On Tue, 15 Jul 2008 11:08:41 -0500, Ignoramus19502
wrote:
snip
I do not see any evidence for this.

Some people or businesses who invested in mortgage backed securities
that are guaranteed by these companies, would be a little poorer
without those guarantees. And home loans will be slightly more
expensive, as they should be. But I do not see a big fallout from
Fannie mae and Freddie Mac going bankrupt.
snip
=========
In an ideal and/or ration world this is indeed what should
happen, however all the economic "fire walls" and "water tight
bulkheads" have all been removed, and the failure of either of
these behomoths will be almost instantly followed by the other,
which is certain to trigger a cascade of major failures/defaults
resulting in massive CDS derivitive redemptions. These GSE
securities have become entwined and embeded in every financial
nook and crany in the world, and if these go up in flames, so
does everything else.

In turn this will sevearly limit if not eliminate most
governmental revenues at a time when demands for basic emergency
and social services will spike. [e.g. With no income and no sales
there will be no income and no sales taxes paid...]

Budweiser/InBev is a preview of things to come as our creditors
look for anything of value the can exchange their rapidly
depreciating American dollars for.

We put our own head in this noose.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

F. George McDuffee wrote:
On Tue, 15 Jul 2008 11:08:41 -0500, Ignoramus19502
wrote:
snip
I do not see any evidence for this.


We put our own head in this noose.

And we, fortunately, can take it out.

Life is hard George, even if you are well educated.
It's infinitely harder if you are stupid.

BTW, this isn't a specific comment but a general observation.
You fall into the reluctant category and are one part of whatever hope there
is for our future.

--

John R. Carroll
www.machiningsolution.com

cavelamb himself wrote:
F. George McDuffee wrote:

On Tue, 15 Jul 2008 11:02:48 -0500, cavelamb himself
wrote:


Oh I know, John.
Just batting at the whiner.

Ya'll reboot your crysal balls and tell me this one...

What happens when the tax payers can't afford to pay the taxes
that are going to pile up from all this?

snip
===========
Start the high-speed printing presses at the Fed printing million
dollar bills?



I haven't even seen a thousand dollar bill in ages.

I thought they were taken off the teble so drug dealers had to
use bigger suitcases to carry their money around.


But I did like the quote...


America has become thouroughly convinced that the lunatics are running
the assylum and good idea or no, it will take more that George W Bush
at a press conference to reclaim the public trust this administration
has wantonly destroyed.

Hey!
That original content dude!!
LOL


--

John R. Carroll
www.machiningsolution.com

On Tue, 15 Jul 2008 09:01:21 -0500, F. George McDuffee
wrote:
snip.
At the same time the financial "masters of the universe" are
screaming for governmental GSE guarantees and bailouts, they are
not only dumping the GSE stock they own, but are selling short.
snip
========
That was quick -- I just received two emails asking for
information on F&F short sales.

========
SEC Curbs Shorting of GSE Stocks,
Considers Limits for Wider Market
By KARA SCANNELL
July 15, 2008 5:42 p.m.

WASHINGTON--The Securities and Exchange Commission announced an
emergency action aimed at reducing short-selling that targets
Wall Street brokerage firms as well as Fannie Mae and Freddie
Mac, and will immediately begin considering new rules to extend
new requirements to the rest of the market.

SEC Chairman Christopher Cox said the SEC would institute an
emergency order requiring any traders to pre-borrow stock before
shorting Fannie Mae and Freddie Mac, the embattled
government-sponsored entities that own or back more than half the
nation's mortgages. It would also apply to the stocks of Lehman
Brothers, Goldman Sachs, Merrill Lynch and Morgan Stanley. The
order is a near-term fix and will expire in 30 days.
snip
for complete article click on
http://online.wsj.com/article/SB1216..._us_whats_news


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

F. George McDuffee wrote:
On Tue, 15 Jul 2008 08:40:58 -0700, "John R. Carroll"
wrote:
snip
it will take more that George W Bush at a press
conference to reclaim the public trust this administration has
wantonly destroyed.
snip
==========
If it were only this easy.

The "turkey buzzards" now circling and preparing to come home to
crash land [and poop] have been growing in size and quantity for
a number of years, although it can be argued that the current
administration did provide unusually large amounts of carrion and
offal to help them mature more rapidly than they would have
otherwise done. However in toto this was genuine bipartisan
effort.

Absolutely and it's a fair read on this entire eight year nightmare America
has been living.


"W" will be gone in a few months, his appointees will be replaced
and many of his policies will be reversed.

That remains to be seen.



We will then discover that just as chopping the head off the
rooster does not prevent the sun from coming up, the economic
contraction and de leveraging, with all that this implies, will
continue.

To some extent this is certain to be the case but depending on the outcome,
there might be a real effort to rip this weed out by the roots.



