Insiderman

Fannie Mae and Freddie Mac: More Bonuses for Failure

The really funny part about all this is that Sen. Chris Dodd thought he was allowing FNMA and FHLMC bonuses (to keep Rep. Barney Frank happy) when they inserted language into the stimulus bill that was so vague it also allowed the AIG bonuses.

When can we get rid of those two again?

The Stimulus Bill: Did the Government Break Our Leg and Offer Us a Crutch?

George Bush a free market person? He allowed more government intervention in more ways than I ever thought possible. Compound that with unsustainably large budget deficits and you call George "free market?"

The credit crisis was caused by unintenteded consequences of government programs to help minority and low income borrowers, Wall Street greed that allowed synthetic securities and swaps to counter the risk in an unregulated market, contributions from the regulated to members of Congress that head committees that regulate them, and Fed-determined low interest rates after 9/11 that made ARMs irresistable.

Fannie and Freddie Did Not Cause This Crisis

Agents respond to incentives. FNMA and Freddie set up the incentive to allow unqualified borrowers to apply for loans. THESE AGENCIES SOUGHT SUBPRIME AND ALT-A PAPER in order to expand low income and minority home ownership at the request of the Democrat controlled oversight committees in Congress. To put the blame anywhere but on those who started the chain -- ON PURPOSE -- smacks of malpractice as a financial writer. How typical of the Democrat Party to believe it proper that someone else should pay for their lovely ideas.

Two Fight Back - Cramer's Mad Money (9/11/08)

WaMu says they have capital. Cramer says they don't. Which one do you believe?

I believe the possibility of WaMu doing a "Bad Bank" much like Lehman is doing by separating their Commercial business and CMBS.

Cramer is an idiot with an occasional good idea and a tight stop loss for all his bad ones.

Financials Bailouts, Tempur-Pedic and Wine

Update... I meant FNMA was an offshoot of the Great Depression.

Financials Bailouts, Tempur-Pedic and Wine

You don't think a GM failure would splash red wine on a few mattresses?

The first problem is that the value of GM's (and other companies') assets should fall to their true value. These companies long ago stopped trying to access their customers' value propositions. These companies are fixated on trying to play nice with government so that they can get contracts and perks. Therefore, the value of their assets as currently deployed is about $0, and the market is trying to represent this.

The second big problem is that government has big contracts and perks and legislation to reward or punish these companies.

Government screwed up the economy enough to create the Great Depression, they screwed up the economy enough to create the mortgage meltdown of the 80s (and FNMA and FHLMC are offshoots of this crisis), and they screwed up this economy by increasing support through GSEs for low-income and minority loans.

What the hell is wrong with renting, anyway. Bush just wanted to show how much minority home ownership increased under his administration and allowed Andrew Cuomo as HUD Secretary to mess up the FREE functioning of these mortgage markets.

Free markets work every time they are tried, and government's true role should be to ensure transparency and keep the big guys from beating up on the small guys and taking their things. Unfortunately, the big guys have figured out they can enlist government in keeping the small guys out of markets. Small guys are then allowed to fail while big guys continuously find their way back to the government teat.