July 11, 2008

Here's the latest on the upcoming taxpayer bailout of Freddie and Fannie



Meanwhile word on the street is that Bennie and the InkJets are gonna let Fannie and Freddie borrow directly from the Fed.

Ho.

Ly.

Crap.

Folks, you're looking at the China Syndrome of finance. A meltdown like the world has never seen. We're not talking millions anymore. We're not talking billions.

We're talking trillions. Trillions and trillions.

Where it stops, nobody knows.

Get some popcorn.

52 comments:

Anonymous said...

Its good to be rich in America.

keith said...

Folks, this is a big, big, big event.

Capitalism as you knew it in the United States is about to end.

Socialism is now here.

The United States government is about to socialize the housing crash.

Locked, Loaded and READY FREDDY! said...

Paulsen begining to st st st a stamm stammer like his imbecile master Bushco.

Phony staged late rally saves Friday market from melting down completely...

Now they are quoting Obamam and McCain for their wisdom... (1 pm PST).

Another tragedy looming. Milton Friedman would LOVE it...

Look out HPs the Fucking wheels are coming off now...

Anonymous said...

Hi Keefe. I was just thinking. Twice in my life time the Libertarians in Washington D.C. have deregulated the Financial industry, and twice now it has ended in tears (for the taxpayers anyway).

Libertarianism is a total failure.

Anonymous said...

"Socialism is now here."

Silly Qweefer. Socialism has been around here for the past 20-30 years.

And why are you upset about this? Your pal Obama has been campaigning to do just that. Instead Bush did it. When Bush does it you complain. When Obama campaigns to do it you celebrate. Typical liberal.

keith said...

As has been explained here before, I am 100% against Obama's socialist plans (increased spending, healthcare, higher taxes)

But no matter who you support, it's time for you to understand, socialism is here

Dochtaires said...

So when this happens, does that mean the national on the United States increase by $5 Trillion Dollars, overnight?

Is that right?

Really?

Anybody?

Now we are talking serious money

Democracy about to DIE said...

The 8 YEAR RUN of uninterrupted completely wrong and devastingly incompetent decisions from Dumb Ass Bush is UNBROKEN!

This event is HUGE!.

Look for a terror attack very soon to divert the dumb ass public from looking up from their cheese doodles to find out they are now socialists.

Democracy about to DIE.

American Taxpayer is forever Fucked and Rightfully so.

So how do you like your fractional ownership of your neighbors failing McMAnsion in the exurbs, Joe Six Pack?

DIE U IGNORANT PIGS!

bitterrenter said...

Reminds us again whose policies led us to this meltdown. Let's see, who controlled the agenda and the purse strings for the last decade and a half?

REPUBLICANS!

What ideology has dominated the last 30 years?

CONSERVATISM!

Hope you brainstems can keep up!

bitterrenter said...

It's good to be rich until the masses rise up and slaughter you.

Then it can be a real bummer.

EAT THE RICH. STERILIZE THEIR CHILDREN.

keith said...

It's not just Fannie and Freddie

Other shoes will drop

The Fed and the government will come in to 'save the day'.

But you and I are stuck with the tab

Watch for a major bank to fail next.

BofA?
HSBC?
Washington Mutual?
Wells Fargo?

Who will it be?

Sorry, gotta run. Jiffy Pop is popping

bitterrenter said...

Socialism has only arrived for the well-heeled and well connected.

The rest of you can go pick shit with the chickens.

Dochatire said...

I meant to say, the National debt is _increasing overnight_ by $5 trillion dollars!

Anybody


>So when this happens, does that >mean the national on the United >States increase by $5 Trillion >Dollars, overnight?

>Is that right?

>Really?

>Anybody?

>Now we are talking serious money

Anonymous said...

that dickwad bernanke cost me 7 points on SKF today ..

free market indeed ...

Anonymous said...

Just posted on implode-o-meter.

Indymac is under FDIC control

Update - 2008-07-11: "The FDIC is in charge" was the verbal announcement ringing through the halls of IndyMac's Pasadena offices. "Everyone show up for work on Monday."

The above information came from an inside source just minutes ago. A formal announcement will be made later today.

Anonymous said...

too big to bail. Will not happend.

Thank God this happend under Bush / GOP and not under Democrates.

Did I just thank God that Bush is President...we are in trouble.

Anonymous said...

WWIII will create many new growth opportunities for capitialism.

Game over man! said...

Quit dissing on the cheese doodles!

If elected to the Presidency they wouldn't have attacked Iraq.

