http://www.msnbc.msn.com/id/26567533

CBS says this is a done deal.

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You can't solve a problem with the same thinking that created the problem.

Yup...gotta love that Free Market....

http://www.bloggingstocks.com/2008/0...areholders-by/

Also another stealth move by the FDIC over the weekend...

BTW the tidbit about McCain's son in the article and his ties to Silver State is reminiscent of Neil Bush's dealing with Silverado and the S&L scandal that also cost taxpayer's billions....

what happens to prices when all of the easy funny money is gone???


"Fannie Mae, based in an elegant brick headquarters on Wisconsin Avenue in Northwest Washington, and Freddie Mac, based in an office park in McLean, buy mortgages from banks, hold on to some and package others that they sell to investors around the world. This year they have funded more than two-thirds of new mortgages. "

"Fannie Mae and Freddie Mac have funded 70 percent of home loans in recent months. A reduction in their activities could send mortgage rates that ordinary home buyers pay soaring and result in a new, deeper crisis for the already reeling housing market."

[quote=Gekko;871428]what happens to prices when all of the easy funny money is gone???

New construction will drop to a little above zero. A lot of people who purchased homes in the last five or so years may be unable to sell w/o putting in money to pay off the mortgage on their home. The next four or so years will not be fun to watch. The federal government will have to fund mortgages in an effort to stop the housing market from going into the toilet.

I would not want to be the next president and have to deal with the Bush legacy. On a high note I have underestimated the strength of the US economy in the past and I hope I'm wrong now.
So much for unregulated capitalism. It's a shame the economy does not have a go back button.

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You can't solve a problem with the same thinking that created the problem.

Yeah, that's the problem -- unregulated capitalism. I think the federal government should start a "Fair Housing Price" program. Say, 10k federal employees and a $50 billion budget. Instead of raising taxes to fund the program, we'll just borrow more money and add to the 53 trillion dollar debt. Who cares, right? It's just a big number. Then the FHP police will decide whether someone should buy a house at a particular price -- because it's real hard to figure out on one's own. How people did it for so long without the FHP is amazing. The FHP should also decide what a fair interest rate should be. If the person is poor, they should get a low interest rate. If the person is wealthy, they should get a high interest rate. And if this program doesn't work out at first, we can just keep adding layers to the FHP program. But the most important thing to do is make sure people aren't making decisions for themselves.

Nah...I personally think the Fed should continue with Laissez Faire capitalism ..leave Glass Steagall repealed (Financial Services Modernization Act) and continue to allow commercial and investment banks that are now failing due to massively overleveraging themselves to engage in the securities/derivatives orgy built on housing even if there is no market for them due to foreclosures ..hence the billions in writeoffs, liquidity laxitives by the fed that are not working, and now the socialist takeovers on the backs of the taxpayer. Monetarist management of the economy is the best medicine don't you know No way that the market in an unregulated environment doesn't have self-destructive tendencies.... LOL..ya what an absurd suggestion.

Ya...The Great Depression was produced solely by government mismanagement, ignoring the historical fact that government non-interference in the market all through the post WWI era went a long way in promoting the stock market frenzy of the Roaring Twenties. Hence the enactment of Glass Steagall which was killed under Clinton no less...the man who's legacy is built upon the Roaring 90's. The next douchebag in office is going to be the Second coming of Herbert Hoover...

As Michael Hudson former Wall Street economist puts it..

We are talking about Fannie and Freddie issuing paper sold on the open market. How many of the loans had paperwork that had very little to do with reality ? Who checked to see if the income on the app was real ? Who checked to see if the Appraiser even was in the property or just did a drive by. Were the values inflated to make the deal work on the assumption that values would increase and cover the difference ? Did anyone care that when the rate on an adjustable mortgage went up that the buyer could not pay the increase ? Were the people buying these properties able to make these decisions for themselves or were they just trusting the sellers broker ? How much is it going to cost the feds for each property that goes into forclosure because the proper underwriting was not done ? We could be seeing just the tip of the iceberg. There is an old saying, pennie wise and dollar foolish. BTW we are now talking about taxpayer money and not just OPM.

The reason for oversight is to avoid just what is happening NOW.

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You can't solve a problem with the same thinking that created the problem.

Exactly....I will add a quote from economist Henry Liu

BTW....I personally think Mr Bernanke and his predecessor are BAD IDEAS...notice this was said prior to the unravelling of the dervatives market and housing in Aug 07. He was also saying that the housing problems were contained....now Freddie and Fannie are being taken over and we're moving from one extreme economic model to another. Bernanke, Paulson etc are now socialist central planners who believe in managed economies....privatize the profits (Stage 1)..socialize the risks (Stage 2)....

http://www.usatoday.com/money/market...bernanke_N.htm

Top auto executives, including General Motors Corp. Chief Executive Rick Wagoner, will launch a lobbying push this week for billions in government loans to help beleaguered auto makers and their suppliers.

http://online.wsj.com/article/SB1220...oo_hs&ru=yahoo

Why not, right? Government intervention is a good thing.

http://books.google.com/books?id=WhG...XlwQ#PPA231,M1

You are getting a bit off topic. We have two very different types of corporations. GM etc is a pvt corporation that produces hard goods. Fannie Mae & Freddie Mac are Quasi Government financial corporations who buy mortgages, package them and sell mortgage backed securities to the general public, other corporations, pension funds and anyone else who wishes to buy them. These mtg backed securities are backed by the Federal Government and the guarantee keeps the rates down. With the high level of defaults these corporations are in trouble and the government chose to bail them out by taking them over. To allow these two to fail could cause the markets to doubt the resolve of the government to honor the bonds etc that it sells in the open market. This fallout damage that this would cause is hard to comprehend. The stockholders of Fannie & Freddie may or may not lose their investment.

If GM fails the stockholders will lose their investment and loans and other debts will not be paid unless the sale of assets results in enough to do so. Not going to happen.

I don't know enough to say a loan would help avoid or postpone a falure.
A lot of workers would be out of work and the feds would take over the pension liability for those workers. As far as I know the government is not obligated to help in any way. This probably will be a political solution not the correct one. I would tend to let them go under and have the private sector work it out if possible but as I said I don't know enough about it.

As I said these are two very different types of corporations. Think widget maker vs Savings and Loan.

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You can't solve a problem with the same thinking that created the problem.