johnhaskell

Fannie & Freddie: Myth vs. Reality

this article would be more persuasive if it contained fewer factual errors. The GSE's either "are part of the government" or they aren't ... I'd vote for "aren't." And you can either say that F&F own senior CDO tranches (he describes them without understanding they are CDO tranches) or you can say "they don't invest in CDO's."

Finally, if their portfolio is sound and they are only taking mark to market losses which will be recouped later (same argument MBI and ABK make, by the way) why do they need to raise any real cash at all? Many companies have a negative net worth, but if you have actual positive cash flow you just keep on trucking. Your stock would not fall 40% in an hour.

We Love You Freddie, We Love You Not

I'm glad someone (apparently "longtime critic" Poole) was "biased" against FRE and FNM and prevented them from gorging on toxic mortgages as they would have done had "gebby" been running the show.

FRE and FNM don't have to sell their mortgages now. But they do have to borrow money in the market and assure the market somehow that they are good for the funds they borrow. Furthermore, they should in theory have some equity cushion over and above their debt. Now of course you and Robert Mugabe would say "no equity cushion is needed, we can just print money as necessary to keep them liquid," and that is the scenario that the equity market is increasingly pricing in.

The Fed's Coming Rate Hikes

the man who cut 75bps because of Jerome Kerviel will not raise rates while a) an election is coming up; b) house collapse accelerating to the downside; c)financial system continuing to wobble dangerously with every major bank continuously raising capital and KBW index hitting new lows daily.