In fact, they wouldn't have done much of anything which would be preferable to what our Kleptocracy has done...

XV said...

Let me get this straight - the market tanks on the idea that the GSEs are insolvent and need a taxpayer bailout. Then, when a rumor is leaked that the Fed may swap with the GSEs, the market soars (briefly).

How does the Fed accepting the GSEs garbage any better than a direct taxpayer bailout? There is no practical difference. Either the taxpayers are going to have to bailout the GSEs, or the taxpayers are going to have to bailout the Fed after the Fed bails out the GSEs.

Either way, it's bad news all-around for the economy. We're in for a doozy of a recession.

Anonymous said...

You got it right on Hillary. The CEO of Fannie, Franklin Raines, a black guy, was Bill Clinton's CBO. He ran the company into the ground -- under pressure for false profits and to maintain stock price.

Now that the company is not profitable, its time to move it on the tax payers.

$15 gas. J6P needs to know the simple equation that is : bail out = higher food and gas prices.

I'll be watching the dollar.

Now, if they could of just increased peoples salaries we would not be having these problems. Ya, even if meant raising tariffs to avoid a default on 5T. Oh no, can't help the middle class.

Anonymous said...

I'd like to remind everyone present that Dr Paul stated just last Friday that 'something big' was about to happen. Whether he was referring to the complete unraveling of Fannie and Freddie or something much more sinister remains to be seen. But for now...this shall do.

3 months and a couple of weeks until 'election' day. But first...lets have Le Octubre Surpris

Anonymous said...

i.Now, if they could of just increased peoples salaries we would not be having these problems. Ya, even if meant raising tariffs to avoid a default on 5T. Oh no, can't help the middle class.

That's the whole point...the middle class has to be destroyed...

Anonymous said...

Socialism for the rich. Or back to business as usual in Washington.

God forbid they would ever do something sensible, like maybe a single payer universal health care
in the US.

Anonymous said...

t...t...t...toast.

Anonymous said...

Reminds us again whose policies led us to this meltdown. Let's see, who controlled the agenda and the purse strings for the last decade and a half?

REPUBLICANS!

What ideology has dominated the last 30 years?

CONSERVATISM!

Hope you brainstems can keep up!


________

Neoconservates and wacky liberals together have made this mess.

There are very few true conservatives left...Ron Paul is one of the few. He voted AGAINST everything that made this mess.

Anonymous said...

lol - Look who's conducting this interview.

"Hi Alan, I'm home! Did you fuck up any other economies while I was at work, dear?"

Anonymous said...

NO WAY this can't happen!

Anonymous said...

I guess the dollar will then be worth the same as a peso.

Anonymous said...

This entire situation is INTENTIONAL. The FED, Corrupt Congress, President, and IMF are ALL in on it!!!!!!



Study the history of the Federal Reserve and the haze in which you live in will clear up!

Here comes the big one said...

It is kind of interesting to see that the Government has lost so much trust that now not only the citizens don't believe them, even the financial markets don't trust them either. This is a crisis of confidence, not of accounting. Everyone knows that Mark to Market is simply a number and does not mean that they would liquidate everything in this market. The problem is that all these political idiots for years have band-aided everything without any kind of a plan. Now the fit is hitting the shan, and these retards can't even get one unified message. Poole says there dead, and Bushco says everything is fine. We all know how trustworthy Bushco is, and so do the financial markets and the world.

Welcome to payback folks. Bush pissed off the world with his "we don't need the world to attack anyone" and "you are either with us or against us" bravado, now Europe (not working with the fed on interest rate policy) Saudi Arabia, Iran (Axis of evil, 1/3 of worlds oil), China (owns most of the bonds of the US) and many many foreign investors are having a field day watching the country implode.

While the dopes in the administration were concerned with gay marriage ammendments, the "terrorists" were sitting back and watching us destroy ourselves from the inside out. Guess what - The terrorists HAVE won - in much more of an effective way than using any bombs, they used black gold, and our own greed. They must all be chanting in Afghanistan "god is great" while watching Paulson and Bernanke on the hill.

Edgar Alpo said...

Hinky pinky hanky panky makes me queasy. :\

Anonymous said...

What is the FED and IMF trying to do?



Hold on to your weapons and the constitution, we will need to fight for our freedom one more time.

Anonymous said...

What is the FED and IMF trying to do?



Hold on to your weapons and the constitution, we will need to fight for our freedom one more time.

Anonymous said...

Better late than never??

