August 22, 2008

Jim Cramer thinks Fannie and Freddie may fail (i.e. be bailed out by you the taxpayer) by the weekend




Could be yet another historic (and busy) weekend, as Fannie, Freddie, WaMu and Lehman all get taken out?

Buckle up. Get some popcorn. And get ready for Ben and Hank to tell us more wonderful plans Sunday night.

35 comments:

Anonymous said...

Ben and all the rich bankers are gonna meet in Jackson Hole today to talk about the state of financial union and Fannie and Freddie, will the messiah Obama be on hand to ask them how many houses they have?

keith said...

It is convenient that the unelected powers who run the world are gathered this weekend. They can make all their important decisions on how to destroy the currency and spend the taxpayer money, and then tell us serfs on Sunday night

vanilla ice said...

For Fannie and Freddie to be bailed out means their stocks will have to decline below $2 today. That's not likely. Give it a couple weeks. Maybe early September we'll see another Friday market bust, followed by a bailout from the Fed and Treasury, circa March 2008.

And yes the great "unelected powers" are meeting this weekend. The Federal Reserve, is it private, is it public? They can lower interest rates below inflation, the inflation they are creating!

I remember telling my dad I thought that Alan Greenspan as Chairman of the Fed was the second most powerful person in the world, but my dad scoffed. I still believe that's true because they can make these huge monetary decisions, they are quasi-government when they need to be but not when the don't, and they are not accountable to anyone, except the banks.

vanilla ice said...

Jim, what are you? "The government needs to stop the trading" and "forget about moral hazard." It's this attitude that require the failure of Fannie, Freddie, and the mortgage market in general. This keeps happening over and over because the government keeps jumping in at the last minute and changes the rules.

keith said...

Think China's getting a bit nervous?

Fannie and Freddie fail, but the US taxpayer pays the bill

Sick.

Freddie, Fannie Failure Could Be World `Catastrophe,' Yu Says

By Kevin Hamlin

Aug. 22 (Bloomberg) -- A failure of U.S. mortgage finance companies Fannie Mae and Freddie Mac could be a catastrophe for the global financial system, said Yu Yongding, a former adviser to China's central bank.

``If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic,'' Yu said in e-mailed answers to questions yesterday. ``If it is not the end of the world, it is the end of the current international financial system.''


http://www.bloomberg.com/apps/news?pid=20601080&sid=aslo2E01QVFI&refer=asia

6% is for losers said...

"I have long gotten over the moral hazard issues"

Yea Jim & you are not the only one...evidentally 85% of America is over it that is why you get screwed at every turn and greed is rampant.

bitterrenter said...

QUICK BRAINSTEM QUIZ:

1. Who deregulated the markets and allowed this to happen?

2. What political party turned the treasury over to private enterprise?

3. What political party encourages the people to live beyond their means to impress their friends and relatives?

4. Extra credit: What political ideology does that political party adhere to?

bitterrenter said...

Greed is rampant because the brainstems all believe in a political ideology that is based on "harnessing greed and self-interest".

And don't forget fear. Conservatism is based on the nurturing and cultivation if not the outright encouragement of the worst instincts in humans.

bickerer said...

I just picked up some new 'nomenclature' from bigpicture.typepad.

Fannie and Freddie, now Phoney and Fraudy.


Maybe this isn't that new, but it's the first I saw it.

jack walsh said...

so how much bailout are we talking about here? a trillion?

anyone still buying the "strong dollar policy" BS?

PatFriedl said...

WAIT A SECOND.
First, you guys are bashing Cramer for being such an idiot (and rightly so). NOW, he's a prohet?

First it was Ron Paul, Now it's Obama.

Dude, PICK A SIDE, an issue, whatever - and at least apply some logic to it.

Anonymous said...

Jim Cramer thinks Fannie and Freddie may fail (i.e. be bailed out by you the taxpayer) by the weekend....
------------------------------------
Lucky for us Cramer doesn't known beans about what is going on.

Anonymous said...

