March 19, 2008

FLASH: When you're the US and you find yourself in a massive mortgage hole, why of course, you keep digging. And digging. And digging.


To watch the government stupidly, wrongly and feebly attempt to prop up home prices for housing gamblers in an election year is just plain sick. Sick, sick, sick.

The latest stupidity from DC is to force the regulator to drop Fannie and Freddie's reserve requirement drastically, from 30% down to a shocking 20%, so when the fail, and yes, they will fail, the US taxpayer will be even deeper in the hole. So now Fannie and Freddie can buy up an addition $200 billion in sh*t loans this year.

We are so f*cked HP'ers. Our government is making a bad situation even worse. The taxpayer will be on the hook for trillions. Fannie and Freddie will fail. The lenders will fail. The investment banks will fail. The banks will fail. The FHLB will fail. The Fed may even fail. And nobody cares. What's on Idol?

You know what's coming. Somehow, get yourself and your family to safe shores.

Mortgage lenders to pump $200 billion into markets

WASHINGTON (Reuters) - The two largest U.S. mortgage finance companies on Wednesday won approval to pump up to $200 billion into the distressed U.S. mortgage market, the latest step in government efforts to stabilize credit markets and save the economy from recession.

Policy-makers at the Federal Reserve, regulatory agencies and the Treasury Department have let loose a flood of measures to battle rising home foreclosures and stabilize shaky markets, but some still see the need for a more direct government hand.

The Office of Federal Housing Enterprise Oversight said it was immediately easing restrictions on Fannie Mae (FNM.N) and Freddie Mac (FRE.N) to give them a bigger role in settling queasy mortgage markets. It said they should be able to buy or guarantee about $2 trillion total in mortgages this year.

"All hands are on deck to try and prevent this U.S. situation from becoming a dire crisis
," said David Watt, a currency strategist with RBC Capital Markets in Toronto. "They're doing everything they can, making policy on the fly."

18 comments:

eric in vegas said...

In the final effort to prop up housing the jumbo limit will rise to one million dollars and the reserve requirement will be dropped to 5%. Why don't these dopes realize housing can't stay at the insane levels they got to unless we go back to lending 500k to people making 50k a year?

Anonymous said...

Well, I guess that's how they'll support the value of the dollar. Billions in liquidity will disappear, in the way of increased taxes, to bail out the mortgage companies.

Anonymous said...

Not too concerned. Our backup plan is to leave the country. Unfortunately there are too many dumbf*cks in the good ole US of A that nothing is going to change until disaster has struck.

Anonymous said...

http://www.cnbc.com/id/23708351

So instead of holding reform over their heads, the government finally let up and gave Fannie
Federal National Mortgage Association (Fannie Mae)
and Freddie Mac a break on their capital requirements--which were above the norm as a punishment for previous accounting “issues.” Ta-da! $200 billion comes flowing back into the mortgage market and everyone says, “fabu” because that’s going to help folks get new loans, refi out of bad loans and lower costs across the board.

But it also sends a signal. The federal government, which had been holding tight to its call for GSE reform and stricter regulation of F and F before they let loose their grip, decided to let go. So what’s next? Some say it’s really and truly bailout time.

Anonymous said...

I like this site and agree with the majority of its content. That said, this post is too alarmist, shrill, and conclusory even for me. It's one thing to "sound the alarm" about serious economic imbalances and the consequences -- it's quite another to adopt and "end times" mentality and panic like a tinfoil hat wearing crank.

The truth is somewhere in the middle.

Lady Di said...

Prepare for even more taxation and inflation to run at the same time.

We are so screwed.

Anonymous said...

WHY do I pay my taxes to this country?

Afterthought said...

You have the best blog on the internet; I salute you!

Anonymous said...

"Anonymous said...
I like this site and agree with the majority of its content. That said, this post is too alarmist, shrill, and conclusory even for me. It's one thing to "sound the alarm" about serious economic imbalances and the consequences -- it's quite another to adopt and "end times" mentality and panic like a tinfoil hat wearing crank."

My tinfoil hat has served me quite well. Perhaps Keith can enlist you to approve the posts here so they won't be offensive to fine folk like yourself.

