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Started By
Message
re: FNM's/FRE's Assets to Be Unwound at 10%/Yr from 2010 On
Posted on 9/8/08 at 7:54 am to Doc Fenton
Posted on 9/8/08 at 7:54 am to Doc Fenton
So I go away for a weekend and I become a MBS investor against my will when I return. Fantastic.
Maybe Paulson can pick up some manufacturing (like auto builders... atleast as a lender) so he can help me diversify.
To be told we are buying GSE's because the mortgage spread is too big and thus mortgages are less affordable, eventhough mortgage rates are historically very very low, is really yet another kick in the teeth. Paulson is talking like mortgages are running at 12%.
We still have massive over valuations in significant asset markets and the government, which used to be one degree of separation away from supporting these bubbles, have now removed that pesky degree.
The fact I now will effectively give some idiot a $600K mortgage to buy a 2 bedroom condo in orange county and be told it is for my benefit, because gosh the one thing an asset bubble needs to correct is... liquidity?
The pussification of America continues; the slippery slope is in full effect; and the Big Joke auto companies will be next.
Maybe Paulson can pick up some manufacturing (like auto builders... atleast as a lender) so he can help me diversify.
To be told we are buying GSE's because the mortgage spread is too big and thus mortgages are less affordable, eventhough mortgage rates are historically very very low, is really yet another kick in the teeth. Paulson is talking like mortgages are running at 12%.
We still have massive over valuations in significant asset markets and the government, which used to be one degree of separation away from supporting these bubbles, have now removed that pesky degree.
The fact I now will effectively give some idiot a $600K mortgage to buy a 2 bedroom condo in orange county and be told it is for my benefit, because gosh the one thing an asset bubble needs to correct is... liquidity?
The pussification of America continues; the slippery slope is in full effect; and the Big Joke auto companies will be next.
1
Posted on 9/8/08 at 8:56 am to igoringa
quote:
To be told we are buying GSE's because the mortgage spread is too big and thus mortgages are less affordable, eventhough mortgage rates are historically very very low, is really yet another kick in the teeth. Paulson is talking like mortgages are running at 12%.
Look at the cnn.com front page story. Rates are described as "stubbornly high" at 6.39% and are FINALLY going to come down. I tell you, this shite is through the looking glass.
Posted on 9/8/08 at 9:06 am to Tiger JJ
you're kidding? Those are still good rates. spoiled brats.
Posted on 9/8/08 at 9:49 am to Doc Fenton
quote:
Yes, and now they've been taken over by the government, which has specifically articulated the reason for the takeover as using FNM and FRE as vehicles to provide added liquidity to mortgage markets through 2009.
IMO, 2 main things precipitated this, and neither are related to what you said:
1)China
2)the senior debt of the companies ($1.5 TRILLION in total) is perhaps the most widely held security at banks around the country and the world. If they had defaulted on that, then we truly could have had a death spiral.
quote:
And you're kidding yourself if you think that this doesn't affect the market. Hypothetically speaking, falling prices going forward are already factored into stock market prices. The question is whether or not this moves the bottom any closer to the present time. I think that it does, beyond any shadow of a doubt.
Wasn't the price of a conservatorship of the GSE's priced in already?
Posted on 9/8/08 at 9:59 am to Tiger JJ
My biggest concern is akin to what ignoringa suggested, that this move ends up having the opposite effect and, instead of moving us forward toward the bottom, delays that even longer.
Posted on 9/8/08 at 10:55 am to kfizzle85
I'm basically completely convinced now that the entire reason this was done was to save the senior debt from defaulting.
Posted on 9/8/08 at 12:47 pm to Tiger JJ
That always appeared to be the biggest concern from my perspective.
Posted on 9/8/08 at 1:08 pm to kfizzle85
Agreed. This has almost nothing to do with getting lending going again (which I can't believe people are saying out loud anyway).
Posted on 9/8/08 at 1:21 pm to Tiger JJ
quote:
I'm basically completely convinced now that the entire reason this was done was to save the senior debt from defaulting.
I think its troublesome b.c its being sold as a way to keep the housing market working.