The United States appears to have reached a "tipping point" in
several critical economic, social and economic areas. It should
be noted that many of these changes appear to have high
hysteresis in that once these "tip" or "snap over" into a
different state or value, it required considerable money,
extended time and intensive effort to change them back.

The only thing important going forward is the level of commitment.


Of very considerable concern is the foundational role that cheap
energy, particularly for goods transportation has assumed
worldwide. This is the foundation for very large parts of not
only international but national (even regional) trade. Indeed,
suburban communities dependent on it's commuter residents may be
in particular trouble, as are the automobile companies. Offices
and factories in the larger urban areas may be unable to obtain
adequate staffing if neither suitable local housing nor
economical public mass transit is available for their required
workforce.

So you say.
I say the basis for any forward looking plan will be rooted in restoring the
fundamental integrity of our system of Justice (Legal), Legistlative
(Congress) and Executive but most importantly, the seperation/ cjeck and
balance of the three.
This is what has made America great and it's why capital has flowed inward.
That it's now outbound has everything to do with eight years of disregarding
this truth.


--

John R. Carroll
www.machiningsolution.com

On Tue, 15 Jul 2008 17:13:30 -0700, "John R. Carroll"
wrote:

snip
We put our own head in this noose.

And we, fortunately, can take it out.
snip
----------
Only until it gets real tight and we lose our footing.....

But until then there is nothing to worry about.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

America has become thouroughly convinced that the lunatics are
running the assylum and good idea or no, it will take more that
George W Bush at a press conference to reclaim the public trust
this administration has wantonly destroyed.


At this point some right wing guys should jump in and start calling
you some names.


Just as long as they don't call me late for dinner.
I get positively grumpy if I don't eat.




Class, John.
Pure class...


Monday thru Friday at 7am.
ftp.machiningsolution.com/IMG_0023.JPG

Sunday is bacon and eggs.
ftp.machiningsolution.com/IMG_0267.JPG

and you haven't seen lunch or dinner.
LOL



MMMmmmm... Loks good!
But did you bring enough for everybody?

I'm going to have to start using some of Gunners emotional
indicators to help describe what I'm trying to say.

(laughs), (grins), (Shrugs), (stamps little foot in frustration)


--

Richard

(remove the X to email)

America has become thouroughly convinced that the lunatics
are running the assylum and good idea or no, it will take
more that George W Bush at a press conference to reclaim
the public trust this administration has wantonly destroyed.

F. George McDuffee wrote:
On Tue, 15 Jul 2008 17:13:30 -0700, "John R. Carroll"
wrote:

snip
We put our own head in this noose.

And we, fortunately, can take it out.
snip
----------
Only until it gets real tight and we lose our footing.....

Well, having lost our hear our feet are only following, or is it the other
way around?
LOL



But until then there is nothing to worry about.

Nothing worth worrying about maybe.
There is a distinct difference.

--

John R. Carroll
www.machiningsolution.com

John R. Carroll wrote:

cavelamb himself wrote:

F. George McDuffee wrote:


On Tue, 15 Jul 2008 11:02:48 -0500, cavelamb himself
wrote:



Oh I know, John.
Just batting at the whiner.

Ya'll reboot your crysal balls and tell me this one...

What happens when the tax payers can't afford to pay the taxes
that are going to pile up from all this?

snip
===========
Start the high-speed printing presses at the Fed printing million
dollar bills?



I haven't even seen a thousand dollar bill in ages.

I thought they were taken off the teble so drug dealers had to
use bigger suitcases to carry their money around.


But I did like the quote...


America has become thouroughly convinced that the lunatics are running
the assylum and good idea or no, it will take more that George W Bush
at a press conference to reclaim the public trust this administration
has wantonly destroyed.


Hey!
That original content dude!!
LOL



Well Duh!

It's a quote now.

I suppose I could add the attribution.

--

Richard

(remove the X to email)

America has become thouroughly convinced that the lunatics
are running the assylum and good idea or no, it will take
more that George W Bush at a press conference to reclaim
the public trust this administration has wantonly destroyed.
John R Carroll

cavelamb himself wrote:
America has become thouroughly convinced that the lunatics are
running the assylum and good idea or no, it will take more that
George W Bush at a press conference to reclaim the public trust
this administration has wantonly destroyed.


At this point some right wing guys should jump in and start
calling you some names.


Just as long as they don't call me late for dinner.
I get positively grumpy if I don't eat.




Class, John.
Pure class...


Monday thru Friday at 7am.
ftp.machiningsolution.com/IMG_0023.JPG

Sunday is bacon and eggs.
ftp.machiningsolution.com/IMG_0267.JPG

and you haven't seen lunch or dinner.
LOL



MMMmmmm... Loks good!
But did you bring enough for everybody?

Always

Every

Single

Day

I consider my good fortune something that ought to be shared. I have nothing
at all on my own.

The best excercise invented for the human heart is reaching down and helping
someone up.


