Freddie And Fannie Wave Goodbye

[VeryMeanReversion]

Havent seen it mentioned on here yet but Freddie MAC and Fannie MAE have just been bailed out in the US. (By Treasury and Fed). Heard the info on R4 this morning. Fed can buy shares in them (i.e. setting a floor) and their maximum borrowing levels have increased)

e.g. Freddie response

http://www.freddiemac.com/news/archives/co..._statement.html

More info to follow.

VMR.

[Bloo Loo]

Freddie MAC, busted, yet not much older than the unbacked dollar! (1972 IIRC)

[Guest Steve Cook]

Does this mean we are headed for a dollar inflationary nightmare?

Or am i missing something?

Edited July 14, 2008 by Steve Cook

[Bloo Loo]

Does this mean we are headed for a dollar inflationary nightmare?

Or am i missing something?

I dont really understand this CEO speak, but it looked to me that the Fed and the Treasury are going to guarantee stuff.

Bit like our Gov with NR. Not really spent the money, but are on the hook if necessary.

This will calm the markets until the "results" are prepared at some time in the future. The Yanks Plan has always been to spin things out to give the banks time to trade through the problem.

Looks like time is running out.

[MarkG]

Sooner or later, all major banks that are in trouble will be bailed out or nationalised, because the governments can't survive letting them go bust. That will certainly trash the dollar, probably the pound, and who knows what other currencies?

Ok, the problems that would cause might lead to people rioting in the streets, but if the global financial system collapsed, there'd certainly be rioting in the streets and politicians hung from lamp-posts with the intestines of bankers.

[Guest Steve Cook]

Sooner or later, all major banks that are in trouble will be bailed out or nationalised, because the governments can't survive letting them go bust. That will certainly trash the dollar, probably the pound, and who knows what other currencies?

Ok, the problems that would cause might lead to people rioting in the streets, but if the global financial system collapsed, there'd certainly be rioting in the streets and politicians hung from lamp-posts with the intestines of bankers.

so...

we lose our deposits

or...

our deposits are worth f*ck all

Nice

gold it is then

Edited July 14, 2008 by Steve Cook

[Injin]

Sooner or later, all major banks that are in trouble will be bailed out or nationalised, because the governments can't survive letting them go bust. That will certainly trash the dollar, probably the pound, and who knows what other currencies?

Ok, the problems that would cause might lead to people rioting in the streets, but if the global financial system collapsed, there'd certainly be rioting in the streets and politicians hung from lamp-posts with the intestines of bankers.

It's a collapse either way but you can tell what they will do 100% of the time if you realise that the government are owned and controlled by bankers.

Basically they are bailing these guys out because if they didn't houses would only be selling for cash. If that caught on in the US, the dream would end, the population would wake up and most crucially jingle mail would rocket. This would end the rule of the US by bankers more or less overnight as houses returned to their true value.

H Y P E R I N F L A T I O N

Is coming. Plan accordingly.

[VeryMeanReversion]

http://www.housepricecrash.co.uk/forum/ind...showtopic=82054

Oops, another thread with same discussion, please continue there and let this one fade away.

VMR.

[Guest Steve Cook]

It's a collapse either way but you can tell what they will do 100% of the time if you realise that the government are owned and controlled by bankers.

Basically they are bailing these guys out because if they didn't houses would only be selling for cash. If that caught on in the US, the dream would end, the population would wake up and most crucially jingle mail would rocket. This would end the rule of the US by bankers more or less overnight as houses returned to their true value.

H Y P E R I N F L A T I O N

Is coming. Plan accordingly.

I think you are right injin

[renterbob]

I think you are right injin

The git always is.

No more head to heads.

[Minos]

I think you are right injin

So if you agree it's hyperinflation, why did you STR?

[aliveandkicking]

this just gets uglier and uglier.

Fannie and Freddie are now essential to the US economy.

And what do they do? They provide below cost loans to people who can hardly afford the below cost loans. They are majorly responsible for creating a food chain of borrowing where it made no difference if Country wide financial created crap loan products at high interest because it was always one of F and F's *investors* problems. And F and F seemed to have made a market in their own product by buying back their bonds and holding them for longer periods.

Well guess what? The investors are saying no more. So you have F and F providing something like 80% plus of mortgage lending in the states unable to lend more because investors are not wanting to buy their bonds which are the source of F and F's credit. And more or less without F and F then nobody will lend at current valuations.

Nationalising F and F is like nationalising a turd. There is only crap to be had there when more or less every loan is going to go underwater. For sure one day these loans will perform but that is not the issue.

The issue now is that a large amount of F and F's funding is now going to come from a country that is now on the verge of bankruptcy *or* F and F will be cut lose and the country will default on its debts.

It seems crazy that it has come to this. It was all predicted years ago. And step by sodding step the walk has been taken to get to where we are now!

So it now appears that as predicted there is *no* solution until valuations return to what is truely affordable for your average working American - a valuation that is still some light years off into the future in peoples ability to grasp the more or less unthinkable horribleness of it all. :angry:

But just like all those who profited on the way up i am just hoping i can profit from this on the way down and just survive the nightmare that seems to be on its way:-(

[IMHAL]

I think you are right injin

Sounds like its hyperinflation then - eventually! - unless the BoE disconnect from the actions of the yanks - which is unlikely in my opinion.

The real issue is that this could unfold quickly or slowly - the quicker it unfolds the less time there is for a housing correction to take place - again its going to be about timing - but this time its not about waiting for the bottom - its about timing the point when the inflationary spiral will hit. In my view the measure to observe is wage inflation - I still feel that governments and central banks will look disaprovingly on this at the moment.

