George Jurgensen 01

Bust, Bail, Repeat: The U.S. Enters into an Ever-Worsening Cycle

You said "There may be euro weakness or NZD weakness or even yen weakness. But not dollar strength. Not now and, if ever again, surely not for a very long time." I couldn't agree more


On Jul 24 10:01 AM bearfund wrote:

> There's only one thing really wrong with your arguments: the notion
> that the dollar is, or has been, strengthening. In fact the dollar
> index has been in a fairly narrow trading range for months (71-74)
> and remains there today. Relative to the 7 sizable downlegs that
> brought the dollar from 88 to 74 over the past 2 years and change,
> there has been no appreciable movement in either direction since
> the last big drop in February-March.
>
> Everyone talks about "dollar strength" but all we've really had is
> yet another bounce off 71, something we've seen many times already.
> Technically, I see nothing to get excited about until there is a
> convincing break above 74. Fundamentally, I share your view completely.
> There is no dollar strength. There may be euro weakness or NZD weakness
> or even yen weakness. But not dollar strength. Not now and, if
> ever again, surely not for a very long time.

Bust, Bail, Repeat: The U.S. Enters into an Ever-Worsening Cycle

FNM and FRE as the GSE's underwrite conforming mortgages, that is their mandate, and they get discounted financing due to the government's implicit guarantee and reduced capital requirements versus banks. So why did FRE and FNM have holdings of non GSE CDO's in their asset holdings, including Alt-A, subprime, and payment option mortgages, at total holdings that were well above equity capital. How on Earth can Paulson and the government justify bailing out shareholders and subordinated debt holders? Why were regulators not preventing the GSE's from holding non-conforming assets? Paulson and the SEC should be investigating fraud, not bailing out management. GSE's should be recapitalized with much subordinated debt converted to a new equity stake, and insolvent shareholders getting zilch, nada, nothing.

GSE shareholders, including affiliated banks like WAMU, allowed management to go out on a limb in search of yield, not keeping to the GSE mandate, all while collecting fat dividends before the house of cards crumbled. No bailout for shareholders!

Fannie And Freddie Only $25 Billion! Act Now While Supplies Last

FNM and FRE as the GSE's underwrite conforming mortgages, that is the mandate, and they get discounted financing due to the government's implicit guarantee and reduced capital requirements versus banks. So why they did FRE and FNM have holdings of non GSE CDO's in their asset holdings, including Alt-A, subprime, and payment option mortgages, at total holdings that were well above equity capital. How on Earth can Paulson and the government justify bailing out shareholders and subordinated debt holders? Why were regulators not preventing the GSE's from holding non-conforming assets? Paulson and the SEC should be investigating fraud, not bailing out management. GSE's should be recapitalized with much subordinated debt converted to a new equity stake, and insolvent shareholders getting zilch, nada, nothing.

GSE shareholders, including affiliated banks like WAMU, allowed management to go out on a limb in search of yield, not keeping to the GSE mandate, all while collecting fat dividends before the house of cards crumbled. No bailout for shareholders!