I'm going to have to start using some of Gunners emotional
indicators to help describe what I'm trying to say.

(laughs), (grins), (Shrugs), (stamps little foot in frustration)

The locals, and it's a big town, all know me.
I feed business owners and homeless folks here every day and at the same
time and no one has ever been turned down regardless.


--

John R. Carroll
www.machiningsolution.com

On 2008-07-15, John R. Carroll jcarroll@ubu wrote:
Ignoramus19502 wrote:
On 2008-07-15, John R. Carroll jcarroll@ubu wrote:
Ignoramus19502 wrote:
On 2008-07-15, John R. Carroll jcarroll@ubu wrote:
Ignoramus19502 wrote:
On 2008-07-15, John R. Carroll jcarroll@ubu wrote:
Ignoramus19502 wrote:
On 2008-07-15, cavelamb himself wrote:
John R. Carroll wrote:
cavelamb himself wrote:

azotic wrote:

It appears the american taxpayer will subsidize the risks
Yes, and brokers will sell debt through new means, vehicles etc.

You know reconditioning well Chudov but apparently not finance.

I have a Master of business administration degree in finance from
University of Chicago. Which is admittedly not that much, but at least
I studied it a little bit.

Brokers don't buy debt, they sell it and their payoff is the fee they
collect.

That's right. This changes a little when they sell it and also
guarantee it. Then their payoff is the fee, but the risk is being on
the hook for delinquencies. But that is an aside. The bottom line of
this story is that if buying home loans is attractive enough (possibly
at higher interest and more stringent equity requirements) the buyers
will buy them.


BTW, that comperssor recon. was beautiful.



Possibly these new means will require better capitalization of homes
and better returns (interest rates).

I do not see what the big deal is.

I'm certain at this point that you don't.
You will soon.


We'll see just how bad it gets before it gets better. What ultimately
does matter, is that there was a lot of irresponsible lending due to
poorly placed incentives, and restructuring of home credit markets
would be beneficial.

--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
http://improve-usenet.org/

Ignoramus19502 wrote:
On 2008-07-15, John R. Carroll jcarroll@ubu wrote:
Ignoramus19502 wrote:
On 2008-07-15, John R. Carroll jcarroll@ubu wrote:
Ignoramus19502 wrote:
On 2008-07-15, John R. Carroll jcarroll@ubu wrote:
Ignoramus19502 wrote:
On 2008-07-15, John R. Carroll jcarroll@ubu wrote:
Ignoramus19502 wrote:
On 2008-07-15, cavelamb himself
wrote:
John R. Carroll wrote:
cavelamb himself wrote:

azotic wrote:

It appears the american taxpayer will subsidize the risks
Yes, and brokers will sell debt through new means, vehicles etc.

You know reconditioning well Chudov but apparently not finance.

I have a Master of business administration degree in finance from
University of Chicago. Which is admittedly not that much, but at least
I studied it a little bit.

I can't match that but I doubled as an undergrad in M.E. and Mathematics at
Michigan.
I'd originally been enrolled in an accellerated five year syllabus that lead
to a JD w/an Engineering undergrad but decided to get MARRIED, like an
idiot, and took the double in three and a half years including summer
semesters instead.
I also did a 4000 hour Tool and Die apprenticeship but started that before I
got all full of myself thinking someone would actually want a degreed
engineer with and apprenticeship under his belt.
Who knew?


Brokers don't buy debt, they sell it and their payoff is the fee they
collect.

That's right. This changes a little when they sell it and also
guarantee it. Then their payoff is the fee, but the risk is being on
the hook for delinquencies. But that is an aside.

Huh?
An aside perhaps but it's also not the universe that you and I live in.
Brokers don't guarantee anything, not even their own representations.


The bottom line of
this story is that if buying home loans is attractive enough (possibly
at higher interest and more stringent equity requirements) the buyers
will buy them.

They will want to. What they need is access to the necessary capital to do
it.



BTW, that comperssor recon. was beautiful.

Nothin'?
Damn!
LOL




Possibly these new means will require better capitalization of homes
and better returns (interest rates).

I do not see what the big deal is.

I'm certain at this point that you don't.
You will soon.


We'll see just how bad it gets before it gets better. What ultimately
does matter, is that there was a lot of irresponsible lending due to
poorly placed incentives, and restructuring of home credit markets
would be beneficial.

That won't matter at all when ten or fifteen percent of America is eating
out of garbage cans or behind your local restaraunt. Not one bit.

--

John R. Carroll
www.machiningsolution.com

John R. Carroll wrote:

So you say.
I say the basis for any forward looking plan will be rooted in restoring the
fundamental integrity of our system of Justice (Legal), Legistlative
(Congress) and Executive but most importantly, the seperation/ cjeck and
balance of the three.
This is what has made America great and it's why capital has flowed inward.
That it's now outbound has everything to do with eight years of disregarding
this truth.