QUICK BRAINSTEM QUIZ:

1. Who deregulated the markets and allowed this to happen?

2. What political party turned the treasury over to private enterprise?

3. What political party encourages the people to live beyond their means to impress their friends and relatives?

4. Extra credit: What political ideology does that political party adhere to?
---------------------------------
The short answer: The libertarian Over Class that has been in charge since the early 1970's.

Anonymous said...

Blogger keith said...
"It is convenient that the unelected powers who run the world are gathered this weekend. They can make all their important decisions on how to destroy the currency and spend the taxpayer money, and then tell us serfs on Sunday night"

My Libertarian Over Lords get a free junket, and all I get is the bill.

Hardmoneyloans.org said...

CALIFORNIA HOME SALES UP UN JULY

California Real Estate market gave signs of relief. Home sales went up 12.3 percent in July compare to the same month last year. According the Quick Data, a company that monitors Real Estate Activity nationwide.

Of the homes sold 44.8 percent were foreclosure resales.

The median home price last month was 318,000 down 3% from 328,000 for the month before and down 33.5 percent from July a year ago. Most of the drop in home prices is due to the depreciation properties are facing because of the mortgage meltdown.

Not even the most knowledgeable Real Estate indicators know exactly where the market is going. Foreclosure activity is at record levels, banks are asking for tougher requirements, non-owner occupied homes are almost impossible to re-finance.

Anonymous said...

This week McCain called lobbyists "birds of prey in pursuit of their share of the spoils". Great stuff.

On the other hand no one even reads bitter or brainstems posts, which is also a laughing matter.

Anonymous said...

PHONEY AND FRAUDY TO DA MOON ALICE!!!

Reality said...

"1. Who deregulated the markets and allowed this to happen?"

The FDR administration that invented FNM to make home mortgage interest rate artificially low because his big government spending policies were driving the market interest rate skyward.

The LBJ administration that "privatized" FNM in order to take the FNM liability off the federal government's book. No, Enron did not invent "special purpose vehicles" and "off balance sheet entities." The federal government established precedence three decades before Enron. FRE was invented by LBJ in order to pretend that there is actually a viable market for lending people mortgage money at below capital market rates.

Lawmakers also made a special case regulation for FNM and FRE: banks can use FNM and FRE preferred stocks as reserve capital assets . . . the only at-risk stock issues from any company anywhere that can used for such purpose under existing banking regulations. Any wonder why banks are loaded FNM and FRE preferred stocks? thereby inflating the FNM and FRE bubble in years past?

"2. What political party turned the treasury over to private enterprise?"

Woodrow Wilson, who signed the Federal Reserve Act into law, was a Democrat.

"3. What political party encourages the people to live beyond their means to impress their friends and relatives?"

Is that what "affordable lending" regulations are about? that people who can not really afford the loans to buy the houses of their "dreams" should be allowed to take out the loans anyway? You know as well as I do which side of the aisle was really into that . . . while taking $200+ million lobbying money from FNM and FRE.

"4. Extra credit: What political ideology does that political party adhere to?"

The government is here to help; regulations are for the good. One ring to rule them all . . . why don't we keep the ring for good instead of evil? hahaha. Dream on.

Reality said...

Bitterrenter,

Greed is just another phrase for self-preservation instinct; it's a natural human condition . . . can be used for good or evil. Political agendas that ignore the existence of greed never leads to good results.

As for fear, where do you think the power of government regulation comes from? The ultimate draconian enforcement mechanism is do as I say or you get taken out and shot, right?

Reality said...

"The short answer: The libertarian Over Class that has been in charge since the early 1970's."

Don't confuse Neocons with libertarians. Neocons are ex-Trotskyists . . . i.e. communists with an internationalist bend . . . yes, the New World Order crowd.

Since 1971 Nixon "closing of the gold window," we have had a paper money that is not fixed to any tangible asset in any way. The dollar has devalued 90% since 1971; 96% since 1933 (yes, that's 60% between 1933 and 1971). Fiat money central banking was among proposals straight out of the Communist Manifesto! The very purpose of it is to destroy the bougeouise middle class, and replacing libertarianism (the historical norm, as most people believed in private property rights) with unlimited state interventionism.

Mammoth said...

Anon 6:47 PM said…
“On the other hand no one even reads bitter or brainstems posts, which is also a laughing matter”
-------------------
Can’t take the truth, can you?