Government Rule Makers Looking at Pensions

By MARY WILLIAMS WALSH
July 11, 2008
NORWALK, Conn. — As cities and states struggle with ballooning retirement costs, accounting rule makers started an ambitious project Thursday to force state and local governments to issue better numbers and reveal the true cost of their pension promises.

The effort is likely to take years, and to be contentious from beginning to end. In the meantime, more places are likely to end up like Vallejo, Calif., which declared bankruptcy earlier this year after locking itself in to paying police officers and firefighters benefits so costly that they swamped the city’s finances.

No one would knowingly create a pension plan like that. But under the current accounting rules for governments, officials can get in over their heads rather easily, without knowing it, because the current methods can understate the cost of benefits, making them look affordable even when they are not. The hidden costs can then compound over time and become crushing.

In a public meeting here on Thursday, the Governmental Accounting Standards Board began the project by tackling just this issue: whether the accounting rules must be changed to stop systematically undercounting pension costs. Proponents of sweeping change say the rules now give rise to bad numbers everywhere — not just when governments are cutting corners or making mistakes, but even when the plans are run responsibly.

“Mispricing is the issue,” Jeremy Gold, an actuary and economist from New York, told the accounting board. “Good accounting will expose the fact that this generation has borrowed from the next generation. I think that’s valuable information."

Anonymous said...

Get some popcorn.


More like stockpile your popcorn because it's going to be all you'll have to eat now that we're going into full fledged BANANA REPUBLIC MODE.

HAHAHAHAHAHAAAA!!!

DOPES!!

k.w. - Southern Ca. said...

The huge losses we're about to see make clear just why a tax payer funded (government) bailout will not work.

More and more workers are being laid off, and the gains (minimal in comparison to the losses in the private sector) within the health sector and other public service areas, will not be enough to provide sufficient economic stability within the economy.

We relied too heavily on speculation within the housing industry to make money, and now that that has failed miserably, we have nothing in the economy to provide solid economic growth for the majority of citizens in this country.

This is just the beginning, the losses to the financial sector will extend well into 2009, and most likely beyond.

Think that's "doom-and-gloom"? . . . just wait till Bernanke and Paulson run out of attempts to keep covering up the truth of the financial carnage coming our way.

bostonobserver said...

Come on Keith... time to dump Obama who is head cheerleader for this putrid bailout. Here is his quote from today:

"I call on the administration to support this bill along with a second emergency stimulus package to jumpstart the economy and build on this important start to advance more rigorous measures to protect homeowners from foreclosure,"

Bailout of "homeowners" and sending out more checks from the already bankrupt US government. Housing is your topic and this is your guy?? Are you kidding me?

bostonobserver said...

xv - spot on with your analysis of the market today. Whether the government bails out FNM and FRE or the Fed loans them money against shaky assets the net is the same... the taxpayer is toast.

That said, a government takeover of the GSEs does not increase the net debt by $5T as the vast majority of these loans are performing and are securitized by reasonable assets.

Anonymous said...

This mess is a measure of the ignorance and stupidity of the American sheeple. They allowed the gov't to screw them because they bought in to all the mom and apple pie crap about "encouraging home ownership" and "building stronger communities" and "helping people buy the American Dream". Stupid sheeple. They think if it sounds good it is good.

Adman said...

Have to give you credit Keith, you said "you will be shocked" and my jaw is on the floor. I've raised alot of cash and my popcorn is ready - thanks!

Anonymous said...

a bailout of fannie and fredie is a bailout of foreign investors how have received a premium (compared to Tbills) because these bonds are not backed by the federal government. foreigners own 1.3 Trillion of these notes.

Anonymous said...

Folks, this is a big, big, big event.

Capitalism as you knew it in the United States is about to end.

Socialism is now here.
-----------------------------------

Mish has been saying for a while that "we are all about to become homeowners" via a bailout of fred and fan.

my bet is WaMu is next to fail, around the end of the year.

Anonymous said...

But no matter who you support, it's time for you to understand, socialism is here

-------------------------------------

its been here for a while. for example, the "earned income credit" (someone who files taxes but yet pays no tax gets a tax refund anyway), which is simply wealth redistribution.

chslaxcoach said...

I love how GE ... errr NBC ... has Alan Greenspan's wife reporting on this issue.

Mike Hunt said...

Keith,

Per your comment about the next bank failing.... I read an article that HSBC has the strongest cash reserves behind tbe Royal Bank of Scotland. Why exactly are they in danger of failing?

-Mike

Silex said...

Privatize the gains, socialize the losses, that is the form of mercantilism that has reigned since when? The creation of the Federal Reserve? The Income Tax?