8 years? How about 28? Republicans have no monopoly on dismantling the
Constitution and Bill of Rights.

David

On Tue, 15 Jul 2008 17:24:54 -0700, "John R. Carroll"
wrote:
snip
Of very considerable concern is the foundational role that cheap
energy, particularly for goods transportation has assumed
worldwide. This is the foundation for very large parts of not
only international but national (even regional) trade. Indeed,
suburban communities dependent on it's commuter residents may be
in particular trouble, as are the automobile companies. Offices
and factories in the larger urban areas may be unable to obtain
adequate staffing if neither suitable local housing nor
economical public mass transit is available for their required
workforce.

So you say.
I say the basis for any forward looking plan will be rooted in restoring the
fundamental integrity of our system of Justice (Legal), Legistlative
(Congress) and Executive but most importantly, the seperation/ cjeck and
balance of the three.
This is what has made America great and it's why capital has flowed inward.
That it's now outbound has everything to do with eight years of disregarding
this truth.
snip
=========
A large amount of chicken or egg primacy here, as well as
determining which leg is the most important leg on a 3 legged
stool.

From history and a survey of current conditions, it is clear that
a bad economy promotes a bad political and judicial process, and
a bad political and judicial process produces a bad economy.

It is also clear that a bad economy, *AND* a bad
political/judicial process produce a rotten and cynical attitude
in the majority of the citizens or subjects.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Tue, 15 Jul 2008 20:18:57 -0500, with neither quill nor qualm,
Ignoramus19502 quickly quoth:

On 2008-07-15, John R. Carroll jcarroll@ubu wrote:

You know reconditioning well Chudov but apparently not finance.

I have a Master of business administration degree in finance from
University of Chicago. Which is admittedly not that much, but at least
I studied it a little bit.

Well, at least you gave it up for something more real and honest:
hawking wares on eBay and doing new/used metalworking.

--
"Giving every man a vote has no more made men wise and free
than Christianity has made them good." --H. L. Mencken
---

I do not see any evidence for this.

Some people or businesses who invested in mortgage backed securities
that are guaranteed by these companies, would be a little poorer
without those guarantees. And home loans will be slightly more
expensive, as they should be. But I do not see a big fallout from
Fannie mae and Freddie Mac going bankrupt.
snip
=========
In an ideal and/or ration world this is indeed what should
happen, however all the economic "fire walls" and "water tight
bulkheads" have all been removed, and the failure of either of
these behomoths will be almost instantly followed by the other,
which is certain to trigger a cascade of major failures/defaults
resulting in massive CDS derivitive redemptions. These GSE
securities have become entwined and embeded in every financial
nook and crany in the world, and if these go up in flames, so
does everything else.

In turn this will sevearly limit if not eliminate most
governmental revenues at a time when demands for basic emergency
and social services will spike. [e.g. With no income and no sales
there will be no income and no sales taxes paid...]

Budweiser/InBev is a preview of things to come as our creditors
look for anything of value the can exchange their rapidly
depreciating American dollars for.

We put our own head in this noose.

Ya got that right, and it all stems from free trade and the global economy.
What the free traders want is basically an unregulated market where all
goods, services, and capital can freely go anywhere in the world where it is
most profitable. In theory this sounds very efficient and a good way to move
goods and capital around the globe. But it's really no different from what
we are experiencing here in this country, but expanded globally. We have
deregulated and privatized like mad since the republicans took over, this
was exactly what they said they would do and they did it. We now see what
happens when the markets are free to operate in a natural state. Lots of
money is made but there are also so many negative effects that it turns out
that unregulated markets are a disaster for most people. Now the same people
who brought us the mess we are in want to expand the same thing worldwide.
The result will be that the few countries that have the resources needed to
win the competition for business will have all the money. The nations that
are small, and lack the proper resources will be the losers in the global
competition. As in all capitalistic system there are a few big winners and
many losers. That is what will happen but the winners or losers will be on a
national scale. In the past the US always was the big winner so it seemed
like the best system, however, we are not the country with the best
resources for winning a global competition. That means we will have to learn
to live with being a loser nation in the global free market; and that's no
fun. Nobody stays on top forever and with the new competition we're likely
to be nearer the middle or bottom of the pack. It's either that or not buy
into the free trade trap at all and follow policies that put this country's
interests ahead of the free market.

Hawke

David R.Birch wrote:
John R. Carroll wrote:

So you say.
I say the basis for any forward looking plan will be rooted in
restoring the fundamental integrity of our system of Justice
(Legal), Legistlative (Congress) and Executive but most importantly,
the seperation/ cjeck and balance of the three.
This is what has made America great and it's why capital has flowed
inward. That it's now outbound has everything to do with eight years
of disregarding this truth.

8 years? How about 28? Republicans have no monopoly on dismantling the
Constitution and Bill of Rights.

No, but the last eight or ten years have been especially bad in this regard.

