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Unintended Consequences of the Fannie / Freddie Bailout

Let's be real here - the US public policy has been to subsidize home ownership for many many years - interest deductions, federally supported loans, etc. This has led to overblown home prices, use of real estate taxes by local government as the primary revenue source, use of real estate appreciation as a substitute for personal savings, you name it.

The only way these distortions will go away is to get rid of this marketplace distortion completely - no housing subsidy.

Fannie/Freddie Bailout 'Disastrous Fiasco'

zooey - I am not going to question your sanity. However I find it reasonable to question your ability to write a coherent posting.

debtacid - since when has the US been a democracy? Ben Franklin was there when the Constitution was signed and quite correctly said: "Congratulations gentlemen, you now have a Republic, if you can keep it".

daytrading - Since when were the FMs public corporations? They have always been something not quite fish nor fowl.The reason is that if they didn't the problem would get much worse. Maybe it is pissing up wind into a Katrina, but to do nothing would guarantee the collapse of the US's ability to sell debt to foreign nations. That would lead to an immediate 50% haircut to the value of the dollar. Which would you rather have? This or the IMF imposing budget limits on the US Government? Yes, it could get that bad.

Fannie/Freddie Bailout 'Disastrous Fiasco'

Jim Rogers - if he had his way he'd abolish the Fed and move us back to the gold standard. Been there, done that.

The problem with the gold standard is that it triggers deflations that cause depressions - like about six of them between 1820 and 1941.

Sell-Side Analyst on Fannie: A History of Being Wrong

I like phrase "do not attribute malice where stupidity will do". So I will suggest that analysts are stupid until proven malicious in a court of law (which does happen now and then).

As to the bottom line, it doesn't matter. You have to do your own research.

A First Look Inside the Fannie / Freddie Bailout Plan

Hope you guys aren't too short. The Asian markets are going nuts, up 4%. Look for a the Dow to be +500 tomorrow maybe more if short squeezing gets really bad.

As for this being the end of the bear market - depends what you mean by bear market. I think we are in a secular bear market that has another 6 years or so to go. But it might be the end of this business cycle bear market. Or not.

A Closer Look at the Treasury's GSE Preferred Stock Purchase Plan

$36 Billion is NOTHING compared to the large picture here.

What Will Fannie / Freddie Mean for Monday?

But if you are approaching retirement, are one of the few that has been an ant not a grasshopper this is the best of all times to start looking at real estate.

8 Quick Comments on the Freddie/Fannie Bailout Plan

This is strictly psychological. Frannie is has sufficient liquidity but the lack of credibility is causing problems with bond issues. In retrospect this is going to make people question the validity of the free market system is a 15 trillion economy. Free market is great if people can maintain their heads - but sometimes that doesn't happen - vis a vis the multiple great depressions that the US went through before FDR socialized the US.

Problematic GSE Bailout

As far as I can tell this move is triggered by exactly the lack of confidence by the bond markets that the author of the article is advancing as a good thing. It is mostly a emotional reaction at a fairly late stage in a financial upheaval. The actual cost it taxpayers is not "hundreds of billions of dollars". Freddie and Fannie are losing about 1 billion per month between them, far less than say the big three automakers who are next up for a bailout.

This is a smart move because of the fear in the market, and the connectivity that the Freddie and Fannie have with other important money flows. The cost to the taxpayer is far outweighed by the impact that this takeover will have.

While it may not put an end to the problems in the current economy, it does put an end to the doomsday scenario and the possibility of another Great Depression.

Grab Your Shorts, the Tide Has Turned

Buy on bad news. Sell on good news.

Yes it really is that easy.