Actually, some of us do read Bitterrenter’s posts, agree with his comments, and view the flamers who criticize him as cowards who hide behind the “anonymous” handle.

-Mammoth

Anonymous said...

Could you political party retards take your quadrennial naked twister orgy somewhere else? Us adults are trying to have a discussion about things that matter.

fast actin tinactin said...

Ok Mammoth, because you're a long time poster and I enjoy your writing I'll give an answer. The bitter and the brainstem (who are the same person, and who also goes by munster sometimes) adds nothing to the discussion except (very slight) revisions of the same hate filled sentence.

There is nothing there. It is slag. No though, no experience no effort. Just drudgery and hatred, expressed with the same words in the same order over and over.

In recent days I started to suspect this individual is actually Casey Serin but then thought, no, for all his faults at least Casey has something to say.

We just had this discussion about mindlessness yesterday where I more tactfully tried to persuade him and his mirror image Obama hater to use a little thought before writing. But it (of course) fell on deaf ears. And now I'm just giving the reality of it, no one will read the same words in the same order over and over. No one. I respect the fact that you have a different view of the world than me and I enjoy your posts. It's the classlessness of it that I'm objecting to, and so should you.

From this day forward I will never read a single word written by the three mentioned above. Anyone who does is just a fool.

And also, at times anonymity has its purposes.

Frank@MarketingOpus.com said...

This dude needs to be put in a straitjacket. I don't believe a word he says.

Paul E. Math said...

I really can't stand Cramer.

You can sure tell who and what Cramer cares about when he says that you can't trust the government because, horror of horrors, they aren't looking out for stocks. Yeah, heaven forbid, the government actually look out for the interests of the electorate, people who work for a living, people who pay taxes.

So now he wants to nationalize phoney and fraudie. Great idea: put the taxpayer fully on the hook for the consequences of fraud and deception so that stocks are protected.

Yeah, I have a tough time seeing the good in someone like Jim Cramer.

Peter T said...

> I remember telling my dad I thought that Alan Greenspan as Chairman of the Fed was the second most powerful person in the world, but my dad scoffed.

Maybe your dad was right to scoff: why only second most powerful?

Peter T said...

> ``If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic,'' Yu said

What means "adequately"? Should the government pay every bondholder in full? If you wanted that, why didn't you stick to treasuries? Fannie's and Freddie's bonds brought you a spread above treasuries, and you took it greedily. The paper is still not worthless like many second mortgages; maybe 80 or 90% of face value is adequate.

Peter T said...

> ``If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic,'' Yu said

What means "adequately"? Should the government pay every bondholder in full? If you wanted that, why didn't you stick to treasuries? Fannie's and Freddie's bonds brought you a spread above treasuries, and you took it greedily. The paper is still not worthless like many second mortgages; maybe 80 or 90% of face value is adequate.

bitter brainstems said...

Oh tinactin, you are such an intellectual.

It sure was classy when the republicans subjected us to the blowjob drama in order to sink Clinton.

Reality said...

Mammoth,

I respect many of the posts that you have made in the past. Political diatribes from Bitterrenter however make no sense: FNM is are not a product of deregulation. If it were up to the private market place, it died in the early 1970's and would have been left for dead if not for the government regulators resurrecting the beast for political purposes. Here's a brief history of FNM:

1. Founded in 1938 as a branch of the federal government. FDR's New Deal dam building and warship building programs were destroying the working capital of America, just like Stalin's and Hitler's big government programs were doing in their respective countries at about the same time. There is a difference however, instead of being assigned to dinky apartments after slave labor like in the Soviet Union, or physically looting Jews and political opponents to redistribute "gifts" to the favored party followers (while exterminate the sick and inform to save medical cost) like how it was done in the 1930's Germany, Americans in the 1930's still bought houses with mortgages but incresing difficultly because the governmetn waste was driving up cost of borrowing dramaticly. So the government office of Fannie was founded, along the same lines of FDIC and social security. It's yet another ponzi scheme that was designed to work in good times, but will fail in credit crunch and have to rely on paper money printing to pay its liabilities that was never properly supported by premiums collected in good times using viable long term acturial data . . . just like FDIC and Social Security. Because the whole purpose of the scheme is to promise something for nothing! Otherwise, how can borrowers otherwise rejected by market risk calculations suddenly qualify for loans with very little risk premium?