--

John R. Carroll
www.machiningsolution.com

Today is off to an interesting start:


http://abcnews.go.com/Business/Perso...5381997&page=1


A stumbling economy and a potential federal bailout of home mortgage
giants Fannie Mae and Freddie Mac appear to have prompted some traders
to question even one of the most stable investments: U.S. Treasury bonds.
treasury bonds
The benchmark 10-year bond note yield fell and its price rose in the
wake of a grim economy... Expand
The benchmark 10-year bond note yield fell and its price rose in the
wake of a grim economy assessment by Federal Reserve Chairman Ben Bernanke.

Concern that the government may take on trillions of dollars of debt
from mortgage giants Fannie Mae and Freddie Mac is creating the
perception of instability in the bond market.

As first reported by the Wall Street Journal, certain types of
derivatives trades that profit from the perception of instability in the
bond market have increased. Last week, the price of protection against a
government default on a 10-year Treasury note doubled.

"There are some cracks in the confidence in the United States and the
financial markets," said T.J. Marta, an analyst at RBC Capital Markets.

But, analysts and financial advisors told ABC News that Treasury bonds
remain a safe, stable investment.

The price of the benchmark 10-year bond note rose on Tuesday in the wake
of Federal Reserve Chairman Ben Bernanke's grim assessment of the state
of the economy, sending the bond yield down to 3.83 percent. Bond prices
and yields move in opposite directions.

cavelamb himself wrote:
Today is off to an interesting start:


http://abcnews.go.com/Business/Perso...5381997&page=1


A stumbling economy and a potential federal bailout of home mortgage
giants Fannie Mae and Freddie Mac appear to have prompted some traders
to question even one of the most stable investments: U.S. Treasury
bonds. treasury bonds
The benchmark 10-year bond note yield fell and its price rose in the
wake of a grim economy... Expand
The benchmark 10-year bond note yield fell and its price rose in the
wake of a grim economy assessment by Federal Reserve Chairman Ben
Bernanke.

Concern that the government may take on trillions of dollars of debt
from mortgage giants Fannie Mae and Freddie Mac is creating the
perception of instability in the bond market.

As first reported by the Wall Street Journal, certain types of
derivatives trades that profit from the perception of instability in
the bond market have increased. Last week, the price of protection
against a government default on a 10-year Treasury note doubled.

"There are some cracks in the confidence in the United States and the
financial markets," said T.J. Marta, an analyst at RBC Capital
Markets.

But, analysts and financial advisors told ABC News that Treasury bonds
remain a safe, stable investment.

The price of the benchmark 10-year bond note rose on Tuesday in the
wake of Federal Reserve Chairman Ben Bernanke's grim assessment of
the state
of the economy, sending the bond yield down to 3.83 percent. Bond
prices and yields move in opposite directions.

You have only to think back a little to remember when our President was
hawking T-bills that were in the SS Trust Fund as "worthless paper" Richard.

I'll bet he'd like to take those words back if he could, especially as the
markets are coming around to agreeing with him.
Regime change can't come too soon for America but it's a little late. To bad
the Dems didn't have a decent candidate in 2004.....

--

John R. Carroll
www.machiningsolution.com

On 2008-07-16, Hawke wrote:
Ya got that right, and it all stems from free trade and the global economy.
What the free traders want is basically an unregulated market where all
goods, services, and capital can freely go anywhere in the world where it is
most profitable.

Keep in mind that the two failing behemoths are "GOVERNMENT sponsored
enterprises". It is that designation that let them grow so big and
make so many risky guarantees.

It is hard to blame the "free market" for their failure.

The "free market" response to these loan guarantees was to write and
sell bogus loans that would be guaranteed by these GSAs.

I remember being astonished how I was given a "no-documentation"
mortgage where I did not even have to state or prove my income. (we
did not borrow as much as we could, our mortgage payments are
approximately 10% of our gross income, but the lender had no idea)

i

On 2008-07-16, Larry Jaques novalidaddress@di wrote:
On Tue, 15 Jul 2008 20:18:57 -0500, with neither quill nor qualm,
Ignoramus19502 quickly quoth:

On 2008-07-15, John R. Carroll jcarroll@ubu wrote:

You know reconditioning well Chudov but apparently not finance.

I have a Master of business administration degree in finance from
University of Chicago. Which is admittedly not that much, but at least
I studied it a little bit.

Well, at least you gave it up for something more real and honest:
hawking wares on eBay and doing new/used metalworking.


That's not my day job, which is actually mildly finance related, but
at least it does not involve selling bogus financial instruments.

--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
http://improve-usenet.org/

Ignoramus30183 wrote:
On 2008-07-16, Larry Jaques novalidaddress@di wrote:
On Tue, 15 Jul 2008 20:18:57 -0500, with neither quill nor qualm,
Ignoramus19502 quickly quoth:

On 2008-07-15, John R. Carroll jcarroll@ubu wrote:

You know reconditioning well Chudov but apparently not finance.

