texalope

This Rally Smells Fishy to Me

I disagree. Banks borrow short and lend long. They are making money every day. Retailers business is improving. Housing has improves. Check out the recent Hovanian conference call. Looking in the rear view mirror will not make money for you. In 2007 the people looking through the windshield made money. The same holds true today.

As Mortgage Securities Disappear, What Will Replace Them? [Housing Tracker]

New mortgage defaults are declining, but foreclosures are continuing to rise sharply…

Seems to me foreclosures rising is a direct result of rising defaults a few months ago and should not come as some startling revelation.
Defaults declining indicates that foreclosures will be down in the near future. This is a forward looking indicator .
While all the headlines are gloom and doom and the financial and housing stocks have staged precipitous declines, the overall market is only down 15%. Could this mean things aren't as bad as headlines would have us believe? It's hard to remain optimistic but In Pennsylvania the stores and restaurants are still busy. Recent info on local housing sales show modest price decreases and modest increases depending on the town. Home sales take longer but the market isn't frozen.
The recent housing bill will help on some level. I for on do not expect the US to fail but we may muddle through for a while. I just keep looking for good businesses where the stock prices have fallen to a point that buying now represents value.

Greenspan & PIMCO: A Gross Conflict of Interest

Interesting perspective. I never thought about buying GSE debt as a short bet of FNM and FRE. This make a company like NLY an interesting investment with little down side risk.
What is your rationale for owning FRE common at this point?

What's Paulson Cooking Up For Fannie & Freddie?

As a former shareholder my view is there are three options from the perspective of shareholders;

1) Massive dilution at these low prices.
2) Treasury buying stock and wiping out shareholders.
3) GSE's muddle through and manage their way out of the crisis.

Option 3 involves a lot of good things happening in the near future or at least a slowing or halt to the downward spiral. I'm not sure that option 3 is a reasonable worst case scenario. I don't believe the GSE's are an investment. Any money in here is pure speculation.

Financials Future Still Uncertain

Fannie and Freddie are really troubling. As part of their mandate the government requires them to take on some mortgages that are riskier to fulfill their social responsibility. The market kills the stock making a capital raise all but impossible due to shareholder dilution. Paulson then comes up with the" bazooka in his pocket plan" promising taxpayers that if he has to use it the shareholders will be wiped out. He contends that he favors private shareholders investing in the GSE's. Yet, what shareholder in his right mind would invest in these businesses under the threat of being wiped out by the secretary of treasury under the guise of protecting the taxpayers. As a shareholder who lost a tremendous amount of money, it's frustrating to see 200 government auditors from OFHeo swarming over the GSE's books and saying their capital exceeds regulatory requirements by 20%,. Then the Treasury secretary says he;s sent in auditors to reexamine these same books- It's pathetic. Where were these regulators and the treasury secretary last year when the share price was still 70. All the issues were known then and discussed. Our entire government is in reactive mode. THey don't get in front of any issue. This is pathetic. Are these really the best leaders we can find?
The same can be said for the late to the party SEC. All of a sudden after massive destruction of value they decide to enforce short sale rules- and they only apply it to 19 companies. What about eliminating shorting on the uptick rule. I'm not saying that shorts are wrong. I'm only saying that the same way I'm required to buy stock that really exists, a short should be required to sell stock that really exists. What is wrong with that?

Fannie and Freddie's Rude Wake Up Call

If you look on FRE's website you'll see a recent investor presentation. Slide number 43 shows a retained portfolio of $712 billion. 7 percent are Alt A, all rated AAA with 16% credit enhancement. 13 percent non agency subprime with 37% credit enhancement. The presentation goes into great detail regarding geographical breakdown as well. I think the panic surrounding the
GSE's is overdone without an adequate examination of the facts.