tag:blogger.com,1999:blog-6798074091942701235.post4120816326510338112..comments2024-03-29T01:35:09.550-04:00Comments on Can Turtles Fly?: Will the US Government Support Fannie Mae and Freddie Mac?Sivaram Vhttp://www.blogger.com/profile/06361276466660862882noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-6798074091942701235.post-56533244596983628902008-07-11T17:35:00.000-04:002008-07-11T17:35:00.000-04:00Sivaram, you must have missed the memo on Fed's of...Sivaram, you must have missed the memo on Fed's off-balance entity that's holding the Bear Stearns' assets as a result of the JPMorgan/Bear Stearns bailout.<BR/><BR/>IT HAS ALREADY LOST $1 Billion, wiping out JPMorgan's thin layer of protection charade for taxpayers.<BR/><BR/>I wonder if your Main Man "Calamity Bill" is still holding his Fannies and Freddies.<BR/><BR/>Fannie is now trading where it was in 1990 -- 18 years ago.<BR/><BR/>I am going to stop before I get even more sarcastic and abrasive.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-51955875530624988862008-07-11T13:15:00.000-04:002008-07-11T13:15:00.000-04:00What makes you say that the Bear assets were worse...What makes you say that the Bear assets were worse than it seems? I have seen nothing to indicate that.<BR/><BR/>You are right about a confluence of other events (I have been trying to write a post about bearish factors over th elast few days but can't pin down my thoughts)... however, some of those factors have little to do with the financials being sold off. For instance, Lehman is off something like 20% right now and what does oil price have to do with that? Oil will slow down the economy and possibly cause slightly higher mortgage defaults but most of the problems faced by financials have to do with asset quality. It's all based on wild rumours...<BR/><BR/>I think some of the points you raised have more to do with the broad market or other sectors...Sivaram Vhttps://www.blogger.com/profile/06361276466660862882noreply@blogger.comtag:blogger.com,1999:blog-6798074091942701235.post-70917337014356872682008-07-11T03:18:00.000-04:002008-07-11T03:18:00.000-04:00"one of the lessons I'm learning is how vulnerable..."one of the lessons I'm learning is how vulnerable financial institutions, even those with strong history and seemingly decent balance sheets, are to rumours and the whims of the market. I"<BR/><BR/>I disagree. Speculative houses of cards funding bad math with hot money are vulnerable to . . . the truth.<BR/><BR/>The sad truth is that anyone who purchased a home in the last, say, 36 months paid too much.<BR/><BR/>That part's no big deal-- values rise and fall, and usually that is dealt with peaceably. <BR/><BR/>We have the confluence of several other forces that add up to a train wreck:<BR/><BR/>1) Oil prices . . . effectively a giant tax increase, and a regressive one<BR/><BR/>2) excessive borrowing leaving homeowners with too little equity<BR/><BR/>3) interest rates which were so low that there's now a paradox-- the Fed can't push rates below zero, and with a collapsing dollar the Fed's in a bind. Drop rates and the dollar price of oil probably will go right up . . . so net stimulative effect will be zero.<BR/><BR/>So back to the rumors part. Turns out that the actual situation of Bear Stearns was far _worse_ than rumored. The "seemingly decent" balance sheet wasn't.Crocodilianhttps://www.blogger.com/profile/15691022993691058441noreply@blogger.com