I have a Master of business administration degree in finance from
University of Chicago. Which is admittedly not that much, but at
least I studied it a little bit.

Well, at least you gave it up for something more real and honest:
hawking wares on eBay and doing new/used metalworking.


That's not my day job,

Well you are very good at it.


--

John R. Carroll
www.machiningsolution.com

John R. Carroll wrote:


You have only to think back a little to remember when our President was
hawking T-bills that were in the SS Trust Fund as "worthless paper" Richard.

I'll bet he'd like to take those words back if he could, especially as the
markets are coming around to agreeing with him.
Regime change can't come too soon for America but it's a little late. To bad
the Dems didn't have a decent candidate in 2004.....



I remember.



--

Richard

(remove the X to email)

America has become thouroughly convinced that the lunatics
are running the assylum and good idea or no, it will take
more that George W Bush at a press conference to reclaim
the public trust this administration has wantonly destroyed.

John R. Corroll

On 2008-07-16, John R. Carroll jcarroll@ubu wrote:
Ignoramus30183 wrote:
On 2008-07-16, Larry Jaques novalidaddress@di wrote:
On Tue, 15 Jul 2008 20:18:57 -0500, with neither quill nor qualm,
Ignoramus19502 quickly quoth:

On 2008-07-15, John R. Carroll jcarroll@ubu wrote:

You know reconditioning well Chudov but apparently not finance.

I have a Master of business administration degree in finance from
University of Chicago. Which is admittedly not that much, but at
least I studied it a little bit.

Well, at least you gave it up for something more real and honest:
hawking wares on eBay and doing new/used metalworking.


That's not my day job,

Well you are very good at it.



Thanks John. I respect your opinions, experience etc. But at the same
time I also think that these GSEs created an enormous market
distortion and should be phased out (at least as "government
sponsored" entities).

If the value of mortgages decliness further, and if the government
steps in and assumes guarantees given by Freddie and Fannie, this
could potentially expose it to very large liabilities.

--
Due to extreme spam originating from Google Groups, and their inattention
to spammers, I and many others block all articles originating
from Google Groups. If you want your postings to be seen by
more readers you will need to find a different means of
posting on Usenet.
http://improve-usenet.org/

"Ignoramus30183" wrote in message
...
On 2008-07-16, John R. Carroll jcarroll@ubu wrote:
Ignoramus30183 wrote:
On 2008-07-16, Larry Jaques novalidaddress@di wrote:
On Tue, 15 Jul 2008 20:18:57 -0500, with neither quill nor qualm,
Ignoramus19502 quickly quoth:

On 2008-07-15, John R. Carroll jcarroll@ubu wrote:

You know reconditioning well Chudov but apparently not finance.

I have a Master of business administration degree in finance from
University of Chicago. Which is admittedly not that much, but at
least I studied it a little bit.

Well, at least you gave it up for something more real and honest:
hawking wares on eBay and doing new/used metalworking.


That's not my day job,

Well you are very good at it.



Thanks John. I respect your opinions, experience etc. But at the same
time I also think that these GSEs created an enormous market
distortion and should be phased out (at least as "government
sponsored" entities).

If the value of mortgages decliness further, and if the government
steps in and assumes guarantees given by Freddie and Fannie, this
could potentially expose it to very large liabilities.

Which brings us to the question that always arises when there is a proposal
to privatize some large government entity, or quasi-government entity like
these two: Why were they created in the first place, and what would have
happened without them?

The role of government encouragement for home ownership in our society often
is underestimated. In general (and I haven't studied Freddie and Fannie for
decades, so I'm not being specific here) they're created because the market
isn't producing some desired result. Home ownership has been a desired
result for a long time, and anyone who thinks the market would have emerged
to deal with the relatively low rates of ownership doesn't know the history
of it. In the "free" market, down payments and interest rates were too high,
largely because risk exposure was too large. And the "free" market had
created a number of non-equity payment schemes, such as the infamous "land
contract," which destabilized the whole system when there was an economic
downturn. Freddie and Fannie made it possible for more people to buy houses
and they stabilized the system, having enabled the general use of mortgages
that accrued equity for the homeowners even as the loans were being paid
off.

The upshot is that these two entities maybe -- probably -- created more
wealth and more stability in our economy, not to mention the enormous
fallout of economic activity from home building, than any damage their
troubles are likely to cause. In other words, be careful what you wish for.

--
Ed Huntress

On Tue, 15 Jul 2008 17:41:38 -0500, F. George McDuffee
wrote:
....

What happens when the tax payers can't afford to pay the taxes
that are going to pile up from all this?
snip
===========
Start the high-speed printing presses at the Fed printing million
dollar bills?


Zimbabwe

I think a loaf of bread is about 3 million dollars there - if
you can get it.

