And I'm not alone in that prediction. The question is will the US taxpayer be called upon to bail out these incompetent crooks?
Fannie Mae could be hit hard by housing bust: Mortgage giant could lose $29 bln
The worst of Fannie Mae's regulatory troubles may be behind it, but one longtime skeptic of the mortgage giant thinks it could face bigger problems from trouble in the U.S. housing market.
Gilchrist Berg, founder of $2 billion Jacksonville, Fla.-based hedge-fund firm Water Street Capital, said in a recent letter to investors that Fannie Mae could lose $22 billion to $29 billion if, as he expects, the housing bubble bursts and foreclosures increase.
"We are not sure the folks running the show fully embrace the risk of declining house prices," Berg wrote in the letter, a copy of which was obtained by MarketWatch. If the housing market continues to decline "a major portion of Fannie Mae's value could be wiped out."
Fannie and Freddie bought 25.2% of the record $272.81 billion in subprime MBS sold in the first half of 2006, according to Inside Mortgage Finance Publications, a Bethesda, Md.-based publisher that covers the home loan industry.
In 2005, Fannie and Freddie purchased 35.3% of all subprime MBS, the publication estimated. The year before, the two purchased almost 44% of all subprime MBS sold.
September 19, 2006
HP prediction: Fannie Mae will be the housing bubble's Enron
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Quit obsessing about big companies and start to explore big labor for once.
You want true corruption..
LABOR UNIONS.
Think UAW, SEIU, etc
Fannie holds directly or guarantees approximately TWO-TRILLION DOLLARS in mortgages or MBS.
If the housing bust proceeds as I expect, Fannie alone will be facing more like HUNDREDS OF BILLIONS of dollars in losses.
Freddie Mac too.
Not to mention all the "private MBS issuers" who have stepped up over the last few years and created MBS as Fannie and Freddie have dealt with their internal house of flames.
Oh, and the banking system holds about THREE TRILLION DOLLARS in real estate loans directly and also is sittin on about ONE TRILLION DOLLARS in MBS as well.
So, adding up all the losses as house prices (NOT "values", which is a bogus REIC concept!) go down, down, down, my expectation is that we will easily be in the ONE TRILLION DOLLAR range.
And a systemic crisis in the banking, securitization and derivatives markets.
And those of you who think you are "safe" because you have CDs in a bank or have a money market fund?
Think again and check out where your funds are invested.
Yep, MBS!!!
At best, it will take YEARS for the bankrupt FDIC to be able to pay you off in ever-more worthless fiat dollars!!!
Tighten up your chinstraps, folks. It's gonna be a wild ride!!!
Can Wall Street Withstand Weak Housing?
Some pros say the real estate slump may spell trouble for equities. Others offer intriguing reasons why stocks might be just fine
SEPTEMBER 19, 2006
News Analysis
By Peter Coy
http://yahoo.businessweek.com/print/investor/content/sep2006/pi20060919_269370.htm
If your nest egg is made of 2-by-4s and you're watching the real estate slowdown with a mixture of fear and nausea, then this article is for you.
The question: If real estate tanks, will stocks follow? Or will the market ignore housing? Or maybe—just maybe—will a decline in housing trigger a rise in stocks? It's something you really ought to think about if you're trying to figure out where to put your money.
Conventional wisdom, and some historical evidence, suggests that a decline in housing is associated with a fall in stocks. Evidence of a slump continues to mount: On Sept. 18, the National Assn. of Home Builders said its monthly sentiment index fell to a 15-year low. That's bad for homeowners, because it means that there's no port in the storm. But the case isn't completely closed: There's some tantalizing counter-evidence that stocks might do just fine in a housing downturn, or even benefit from it.
TIME LAG. Let's start with the main, bearish case. Making the rounds of investment advisers is a chart prepared by Merrill Lynch (MER ) showing the Standard & Poor's 500 stock index overlaid on an index of homebuilding activity from the National Assn. of Home Builders. The chart shows that the S&P 500 goes up one year after the homebuilding index goes up, and goes down one year after the homebuilding index goes down. (The correlation is 0.8, which means it's pretty strong.)
The scary part: The homebuilding index has plunged over the past year. If you believe that history repeats itself, the S&P 500 is about ready for a nosedive.
Another chart—this one from InvesTech Research—correlates changes in private residential construction with recessions. Going back to 1968, it shows that with just one exception, every time there has been a downturn in residential construction, a recession has occurred at the same time or shortly after. (The exception: 1995.) That indicator, too, is flashing red, because residential construction has shrunk over the past year. "Being a student of history, I would think I would want to play it very cautiously from a stock standpoint," says Standard & Poor's Chief Investment Strategist Sam Stovall.
WEALTH EFFECT. It makes some sense that a housing slump would be bad for stocks. First, there's the direct effect on jobs in construction, real estate brokering, mortgage lending, and so on. Goldman Sachs (GS ) estimates that housing and related industries account for nearly 10 million jobs (payroll and nonpayroll combined).