So my conclusion is - hyperinflation will only happen after much disquiet and rioting in the streets at the effects of inflation on the ordinary persons decline in standard of living.

HAL

[Guest Steve Cook]

So if you agree it's hyperinflation, why did you STR?

very good point.

I guess my answer would be:

Up to this point my view was that it could go either way in terms of an inflationary or deflationary crisis

As things have progressed, I have vascillated one way and the other

However, recent events suggest that we are heading for hyperinflation

Given the uncertaintly of outcome, it makes sense to have one's exchange valuie in the most transferable form possible. This, naturally is cash. I can transfer this to a commodity at a moment's notice, if neccessary.

Locked up in a house, it is much more difficult to be light on your feet, as it were.

Edited July 14, 2008 by Steve Cook

[Minos]

Sounds like its hyperinflation then - eventually! - unless the BoE disconnect from the actions of the yanks - which is unlikely in my opinion.

The real issue is that this could unfold quickly or slowly - the quicker it unfolds the less time there is for a housing correction to take place - again its going to be about timing - but this time its not about waiting for the bottom - its about timing the point when the inflationary spiral will hit. In my view the measure to observe is wage inflation - I still feel that governments and central banks will look disaprovingly on this at the moment.

So my conclusion is - hyperinflation will only happen after much disquiet and rioting in the streets at the effects of inflation on the ordinary persons decline in standard of living.

HAL

So, hyperinflation will have less of an effect on people's standard of living than plain old vanilla inflation?

[Guest Steve Cook]

So, hyperinflation will have less of an effect on people's standard of living than plain old vanilla inflation?

At a macro economic level, the nominal effect of increasing or decreasing the money supply is, in the final analysis, irrelevent.

In real terms, our economies will contract.

However.....

At a personal level, the inflation/deflation question is of supreme importance.

It dictates whether I store my exchange value in cash or commodities

Edited July 14, 2008 by Steve Cook

[Injin]

So, hyperinflation will have less of an effect on people's standard of living than plain old vanilla inflation?

The plan is credit deflation for Joe Public and then hyperinflation to pay the government and bankers debts. Credit cards are being cancelled and downsized for you and me, but credit lines with central banks are being extended, rolled over, beefed up.

Post chaos the inner circle will be able to buy lots of lovely assets with their CGNAO levels of gold. If they haven't been shot or hung.

[Minos]

At a macro economic level, the nominal effect of increasing or decreasing the money supply is, in the final analysis, irrelevent.

In real terms, our economies will contract.

However.....

At a personal level, the inflation/deflation question is of supreme importance.

It dictates whether I store my exchange value in cash or commodities

Well, you better make your mind up pretty soon.

[Minos]

The plan is credit deflation for Joe Public and then hyperinflation to pay the government and bankers debts. Credit cards are being cancelled and downsized for you and me, but credit lines with central banks are being extended, rolled over, beefed up.

Post chaos the inner circle will be able to buy lots of lovely assets with their CGNAO levels of gold. If they haven't been shot or hung.

Ah, but who are these mysterious people?

[Bloo Loo]

At a macro economic level, the nominal effect of increasing or decreasing the money supply is, in the final analysis, irrelevent.

In real terms, our economies will contract.

However.....

At a personal level, the inflation/deflation question is of supreme importance.

It dictates whether I store my exchange value in cash or commodities

I see no evidence of the presses rolling and causing hyperI. I dont pretend to understand CEO speak, especially from Banks, I look at their actions, and its too early to say if the US Powers are going to merely "back" them with guarantees, which like the FSAs deposit guarantee is worthless in practice, or supply some more cash for them, which, it would appear, they dont have large amounts of.

HyperI does no-one any good, so i am bullish on the deflationery scenario for cash ATM

[Guest Steve Cook]

Well, you better make your mind up pretty soon.

You're right

However, having my store of exchange value in cash at least allows me to make that decision at a moment's notice. That option would not be available to me if it was stored in a house.

In any event, which way do you think this will go?

Edited July 14, 2008 by Steve Cook

[Minos]

I see no evidence of the presses rolling and causing hyperI. I dont pretend to understand CEO speak, especially from Banks, I look at their actions, and its too early to say if the US Powers are going to merely "back" them with guarantees, which like the FSAs deposit guarantee is worthless in practice, or supply some more cash for them, which, it would appear, they dont have large amounts of.

HyperI does no-one any good, so i am bullish on the deflationery scenario for cash ATM

By the time you see the evidence it will be too late. Good luck.

[Injin]

Ah, but who are these mysterious people?

No idea.

Finding out information on the bankers and more specifically people who have accounts with the BOE or shares in the Fed or whatnot is like wall climbing teflon.

[Guest Steve Cook]

No idea.

Finding out information on the bankers and more specifically people who have accounts with the BOE or shares in the Fed or whatnot is like wall climbing teflon.

I know....i looked!

[Injin]

I see no evidence of the presses rolling and causing hyperI. I dont pretend to understand CEO speak, especially from Banks, I look at their actions, and its too early to say if the US Powers are going to merely "back" them with guarantees, which like the FSAs deposit guarantee is worthless in practice, or supply some more cash for them, which, it would appear, they dont have large amounts of.

HyperI does no-one any good, so i am bullish on the deflationery scenario for cash ATM

I agree that as of now, it's deflation for the little guy. There is wads of money out there somewhere but the average bloke is being cut off from it. They are trying a Japan.

At some point though US/UK government debt is going to come due and they will just flat out print to pay it off because there is no export market to actually make "doing a Japan" work.