I am very glad I left there in 1964 and Africa at end of '65

Ed Huntress wrote:
"Ignoramus30183" wrote in message
...

On 2008-07-16, John R. Carroll jcarroll@ubu wrote:

Ignoramus30183 wrote:

On 2008-07-16, Larry Jaques novalidaddress@di wrote:

On Tue, 15 Jul 2008 20:18:57 -0500, with neither quill nor qualm,
Ignoramus19502 quickly quoth:


On 2008-07-15, John R. Carroll jcarroll@ubu wrote:

You know reconditioning well Chudov but apparently not finance.

I have a Master of business administration degree in finance from
University of Chicago. Which is admittedly not that much, but at
least I studied it a little bit.

Well, at least you gave it up for something more real and honest:
hawking wares on eBay and doing new/used metalworking.


That's not my day job,

Well you are very good at it.



Thanks John. I respect your opinions, experience etc. But at the same
time I also think that these GSEs created an enormous market
distortion and should be phased out (at least as "government
sponsored" entities).

If the value of mortgages decliness further, and if the government
steps in and assumes guarantees given by Freddie and Fannie, this
could potentially expose it to very large liabilities.


Which brings us to the question that always arises when there is a proposal
to privatize some large government entity, or quasi-government entity like
these two: Why were they created in the first place, and what would have
happened without them?

The role of government encouragement for home ownership in our society often
is underestimated. In general (and I haven't studied Freddie and Fannie for
decades, so I'm not being specific here) they're created because the market
isn't producing some desired result. Home ownership has been a desired
result for a long time, and anyone who thinks the market would have emerged
to deal with the relatively low rates of ownership doesn't know the history
of it. In the "free" market, down payments and interest rates were too high,
largely because risk exposure was too large. And the "free" market had
created a number of non-equity payment schemes, such as the infamous "land
contract," which destabilized the whole system when there was an economic
downturn. Freddie and Fannie made it possible for more people to buy houses
and they stabilized the system, having enabled the general use of mortgages
that accrued equity for the homeowners even as the loans were being paid
off.

The upshot is that these two entities maybe -- probably -- created more
wealth and more stability in our economy, not to mention the enormous
fallout of economic activity from home building, than any damage their
troubles are likely to cause. In other words, be careful what you wish for.

--
Ed Huntress




This on CBS this morning...
http://www.cbsnews.com/stories/2008/...n4264014.shtml


(CBS) It was during the Great Depression that Fannie Mae was founded -
in 1938 - with a simple purpose in mind: to give lower and middle income
Americans more access to the Great American Dream, owning your own home.

It did it by guaranteeing if a homeowner defaulted on a loan the bank
would get paid, CBS News chief investigative correspondent Armen
Keteyian reports.

Today Fannie and its smaller sibling, Freddie Mac, hold a pivotal place
in the home loan market - one that has grown to include special
advantages, such as:
# guaranteed lines of credits from the U.S. Treasury
# exemption from state and local taxes
# limited government oversight

Their privileged status is that of government-sponsored Fortune 500
companies, powered by a vast political machine.

"Fannie and Freddie have probably had more influence than any set of
institutions in modern times," said former Rep. James Leach.

As the former chairman of the House Financial Services Committee, Leach
tried for years to hold Fannie and Freddie to tougher financial standards.

"You'd have people in Congress that would make it very clear that they
wanted nothing to touch Fannie and Freddie," Leach said.

CBS News has learned Fannie and Freddie now boast nearly 150 lobbyists -
spending more than $5 million this year alone.

In addition, the mortgage giants have doled out about $2 million more in
campaign donations in the last four years to key member of Congress.

"The view was always held that if they lost even a small battle, it
might slide into something more meaningful," said former Rep. Richard H.
Baker, R-La. "So every threat was taken seriously."

A few years ago, Fannie was fined nearly $400 million after overstating
earnings by $10 billion to maximize bonuses. In 2006, Freddie paid a
record $4 million fine for illegal fundraisers.

Both Fannie and Freddy say they've changed their ways. But, more and
more, it appears two companies designed to help average Americans have,
in fact, been helping themselves.


--

Richard

(remove the X to email)

America has become thouroughly convinced that the lunatics
are running the assylum and good idea or no, it will take
more that George W Bush at a press conference to reclaim
the public trust this administration has wantonly destroyed.

John R. Corroll

"cavelamb himself" wrote in message
...
Ed Huntress wrote:
"Ignoramus30183" wrote in message
...

On 2008-07-16, John R. Carroll jcarroll@ubu wrote:

Ignoramus30183 wrote:

On 2008-07-16, Larry Jaques novalidaddress@di wrote:

On Tue, 15 Jul 2008 20:18:57 -0500, with neither quill nor qualm,
Ignoramus19502 quickly quoth:


On 2008-07-15, John R. Carroll jcarroll@ubu wrote:

You know reconditioning well Chudov but apparently not finance.