Second, consumer spending has been buoyed by the housing boom. People spent more freely because they felt wealthier and because they turned their homes into piggy banks through home equity loans, cash-out refinancing, and other means. Take away jobs and consumer spending, and it's no wonder that many experts expect a housing slump to hurt stocks.
By this view, stocks aren't a good choice right now. What, then? Barry Hyman, equity market strategist for EKN Financial Services, says that the same rising rates that have squeezed housing have given investors a nice alternative: money market accounts, which are yielding better than 4%, and bank certificates of deposit, some of which yield 5% or more.
"DOWN BUT NOT OUT." Super-bears on housing have different advice. John Talbott, author of the none-too-subtly titled Sell Now! The End of the Housing Bubble, recommends avoiding not only the stock market, but banks, too, since lots of banks could be hurt by lax mortgage lending standards.
But not everyone is convinced that housing will crush stocks. Why? Some figure that the housing slump won't be severe or prolonged. Robert DiClemente of Citigroup (C ) argues that the adjustment to a slower rate of sales is well under way. He says that the issuance of building permits is actually 10% below the rate of new-home sales. This process "will clear the overhang of houses within the next six to nine months," DiClemente predicts in a recent research note. The headline on his report: "Down But Not Out."
Others say it's too soon to declare the stock market dead because of housing. "Summing it up, I'm in the camp that says I don't know and the jury is still out," says Jeffrey Saut, equity strategist for Raymond James Financial (RJF ).
BACK TO THE FUTURE. Then there are the outright optimists. Bob Carey, chief investment officer for First Trust Advisors in Lisle, Ill., says that the stock market is 20% to 25% undervalued at current levels and should reach full valuation by sometime next year, which means: Get ready for a heck of a bull market. Carey says the demand for housing is driven by incomes and jobs, and since corporate profits are extremely strong, the outlook for income and job growth is good. Says Carey: "It's hard to imagine Corporate America doing well and somehow people not doing well on the employment side."
Carey has seen Merrill Lynch's chart showing a tight correlation between homebuilding and the S&P, but he says the pattern dates back only a decade or so. Before then, there was very little correlation, and he says the economy might return to that older pattern.
It's also possible that the housing slowdown could prod the Federal Reserve into cutting interest rates, which could boost stocks. Maybe, too, speculative investors will go back to dabbling in stocks instead of real estate, the way they did before the dot-com bubble burst and the real estate boom began.
TODAY'S MARKET. But the most intriguing evidence that the stock market might not go down because of a housing slump is simply this: So far, it hasn't gone down. It's gone up. The stock market is famous for looking ahead, and it seems that investors collectively may have decided not to blow a gasket over housing. This past June, the S&P 500 got down to around 1,220. Now, with the news about housing getting steadily worse, it's up to 1,321, and on the verge of setting a five-year high.
Even more intriguing is that stocks of homebuilders—a group that's been out of favor for quite a while—show signs of bottoming out. Since their lows in early September, Pulte Homes (PHM ) is up 14%, D.R. Horton (DHI ) is up 16%, Lennar (LEN ) is up 8%, and KB Home (KBH ) is up 14%. If the stocks at the very epicenter of the housing slump can show signs of life, why is everyone so worried about the market as a whole? Good question.
No way, it's gonna be WaMu or Countrywide for sure that goes down the hardest.
Fannie Mae and Freddie Mac are too closely tied to the biggest Enron of em all, the US government, consequently, they won't get in any trouble...
Freddie Mac Told to Keep Next Fraud Below $5 Billion Or There Will Be Hell To Pay
They reorganized FNM's board the other day... high level players to the murky world of Citibank, wall street investment banking and politics.
If FNM goes down, the world's entire economy implodes. FNM is being quietly bailed out.
The ponzi scheme continues...
anonymous said;
Can Wall Street Withstand Weak Housing?
They may have no choice!
You and I know Damn well there will be Bail-outs aplenty, not for me and you, but for all the mismanagement of Billions or Trillions! All done by the Highly successfull and Intelligent Big Biz!
With our Dollars no Less!!!
Hey Don't laugh!
I'm smarter than all you!
Just bought 1000shrs of Enron!!
Thinking of Worldcom Next!
Losers
oh oh everyone should check out these vids:
http://bullnotbull.blogspot.com/
bookmark it !!!
Some cool videos. I really liked the Carlin bit. But the 9/11 conspiracy clip really loses credibility when it is claimed that a B-52 (yes a B-52) crashed into The Empire State Building. Wrong conspiracy wacko nutjob.
Yet the stock price of FNM is up over 20% recently. Amazing since they have not reported financials in years. A recent investigation cleared FNM mgt of any fraud.
I think FNM is the hangar for BB's helicopters.
One more point... A well respected weather forcaster thinks the winter snowfall in the rockies will be less this year. How is less water going to help PHX next summer? Maybe the dry heat will be a little drier.
http://tinyurl.com/zbcxe
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