2. The "Long Term" crunch arrived in the late 1960's during LBJ's administration. As another round socialism underway at the time of LBJ, our European trade partners became suspicious about US government's ability to keep its end of the bargain under Bretton Wood. In response, LBJ administrations shuffled the books just like Enron would do later, and "spun off" Fannie to make its accumulated liabilities excluded from that of the federal government itself.

3. Within a few years, FNM was teetering on the brink of bankrupt . . . not surprising considering all those special purpose vehicles were created to hide loss making business practices. Instead of leaving it dead, the federal government under Nixon resurrected it with regulatory support! Giving its papers special privileges, such as implied guarantee, eligibility of its senior preferred stocks as reserve asset for banks! No at risk stocks of any other company can be counted as reserve assets in the banking regulations.

4. Not surprisingly, regulatory exceptions such as Fannie and Freddie became giant money laundry machines for political campaign donations, just like labor unions. Their very existence depend on politicians keep making exceptions for them that are denied all other market participants. Fraud and criminality became rife in those organizations because for their own survival, the executives at those privileged organizations also have the dirt on the politicians.

It's laughable to think that anyone putting on the robes of officialdom would somehow leave his or her own greed in the freezer at home before leaving for work every day. The United States Constitution was founded on the belief that officials' own greed and ambitions have to be checked. There is something fundamentally un-American about the totalitarian utopia that an almighty government will bestow happiness upon us.

Anonymous said...

Mammoth said...

Anon 6:47 PM said…
“On the other hand no one even reads bitter or brainstems posts, which is also a laughing matter”
-------------------
Can’t take the truth, can you?

Actually, some of us do read Bitterrenter’s posts, agree with his comments, and view the flamers who criticize him as cowards who hide behind the “anonymous” handle.

-Mammoth

I believe Bitterrenter/Andrew Hac would be the presidential dream ticket of all time.

Stem Snappers.

JaneZ

Anonymous said...

Greed is rampant because the brainstems all believe in a political ideology that is based on "harnessing greed and self-interest".

No.

The brainstems BELIEVE that their Reptilican master's ideology is "harnessing" greed.

The reality---as proven time and time again by actual facts---is that the actual, intended result, is not harnessing it for good purposes, but actively un-harnessing criminal fraud, greed, theft and general corruption of the hyper"capitalist" top 0.001%. All while looting the lifeblood of the underlying health of the economy and government---and then having the astonishing chutzpah to blame all these problems on "liberals". We haven't had liberal economics since 1978.

And worse, the brainstems believe it!

This is NO different than the stories you hear about some African hellhole rioting and murdering some women because they were supposedly "witches" who cast some curse making them poor, instead of underlying reality. We're all smug and think "god, how dumb are they to believe in that crap".

Well, the Rethuglicans these days are telling the same kind of stories---and they have extremely good propagandists (well paid) on their side.

Paul E. Math said...

I'll sound off a little on the repubs v. dems thing.

Personally, I agree with the traditional fiscally conservative ideology of the republican party. I do not agree with the traditional expansive social programs of the democratic party although I admire the sentiment.

That having been said, the ideology of fiscal conservatism has been hijacked and perverted by those in the republican party seeking personal aggrandizement.

I believe in conservative ideals because I truly believe that, implemented honestly and fairly, they best serve the interest of the poor and the middle class.

Anonymous said...

"...and then having the astonishing chutzpah to blame all these problems on "liberals"..."

Gotta admire the efficacy. It matters not what is true...only what is believed.

When we really crater in 5-10-20 years, a cerebral analysis of what actually happened will be far from people's minds.

Anonymous said...

LOL- my "friend" Cramer is concerned about us "little guys". In-duh-vidual inverstors he calls us and somberly emotes "The stocks are rigged. Some people know the answer and others don't" -- Oh man is this guy a bad actor!

Hey Cramer, tell your hedge fund buddies to cram it. I'll be dancing on their graves come '09.