Tuesday, Nov 25, 2008
US Taxpayers buy mortgage debt
BBC News: US Fed unveils new $800bn rescue
"Under this new rescue plan - which is in addition to the already-announced $700bn bank bail-out - the Fed is to buy up to $100bn in debt from the troubled mortgage giants Fannie Mae and Freddie Mac. The central bank said it would also buy another $500bn in mortgage-backed securities - pools of mortgages that are bundled together and sold to investors."
Could this put downward pressure on the dollar? Big dollar/sterling fall between 1-2.00GMT but apparently not sustained. Anyone anticipating a future dollar collapse and if so, by how much? (against gold or sterling)
Posted by doom&gloom @ 03:14 PM (970 views) Add Comment
21 Comments
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1. Greenbay said...
HMMMM!.....
Was it me that said there would be government intervention before the credit crunch materialised? think so.... hate to say i told you so.
Whats been happening here then missed much :-)
2. 51ck-6-51x said...
Dammit, you beat me to it doom&gloom!
Was gonna post: http://www.bloomberg.com/apps/news?pid=20601103&sid=aEGL76HEwHls&refer=news
3. mountain goat said...
Rogers Says Dollar to Be `Devalued,'.- "The U.S. dollar will be ``devalued'' as policy makers seek to weaken it, undermining the greenback's role as an international reserve currency, said Jim Rogers, chairman of Rogers Holdings in Singapore.
``They think that if you drive down the value of your money, it makes you more competitive, now that has never worked in history in the long term,'' "
I think it is wrong to blindly follow advice of someone when it comes to investing, I prefer to educate myself and take my chances. However, I tend to see eye-to-eye with Rogers most of the time. Hope I will be half as successful as he has been!
4. 51ck-6-51x said...
Looks like Uncle Same is going to try even harder to inflate his way out of debt then.
"The program will stop making new loans on Dec. 31, 2009, unless the Fed Board of Governors extends it. "
- read 'The program will stop making new loans when we feel like it, or when there's no point any more, like when no one is bothering using our currency because it's not even possible to carry enough to buy a loaf of bread.'
5. doom&gloom said...
NOT.... Not THE greenbay???
6. doom&gloom said...
MG. Interesting views from Rogers. He's buying yen, and Japanese have intervened before to devalue that too, so not sure why he's sure they won't again this time (maybe Rogers thinks they have too much govt debt already to intervene)
Will look into his commodoties stance further. Personally have been out since Jan (except platinum, dammit), so maybe time to have another look...
7. inbreda said...
Hay greenbay! Got time on your hands now your properties have been repo'd?
8. theboltonfury said...
Greenbay - good to have you back
You said a lot of things from memory. One being Governement won't allow a HPC. That's wrong - look just over those Swansea hills and see the carnage. The government may not allow a full global economic meltdown - but that's up for discussion and possibly out of their control
Next?
9. theboltonfury said...
I might also add you are gloating about an act that took place in another bloody country!!!
10. mountain goat said...
Greenbay is back hurrah! House prices sure to bounce back now.
11. doom&gloom said...
Not sure intervention has quite stopped the credit crunch 'materialising', Unless I've been reading different papers to you for the previous six months.
12. peter_2008 said...
"Key lending such as credit cards, car loans and student loans had essentially come to a halt in October." Second credit crunch tsunami!!
And despite the "good" news, Dow Jones isn't really reacting.
13. jack c said...
@Greenbay - not a lot has happened since you last posted a message - residential house prices have declined by approximately 17% on average in the past 12 months and look likely to continue to fall, several lenders have run into major problems and required Government intervention including Bradford & Bingley who were highly active active in the BTL market. The number of mortgages available in the market has declined dramatically and the criteria for lending has tightened dramatically resulting in a requirement for higher deposits. Arrears on mortgages are rising rapidly particularly on BTL and although many regulars on here think S2R1's is as mad as a March Hare his doom laden predictions appear to be moving ever closer to reality.
14. planning4acrash said...
Greenbay. Nobody doubted that the government would step in. We claimed that intervention would prolong and deepen the crisis and cause additional problems. But tell us. How is your portfolio?!
15. jackas said...
Hey Greenbay!
We've missed you. Hopefully your property empire is going well, and your tenants/surfs are working hard, because if the government carries on like this you'll need to pay a lot of tax to bail out other people that have bought over priced house unlike your good self of course.
16. icarus said...
MG @3 - I wish JIm Rogers and others who predict the end of the $'s reserve currency status would explain how this is likely to come about (other than saying simply that 'devaluation is in the pipeline'). China is like a financial institution - a large part of its equity is its dollar reserves and it leverages on this by issuing bonds in the domestic market. If this equity is impaired (through dollar devaluation and/or deterioration of US credit quality), or cannot be accessed without incurring losses, then the safety of Chinese capital is also impaired.
The build-up of dollar reserves around the world is/was a liquidity creation scheme that depends on the dollar's reserve currency status. Problems with the dollar and its status mean global deleveraging.
I'm not saying the end of reserve curency status won't happen but I'd like to know how JR thinks it will happen.
17. bellwether said...
Icarus this is something I was wondering about too.
Also not convinced that the yen looks like value right now even tho hold some. Japan is an exporter and is already struggling. If its currency gets stronger it will be further compromised. Isn't it pretty much the case that everyone wants a weak currency right now. Cue P4AC for gold lecture!
18. mountain goat said...
Icarus agreed this can only happen with the USAs main creditors being consulted. In the past I have heard JR talk about this in a historical context. He describes a sequence of events where exchange rate controls are imposed to stop capital flight. But I don't know what period he bases this on. He does seem to know his economic history.
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