OldLimey

Why Is AIG Backing Fannie / Freddie 'Enhanced' Mortgages?

You're not alone. Here in the UK Bubbles Brown and his team are giving GBP14 billion of future taxpayers' money to the failed Northern Rock bank in the hope they can reflate the residential property market in time for next year's election. They're insisting on 'prudent lending', of course, which they define as 90%LTV. Given that many observers (other than in the property industry, needless to say) see further across-the-board price declines in the 10-20% range this is the sort of behaviour only a politician seeking re-election would see as 'prudent'.

The economic model that has for decades kept the political elite in power and made their wealthy backers richer is utterly kaput. But there is no 'Plan B' for these people, so they cling to what they know best.

Great Depression Not Imminent, But Inevitable

TAS: "Corruption in the West is eventually exposed and is the exception, not the rule."

Dream on.

Wall Street, 1792 - 2008?

Squashnut: Exactly the same in the UK. I've got a relative running a conservatively leveraged, profitable, medium-sized business; she's having a fight fending off bankers who want to lend. Barely a day goes by without a credit card offer on the mat, and yesterday I went into three shops and was solicited for a store credit card in two of them. What credit crunch?

Sure, there's counterparty risk-avoidance in the interbank market, but from what I hear banks (at least, the larger UK and European 'universals') are awash with cash they won't lend to their mates but are quite happy to push out to good quality corporate credits. Folks like us will probably never know the truth, but I get the sense that we're being played.

Fed Is Likely to Make Money from Its Bank Buyouts

gramps2: spot on.