Dans Deep Creek Blog

Fannie Mae: 'Business As Usual'

dlaw,

So if they fully intend to nationalize the home loan industry where does it stop? Do they make mortgage brokers and loan officers agents of the federal government as well?

I do not believe that they can be successful in artificially propping up home prices forever, so eventually something has to give. Look at the home price index from 1890-2000 and then 2000-2005 (en.wikipedia.org/wiki/...), something is clearly wrong with the picture and something is unbalanced. Then look at this new chart (seekingalpha.com/artic...) from another Seeking Alpha writer within the last few hours and observe how Fannie and Freddie debt relative to GDP exploded in the same time.

My question then is can the government really step in and provide long-term support to bubble prices or is it only a short-term allusion of doing so? Even if they really do not intend to re-privatize Fannie and Freddie in 2010 or beyond.

On Sep 10 09:39 PM dlaw wrote:

"They are not going to sell at 10% a year. That's a nonsensical soak to the laissez-faire crowd.

The GSE book will expand ad infinitum."