It's hard to get excited about the announcement that "socialism is now here" when you have done a bit of reading.

Adam SlowHand Smith said...

That Faber guy is one smart cookie.

He summed up the situation quite well: this mess was created by YEARS of REGULATORS being intentionally hamstrung by their superiors, all at the behest of the guy sitting in the Oval Office. They allowing these Wall St. crooks to run the largest three-card Monte game in town, making the crooked carnies at the fair seem like the small potatoes operators they are.

Now that these Wall Street crooks have screwed the system for personal profit, the Prez and his staff want the Gov't (which is really just code for YOU and I, the taxpayer) to step in to save the day, so WE don't get hurt? Isn't that adding insult to injury?

Once again, an amazing example of privatization of profits, but socialism of the losses. The public is allowed to share in the LOSSES, and not the profits. As Chico Marx often said, 'that'sa some fine (fill in the blank; in this case, "government") you have there, Mister!'

@@@@

Someone above dropped the cliche of 'crisis of confidence'? NO, this is NOT just a crisis of CONFIDENCE, which suggests the public UNFAIRLY has doubts about the solvency of the firm(s) in question. The S&L crisis of the 1990's WAS a god example of a crisis of confidence, where some banks DID have liquidity and solvency issues and rightfully went out of business, but the majority did NOT. In that case, it was appropriate for the FDIC to step in and support the basically-sound banks, as they knew the firms WOULDN'T go under as they were fundamentally sound in 'normal' situations (there was no THERE there, as they say). These firms had no "skeletons in the closet" that would later come to the forefront to sink the ship.

But this time it's different.

Many of these firms DO have "skeletons in the closet", and their doctored financial books are like the catacombs of Paris, the underground ossuary that's lined with MILLIONS of bones of the long-since deceased. It's only a matter of time until buried bones start coming to the surface, especially after a heavy rain!

SO, what these firms are facing IS actually a crisis of SOLVENCY, i.e. the firms actually ARE bankrupt, and not simply a crisis of CONFIDENCE; the general public has EVERY good reason to have a loss of CONFIDENCE in their status! The term' crisis of confidence' suggests there's no good reason for the public to be overly concerned, aside from fear itself.

A radio talk show host the other day had a guest who mentioned how when he was a teen driver, he walked into the kitchen and said to his Dad, "Wow, it sure is a good thing you and Mom pay for auto insurance. And the thing that matters in the event of an accident is that no one is hurt, etc". Of course, his Dad knows what this means, and shoots back with, "Son, where's the car? What happened?"

The same thought process occurred a few days ago, when Paulsen was dropping hints about how banks need to be able to fail without expecting a government bail-out. If THAT wasn't a red flag, then I don't know what IS....

@@@@

And just to correct one misstatement above, Bush is NOT a 'neo-conservative': let's call a spade a spade and label Bush what he is: a PSEUDO-conservative. The 'pseudo-' prefix implies false, fake, so he's a FAKE conservative, a wolf in sheep's clothes by claiming to be something he's not.

Bush ran for office under the pretense of being a conservative (fiscal conservative to boot, LOL!), and only after securing the Executive Office did his true colors come to the surface. It was like some alien invader hiding under a suit made of human skin who then peels it off to reveal his true appearance; suddenly we all realize how screwed we all are going to be.

I swear, even Obama (with all the fear-mongering about how the half-black man will seduce your daughter and spend and tax and spend like a drunken sailor) couldn't possibly do a WORSE job!
Obama wants to START to clean up the mess left by Bush (it'll take decades to get us back to where we were before Daddy War Bucks got his hands in the till).

NOTE: to all the drunken sailors on shore level, I would like to apologize for the unfair comparison: we all know a drunken sailor could only blow thru HIS own money, and not public funds. No, that's a feat reserved for only the highest officials in the land, something that an ex-frat-boy, ex-alcoholic could accomplish once he got into the highest office in the land.

This is like if the said drunken sailor was pay-master for the ship, but got drunk and took the wad of gov't money to live the high-life for a night of buying hookers, expensive gifts, rounds of drinks and blow, etc . If word got out, this guy would be hunted down by MPs and thrown into the brig to face criminal charges for any number of offenses.

But wait: remember the operative concept, "too big to fail"? This small-time white-collar criminal is going to be charged with dereliction of duty, theft of gov't funds, etc, but the big-time crook in the highest office in the land is going to walk away scot-free as he's "too big to fail" (TBTF)?

