lifetime debt, much of it from the badly broken 'healthcare' (read healthmarketing) system in the US. Then most of the financial institutions violated their own ethics, laws, etc in their 'grab for the gold' and brought this crisis down upon the American people (even the Swiss were appalled at the so called 'lending practices'). We have the fake 'terror wars' ongoing to pay for and now the largest corporate welfare system is going to have its back broken, first with the Freddie/Fannies, then with the largest banks and big 3 auto makers. The only hope for the republicans and most dems is to postpone the collapse as long as possible-at least until after the elections. You should now begin to understand why the rich are leaving in such high numbers the whores in CONgress have added a financial penalty for those who leave and renounce citizenship.
Time to gut government welfare by removing healthcare from CONgress, take away their pensions and force them into Social Security (just imagine how fucked up things would be if they had 'privatized' it), cut the insane 'foreign iad' packages that have no real value to the US other than bribing foreign officials for the short term they are in office, nationalize a portion of the oil/gas industry (or continue to pay Halliburton fraud/extortion prices for all that goes to the military and Israel), force ALL gubmint officials to sign a 3-5 year 'no competition' clause so they will be less likely to abuse, aw fuck it.
REVOLUTION NOW PEOPLE BEFORE YOU BECOME SOYLENT GREEN!!! |
| Anonymous Coward
User ID: 499031
9/7/2008 2:42 PM | | Re: Fannie and freddie...govt taken over | Quote |
wow its gonna be a BLACK MONDAY now...this aint good folks... Quoting: Anonymous Coward 496145
Not Agreed. |
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