Frugal Millionaire

Fannie and Freddie: When the GSEs Go, So Goes the Dollar

I just realized that SeekingAlpha doesn't have my post on housing bottom. Here is the link:
www.1stmillionat33.com.../

I won't be checking comments here going forward. Frankly, I've got so many things to do, that I don't have any time to pick a fight with anyone. I'm always telling my own opinion. You can take it, object to it, or whatever you want to do with it. My only hope is that you may benefit from my thinking (even if you like to take it contrarianly).

Regards,

Frugal

Fannie and Freddie: When the GSEs Go, So Goes the Dollar

I don't claim to know all, or know more for that matter. Everyone is entitled their own view.

I just want to retract my statement above on markets not being reacting fast enough. It looks like markets are getting much wiser this time around. Gold/silver went up, $US dropped, US treasury bonds dropped, and just about everything that you would expect is happening. Hold on tight.

By the way, in my previous post, I have stated that I believe real estate will not hit bottom until 2012/13. The results of what happen to these mortgages obviously depend heavily on what happens in the housing market.

Fannie and Freddie: When the GSEs Go, So Goes the Dollar

Bonds lose their value when interest rates go up. What I expect things would unfold is that the rates for long or short term GSE/treasury bonds that have been fixed at a lower rate will continue to increase as they rollover. Anyone who buys up the bonds (by bailout) will continue to lose money whether you mark to the market, or thru an increase of financing the interest cost when rollover. That would be a "nice" way to add to US debts.

As far as the leverage of federal government is concerned, I kind of agree with you. The transaction is probably a "reduction" in leverage for federal government accounting-wise, when you don't add in all other assets that US has. But why don't you argue that USA can always sell off a couple of states and its land to repay debt. In that scenario, wouldn't the federal government have a massive asset base already, not needing to add more assets for leverage reduction?