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fofp

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  1. Oh, I've been saying for around eight years that Fannie and Freddie would be Ground Zero in the credit bust. The most common reaction was "Who?" A couple years back I was skiing in Vail and shared a hot tub with a couple of hospital Consultants. The conversation came around to comparing the the UK and US economies. He mentioned that he had his pension cash invested in Fannie Mae as a "safe haven". I gave him the "Ground Zero" warning and suggested he "run rather than walk" to jis broker when he got back and sell Fannie Mae. He checked that it wasn't insider dealing or anything and I told him
  2. A piece on why they're crucial to mortgage markets: http://www.iamone.co.uk/2007/12/01/when-mo...s-buy-the-farm/ Whether it's now or later, they're going to be insolvent because they're 60 to 1 levered on that 5,2 trillion of mortgage guarantees and even prime mortgages are going to see default rates hiyt 2% They'll also have to be bailed out in some way because the world financial system is at risk otherwise. Also the 50% of US mortgage markets which was subprime, Alt-A and Jumbo has already largely shut down. The 50% that's still functioning securitises 90% of it's business through Fannie
  3. Some good analysis here. What's missing is the current state of US ortgage markets. The half that was subprime, Alt-A and Jumbo has effectively shut down. The half which is still functioning is 90% run through securitisation by either Fannie or Freddie. If they shut down, then the US ortgage markets will be over 90% closed to business. Securitisation would effectively be dead and only the banks left to lend. The banks are hurting for cash, and they're not going to be so keen. The end result would be a gigantic hit to available mortgage cash, meaning far fewer mortgages and far higher interest
  4. In the end, credit bubbles and their collapse lead us to the point where credit is neither offered nor sought. Houses will eventually become affordable. For cash buyers. The deposit will become the price.
  5. OK, I managed to finish a draft article for One magazine. It's massively too long, but I guess that's the editor's problem until he tells me what further work he wants done. So: now I owe you guys an article. I never know how to start these things and generally need a kick to get moving anyway, so why don't you kind folks suggest which topics you'd like me to cover? Obviously I could update on anything I'd touched on in the original post, but I'd be willing to have a go on other stuff if I happen to know anything about it. As I've said, my main interest has been in the history of previous c
  6. Someone just alerted me by email. Where's the further discussion. I do apologise for extreme tardiness and I'm aware that I do owe you guys an article. Unfortunately (or fortunately?) One magazine have contacted me and asked for an update to "When Mortgages Buy the Farm" (see link earlier in this thread). I really have to do that one first. If anyone really is hungry for more of my ranting (and I find that surprising myself), there's stuff on the uk.finance newsgroup in the thread "Housing Market Collapse".
  7. There's a story out there that the Fed moves this week has caused these problems. The basic idea goes that the Fed offered the option to swap AAA mortgage-backs for Treasuries (the subtext was that Fannie Mae is in trouble and this is a way to bail them out since most such bonds will be theirs or guaranteed by them). However only banks can go to the helicopter and make these trades. So suppose you're a creditor of Bear Stearns or Carlyle and you're scared witless about their exposure to mortgage-backs. You don't want to call them in on a default, grab the MBS's and sell 'em yourself because
  8. I'm in Utah at the moment and have been following the fun on yank TV. The Bear Stearns thing was looking likely evn two days ago, though of course they were denying it as hard as the Hillary camp denying theyre racist. What's really interesting is that it's all been accompanied by rumours that Fannie Mae is in trouble too. Fannie dropped 11% two days ago and then recovered. There was clear panic that the half of the US`mortgage market that is still operational was about to shut down. I'd be amazed if Chopper Ben hasn't hasn't been working behind the scenes to bail out Fannie too. I've thought
  9. I'm in Utah at the moment getting high on the white stuff. Today though there's so much of it I'm pretty much trapped in the hotel. Still, as a student of bubbles and crashes, the television here is unusually exciting. I've been watching CNBC (known affectionately as "Bubblevision" over on prudentbear.com, one of our comrades in arms). There's been a slew of angry capitalists frothing at the mouth about Bernanke's bailout of Bear Stearns and apparent favours to JPM Chase. The President has been on TV to tell everyone that everything is hunky dory. He looked like a deer caught in headlights. M
  10. Oh yeah. Friends of Fernando Poo : arguing in newsgroups since 1987 ;-)
  11. We must be. The FT said last week that the average yield on NR's 25 billion mortgage portfolio was around 6% So they're going to pay 6.9% plus something to compensate the government for the bond insurance (after the EU orders it). Call that somewhere between 1% and 2% (which is generous given NR's dodgy finances). This means that NR would have to shell out about 1.5 billion per annum in losses just on that 25 billion, never mind whatever interest they've racked up at penalty rates in the meantime at the BofE. Remember the adage "When in a hole, stop digging"? Brown and Darling are in a very
  12. It's beginning to percolate people's thinking that a recession was already written in and that the 750 basis points cut and the raining down of 800 Dollars cheques is about trying to stop a US depression. I've said for years that Greenspan would go down in history as the man who saved a recession at the cost of a depression. Now that gets put to the test...
  13. Trading now suspended on Shanghai stock exchange. US liquidity was largely supplied from China and Japan. Inasmuch as the debt cycle involved the US going into hock to buy Chinese imports and then the Chinese recycled the Dollars as US debt in bonds and mortgage-backs, both wheels have now come off the bicycle. No doubt now: first global credit crash. The largest credit bubble in history is now fatally punctured.
  14. We may as well get used to calling it "Buy to Lose"
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