Comments on: US Government takes over Fred and Fannie

By: Mick Sutcliffe

Mick Sutcliffe — Wed, 10 Sep 2008 10:43:14 +0000

There was an interview on BBC world today where the economist being interviewed stated that due to the size of the debt in Fannie and Freddie it would have the same level of impact as if another first world country’s economy collapsed.

By: jc

jc — Wed, 10 Sep 2008 10:42:36 +0000

Pom

Lehman has an investor phone hook up conference this evening which you can get to by following the links on their website. Going to be interesting. The rumor mill in the far east was suggesting that they have done some sort of deal with the Koreans.

lets see.

By: pommygranate

pommygranate — Wed, 10 Sep 2008 10:35:44 +0000

Adrien

yes.

By: pommygranate

pommygranate — Wed, 10 Sep 2008 10:34:59 +0000

Lehman next to go? results brought forward to 7:30 EST today, KDB pulled out of takeover talks yday, noone else wants to know, JPM already has Bear and is wondering why, Citi hasn’t got the cash, BoA hasnt got the balls, Deutsche ruled themselves out this morning, Leh stock down 44% yesterday, ‘the Fed must bail out lehman’ says ECM analyst, ‘it’s too big to fail.’

and GM and Ford have their hands out for more cash (they’re asking the Feds for $50bn) ……at $780, buy as much gold as you can.

By: Adrien

Adrien — Wed, 10 Sep 2008 10:32:17 +0000

Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe,”

Being an economic ignoramus I have o ask a stupid question: is there anything to the above statement?

By: Jono

Jono — Wed, 10 Sep 2008 00:18:47 +0000

Oh and if anyone thinks that the failure of Fannie and Freddie is a market failure, please go and read their charters. And read about the Home Ownership Bill passed in 2005 in Washington.

These monstrosities were sponsored and regulated to provide cheap abundant credit for home ownership.

By: Jono

Jono — Wed, 10 Sep 2008 00:16:59 +0000

And today its September 10th, and we’ve learnt that the market *doesn’t love it*.

Wall St down 2.5% overnight.

It would have been great if 10 months ago, the Fed, the Treasury and the government just sat on its hands and let the market liquidate the failing institutions. No bail outs, no corporate welfare, no discount windows, no loosening of the quality of securities that can be exchanged for liquidity.

This is socialism for the rich.

By: jc

jc — Mon, 08 Sep 2008 10:33:06 +0000

They’re committing, I think. Yes that’s the little different. Thanks pom.
Good call on stocks a few months back by the way.

By: pommygranate

pommygranate — Mon, 08 Sep 2008 09:47:17 +0000

They’re tipping in $200 billion hoping it will stabilize things

i’m not sure they are, jc. my read of this is that they are tipping in just $1bn and hoping.

market seems to love it, but i bet we’ll be making new lows next week.

By: jc

jc — Mon, 08 Sep 2008 05:13:53 +0000

I don’t think the government will help those two as it would be getting itself into a right royal mess.

GM and Ford are basically health care companies making cars on the side at a loss. They’ll go into chap 11 dramatically change the heath care deal through the courts recap and start again. They’ll be great companies to buy into once they come out of Chap 11 and recap. I’m dying to own GM and Ford as I think the eventual recap will get done dirt cheap.

Stripping out the health care mess they could actually be very profitable firms. They make shitty cars for middle America but so what as long as they sell enough of them.