I always thought it was a way to make sure that china keeps loaning us money.
Posted on 9/8/08 at 4:00 pm to Tiger JJ
quote:
I'm basically completely convinced now that the entire reason this was done was to save the senior debt from defaulting.
quote:
This has almost nothing to do with getting lending going again (which I can't believe people are saying out loud anyway).
How can these two things not be related, if they aren't actually just the same exact thing said with different words?
This post was edited on 9/8/08 at 4:02 pm
Posted on 9/8/08 at 4:05 pm to Tiger JJ
quote:
Wasn't the price of a conservatorship of the GSE's priced in already?
No. Nobody was sure if Paulson was actually going to take the GSEs over, or keep them zombified with an indefinite series of mere capital injections from the taxpayer over an extended period of time. There could have been multiple scenarios very different from what happened: (1) extended capital injections keeping the GSEs bloated in perpetuity (the Japan option), (2) a few capital injections to prolong the pain and inefficient risk-tasking before a long-delayed takeover by the government many months from now, (3) a few capital injections to blow the problem over for the next Presidential administration to take care of--or not--in 2009, or (4) a decision to delay even capital injections, and just let the markets suffer and twist and the wind, which so many posters on this board seemed to want to happen.
Posted on 9/8/08 at 5:28 pm to Doc Fenton
Considering the major smoke and mirrors that surround what is actually going to happen, my comment to your last post is "All of the above, and some other nonsense once the next admin comes in."
Posted on 9/8/08 at 5:51 pm to kfizzle85
There is still much to be determined, but that was actually a list of possible scenarios that are no longer on the menu.
Posted on 9/8/08 at 5:54 pm to Doc Fenton
I was under the impression that part of the whole shebang involved what is effectively "quarterly bailouts" based on how the assets perform, on top of their initial movement on the stockholders...?
Posted on 9/8/08 at 5:59 pm to Tiger JJ
quote:
I'm basically completely convinced now that the entire reason this was done was to save the senior debt from defaulting.
Totally agree with this. How much push back was being brought to bear on the US by foreign investors whom own arse loads of the paper? What are eurozone banks pledging as collateral to the ECB for lifelines. The US government should have distanced themselves from the GSE's years ago if it did not want to support them. I mean, c'mon, everyone knew they were cooking the books years ago.
The economy and unemployment continues to worsen in many markets, who is going to be propping up house prices through buying new or foreclosed properties? A friend called me today and said there are > 40 foreclosures in subdivision NE of ATL out of roughly 185 homes, this is adjacent to the subdivision he lives in, that ain't turning around in the next 6-months.
Posted on 9/8/08 at 7:37 pm to kfizzle85
quote:
I was under the impression that part of the whole shebang involved what is effectively "quarterly bailouts" based on how the assets perform, on top of their initial movement on the stockholders...?
I didn't hear anything about that, but yeah, certainly the government will be providing taxpayer liquidity. The difference is, the gov't is officially running the show sooner rather than later, and borrowing rates have instantly dropped as a result. Obviously, whatever Paulson plans will not be completely binding on the next administration. We just have to live with the uncertainty that the next President and the next Congress get to have the final say on this stuff. Still, it is a positive sign that the ball has finally gotten rolling on a plan to eventually unwind the GSEs. This drama won't be over for another couple of years at least.
Posted on 9/8/08 at 8:19 pm to Doc Fenton
Yeah Doc, I'm with you on that.
Posted on 9/8/08 at 9:14 pm to Doc Fenton
quote:
Still, it is a positive sign that the ball has finally gotten rolling on a plan to eventually unwind the GSEs.
Am I missing where the plan to unwind these things is? I havent had much time to day to read about it but what I saw was a modest increase until 2010, then 10% haircuts until it reaches a "lower less risky size"....whatever the hell that means... npo quantification of increase, no time table of 10% decreases (ie how many years) and no end goal stated (besides the qualitative less risky). Did I miss something (I acknowledge I may have)
Posted on 9/9/08 at 3:12 pm to tigerskin
quote:
I am looking at it as a great shorting opportunity.
I tried to make y'all some money.
This post was edited on 9/9/08 at 3:46 pm
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