In the days gone by, citizens would 'tar-and-feather' corrupt minor officials and politicians, and run them out of town on a flag-pole. Wasn't that a useful thing to be able to do?

TBTF is really just a way of saying an organization was run into the ground for personal profit, but no one will ever be held accountable for the criminal misdeeds, however intentional they were. Many of these CEOs were well-paid to destroy the firms they were paid to direct for the benefit of stockholders. How sad they still get their golden parachutes, etc.

Paris Hilton THOUGHT drunk driving laws didn't apply to her, just as Bush doesn't think impeachment is a possibility for him. Can't we show him the light?

Adam SlowHand Smith said...

It's hard to get excited about the announcement that "socialism is now here" when you have done a bit of reading.

Ha! So true. We have had socialism for decades, except The True Red-Blooded Amuricuns could NEVER understand that they have it, or realize that's it's socialism.

Anonymous said...

Keith,

Per your comment about the next bank failing.... I read an article that HSBC has the strongest cash reserves behind tbe Royal Bank of Scotland. Why exactly are they in danger of failing?

-Mike

July 12, 2008 8:47 AM

*********************
LEH is next to fail, imo, or the next TBTF.
Not even on the list.
FMW

BB said...

.

You won't hear much about this situation on foxnews,
cnn, or in business week. It's too touchy a subject right now.

Ya know when you're about to crap and that
little fart escapes before the whole load drops?

That little fart is the sub prime mess, BearStearns, and Indy-Freddie-Fannie so far in 2008.

The real pile of s&!# is what's coming with the CDS (credit default swap) situation.

An even larger, more shady, and MUCH less regulated money orgy. Not to mention
they're deeply woven into the giant circle jerk of hedge funds and mortgage debt
via "counter party risk management". The financial structure of these agreements
has truly gotten inbred to the point of hopeless confusion and capitulation.

We're not talking billions anymore.

This market is well North of 60 TRILLION. As large as the WORLD ANNUAL GDP!

A substantial portion of this market is at risk. The entire US national debt is only
something in the neighborhood of 9-10 trillion right now. If 10-20% of existing
CDSs fall apart, and the government "steps in" for a full rescue, our nation's
debt could increase 50-100% in a very short time. This could be disastrous.

If Benny and the Red Ink Jets (Ben Bernanke and the Fed) hadn't rescued Bear Stearns,
~1TRILLION in CDSs would have vaporized from Bear's implosion alone. Risk of
this scale is unprecedented. Of course, it's also been completely unregulated.


READ THIS:
.

http://onlinejournal.com/artman/publish/article_3356.shtml


.

---------------------------------------------------
Quotable Warren Buffet on the subject of CDSs:
"Financial Weapons of Mass Destruction"
---------------------------------------------------

Economically in the U.S., the next few years will be a good time to be a fly.
Not much else will thrive in the hot stench that will shower our economy.
Sad thing is...generations of taxpayers will pay, for the greed and stupidity
of a few -who will never be brought to justice.

Sounds silly, but this all makes me wonder if it's not a bad time for most
Americans to own a gun, garden, bikes, chickens, a milk cow, and some
equipment + knowledge for canning food the old fashioned way.

Was it Marx who said "History repeats itself" ? ? ?

Watch this situation closely. The Fed (FDIC, etc.) is getting to the point
where they may be unable to "back" or "insure" much of anything if our
currency becomes extremely weak against the rest of the world. IE: The
rest of the world becomes unwilling to loan us money in excess.

At the very least:
We'll have late 70s and 80s severity inflation, and recession
-AKA "stagflation" for the next 3-7 years.

At the very worst:
Remember any and all stories you heard from our Grandparents
about what the great depression was like. It could get that bad.


.

Anonymous said...

$2 trillion maximum taxpayer liability

300 million people, that is a maximum $6667/person expense

David said...

The most alarming paragraph in the story was about the U.S. Gov't losing its "AAA" credit rating. That if the Treasury takes over Fannie and Freddie, with their $5 TRILLION of bad debt, "foreign investors will start pulling their money out."

OK.

To all the dimwit neocon cheerleaders here, what does the phrase "American Peso" mean to you?

When the Saudi, Chinese & South American capital that has financed Bushco's insane, retarded fiscal policies flees the U.S. because we're no longer a good credit risk, what do you think happens? I've lived through currency devaluations. The Venezuelan Bolivar in '88 devalued 1,500% in a year. It was not fun. If you want to know how to survive what's coming, you'd best study up on how to maintain your net worth when those funny green pieces of paper in your pockets suddenly turn worthless...