Ed Huntress wrote:
"cavelamb himself" wrote in message
m...

I do believe it was predicted here several weeks ago.

(John? Ed? Somebody fess up and I'll go easy on ya)

I saw the first story on the news about Alt-A mortgages just
yesterday.


--

Richard

(remove the X to email)

It wasn't me; I know very little about it. I saw an article in the
NYT about it a few days ago, but it didn't look particularly spooky:


http://www.nytimes.com/2008/08/04/bu...yzoGukSHolKMMA


"Fannie and Freddie may yet muddle through without an explicit bailout.
Their near-death experience seems to have wised them up. For instance, they
are now putting a greater effort into modifying the mortgages of
hard-pressed borrowers."
http://www.nytimes.com/2008/08/11/op...hp&oref=slogin

This is the important observation of the weekend.
"Greater effort" is it? ROTFLMFAO
Lenders are working furiously to determine exactly which mortgages are
actuarially or statistically most likely to fail so they can discount them
the ten percent the law requires and refi them with Federal mortgage
insurance. This is the actual result of the latest act of our Congress.

Banks, IB's, S&L's as well as Freddie and Fannie, are unloading their
certain losses on the American Taxpayer.
The only beneficiary are the shareholders of these lenders. The folks with
the mortgages hadn't a prayer - under ANY circumstances - of paying their
mortgages and avoiding eventual forclosure. The benefit of what's going on
today inures completely to the benefit of the creditors involved and at the
expense of the American public.

From the Article:

"But in his desperation to avoid a bailout on his watch, Mr. Bush has
implied a willingness to do just that. At a recent news conference, he
indicated that as long as shareholders owned Fannie and Freddie, the
government's new authority could not be deemed a "bailout." "

Are you startin' to get it now? Sounds a little like we aren't really in a
recession a this point doesn't it.

You might remember a brief "plan" that I posted a while back that began with
the Feds just whacking Fannie and Freddie and sorting them out. I thought it
would be best to wipe the shareholders equity completely out as the only
fair and reasonable course and once everything had stabilized offer equity
in the new business to the public over time. That's how our system works or
it did anyway.

What is being done now is part of the reasoning behind my position. I also
think we will end up doing it anyway and it would be best to start the
medicinal dose of financial homicide sooner rather than later.

Another thing to consider is that this BS is keeping capital out of the
markets even though it's intended to have the opposite effect. Wishful
thinking that. Only an idiot would rush into anything not given the same
competitive advantage being extended by the Fed to mortgage lenders of
whatever stripe. GM, Ford and Chrysler won't ge a dime in fresh equity
before they too enjoy a federal loan gaurantee of some sort.

A federal gaurantee of some sort could become a sort of means test or due
diligence for investors and the effect of that would be catastrophic.


--

John R. Carroll
www.machiningsolution.com