Anonymous said...

today in the mail there were post cards sent out to people about a house for sale in Hayward, Ca about 1200 square feet the post card said there were two houses on this lot, I only saw one, this house had no garage and empty space around it, it looked like it was in a neighborhood on the decline. It sorta looked like a updated doublewide. 850,000 USA dollars. The real estate agent looked very serious. And you know that that house was a failed flipper. And you ask how we got into this mess, this is how we got in this mess. The house didn't look like it was worth more than 100,000 and the banks gave a ridiculous loan out for this joke of a house. They used to be called starter houses, that word is now so passe. This is why we are in this mess. GREED.

Anonymous said...

yes you are fucked HPers...all you morons who rented during the boom are indeed fucked. oh and thanks for the tax payer bailout, i owe you one. in 5 years my house will be paid off since inflation will make the loan worthless. and how will you be living? in the same shithole 1 bed 1 bath except that your rent will be $5000 a month while my mortgage will be $0.

again thanks guys

ScaredRecentGrad said...

My student loans are consolidated with Fannie Mae. If Fannie Mae fails, will they be sold to a different company? I chose FM because it seemed the most trustworthy. It scares me to think of my loans going to some horrible place such as Bank of America that plays games to try to collect extra fees.

Paul E. Math said...

The truth, on this one, is NOT in the middle. This change to Fannie and Freddie capital requirements will absolutely increase the size of their ultimate inevitable bailout.

These incompetent institutions couldn't even meet SEC accounting regulations - how can you justify reducing their capital requirements?

The capital requirements are there for a reason: to ensure that these institutions remain solvent and that mortgages that they have guaranteed will always pay the investor.

The government will have to step in when these company become insolvent. That's a guarantee.

Anonymous said...

uh, certainly they realize that this will only help the financial community out and not FBs, don't they? If WAMU can unload sh*t loans to fannie and freddy do they think wamu will go out and originate more sh*t right now? doubt it.

Andrew Hac said...

The land is slowly sinking into a quagmire of putrid waste, foul smelly sewage, ankle deep in human excrement.
The sky is darkening more and more every minute as the time is drawing near for the judgement fate of the roasted Americano.

"Thou shall be judged and judged rightly..."

<<<<<
Nostradamus prophecy is showing up at the door of the land of the Americano:

Thou shall be slowly roasted nicely over a bed of white hot charcoal, skewered from mouth to ass like a Snapper Turtle skewered on a green Chinese bamboo stick, juice dripping down, fat oozing, sputtering, succulent flesh aromatically wafting hungryly in the air.
>>>>>

Now, a little verse from the "Man With The White Beard" to cheer things up for the horde of Snapper Turtle, Porpoise, Armadillo, Raccoon, Opossum, Porcupine, Skunk, and "BORKAFATTY" AKA :::The Pig:::

Psalm 23:4

"Yea, though I walk through the valley of the shadow of the Housing Bubble,
I will fear no foreclosure:
for Dubya Shrub & Penis Shooter art with me:
thy bail-out and thy rebate-check, they comfort me."

million said...

the OFHEO is not a real regulatory agency. they were tough under Falcon but he was too legit so they forced him out and installed the puppet Lockhart who is a complete FRB/GSE patsy. he put up lipservice resistance to the conforming limit increase just to act the role. don't expect anything resembling action from OFHEO under his neutered leadership.

Anonymous said...

I'm the "truth is somewhere in the middle" guy. To clarify, I wasn't responding to any posts on this board, but rather to Keith's original post -- for ex., "The Fed may even fail. And nobody cares."

Keith, you're right on so often, there's no need to resort to frantic hyperbole now. The Fed won't "fail," and many many folks actually do "care." You know this.

Things are terrible now, to be sure. But let's try and keep some perspective.

Anonymous said...

Andrew Hac said...

Now, a little verse from the "Man With The White Beard" to cheer things up for the horde of Snapper Turtle, Porpoise, Armadillo, Raccoon, Opossum, Porcupine, Skunk, and "BORKAFATTY" AKA :::The Pig:::

Psalm 23:4

"Yea, though I walk through the valley of the shadow of the Housing Bubble,
I will fear no foreclosure:
for Dubya Shrub & Penis Shooter art with me:
thy bail-out and thy rebate-check, they comfort me."

Amen.