I have a Master of business administration degree in finance from
University of Chicago. Which is admittedly not that much, but at
least I studied it a little bit.

Well, at least you gave it up for something more real and honest:
hawking wares on eBay and doing new/used metalworking.


That's not my day job,

Well you are very good at it.



Thanks John. I respect your opinions, experience etc. But at the same
time I also think that these GSEs created an enormous market
distortion and should be phased out (at least as "government
sponsored" entities).

If the value of mortgages decliness further, and if the government
steps in and assumes guarantees given by Freddie and Fannie, this
could potentially expose it to very large liabilities.


Which brings us to the question that always arises when there is a
proposal to privatize some large government entity, or quasi-government
entity like these two: Why were they created in the first place, and what
would have happened without them?

The role of government encouragement for home ownership in our society
often is underestimated. In general (and I haven't studied Freddie and
Fannie for decades, so I'm not being specific here) they're created
because the market isn't producing some desired result. Home ownership
has been a desired result for a long time, and anyone who thinks the
market would have emerged to deal with the relatively low rates of
ownership doesn't know the history of it. In the "free" market, down
payments and interest rates were too high, largely because risk exposure
was too large. And the "free" market had created a number of non-equity
payment schemes, such as the infamous "land contract," which destabilized
the whole system when there was an economic downturn. Freddie and Fannie
made it possible for more people to buy houses and they stabilized the
system, having enabled the general use of mortgages that accrued equity
for the homeowners even as the loans were being paid off.

The upshot is that these two entities maybe -- probably -- created more
wealth and more stability in our economy, not to mention the enormous
fallout of economic activity from home building, than any damage their
troubles are likely to cause. In other words, be careful what you wish
for.

--
Ed Huntress




This on CBS this morning...
http://www.cbsnews.com/stories/2008/...n4264014.shtml


(CBS) It was during the Great Depression that Fannie Mae was founded - in
1938 - with a simple purpose in mind: to give lower and middle income
Americans more access to the Great American Dream, owning your own home.

It did it by guaranteeing if a homeowner defaulted on a loan the bank
would get paid, CBS News chief investigative correspondent Armen Keteyian
reports.

Today Fannie and its smaller sibling, Freddie Mac, hold a pivotal place in
the home loan market - one that has grown to include special advantages,
such as:
# guaranteed lines of credits from the U.S. Treasury
# exemption from state and local taxes
# limited government oversight

Their privileged status is that of government-sponsored Fortune 500
companies, powered by a vast political machine.

"Fannie and Freddie have probably had more influence than any set of
institutions in modern times," said former Rep. James Leach.

As the former chairman of the House Financial Services Committee, Leach
tried for years to hold Fannie and Freddie to tougher financial standards.

"You'd have people in Congress that would make it very clear that they
wanted nothing to touch Fannie and Freddie," Leach said.

CBS News has learned Fannie and Freddie now boast nearly 150 lobbyists -
spending more than $5 million this year alone.

In addition, the mortgage giants have doled out about $2 million more in
campaign donations in the last four years to key member of Congress.

"The view was always held that if they lost even a small battle, it might
slide into something more meaningful," said former Rep. Richard H. Baker,
R-La. "So every threat was taken seriously."

A few years ago, Fannie was fined nearly $400 million after overstating
earnings by $10 billion to maximize bonuses. In 2006, Freddie paid a
record $4 million fine for illegal fundraisers.

Both Fannie and Freddy say they've changed their ways. But, more and more,
it appears two companies designed to help average Americans have, in fact,
been helping themselves.


--

Richard

As always with financial institutions, the fallout from Reaganomics
deregulation has led to some serious screwing of the public. The choices
here are a lot fewer homeowners, on one hand, with an accompanying
multiplication of the financial divide in America, versus responsible
oversight and regulation. Congress has abdicated this responsibility along
with many others; the irony is that it is now Congress (Baker being one of
the more egregious examples) who complain about their own lack of action.

It's worth pointing out, however, comparing such quasi-governmental entities
with private financial institutions, that the total campaign donations that
the article complains about are somewhat less than the transportation,
housing, and greens fees (including large amounts of grease paid to various
officials) that Jack Abramoff paid for a typical week of Congressional golf
junkets in Scotland.

--
Ed Huntress

On Wed, 16 Jul 2008 21:54:19 +0800, Alan
wrote:

On Tue, 15 Jul 2008 17:41:38 -0500, F. George McDuffee
wrote:
...

What happens when the tax payers can't afford to pay the taxes
that are going to pile up from all this?
snip
===========
Start the high-speed printing presses at the Fed printing million
dollar bills?


Zimbabwe

I think a loaf of bread is about 3 million dollars there - if
you can get it.

I am very glad I left there in 1964 and Africa at end of '65
===========
so much for the value of the GNP/GDP as an indicator of economic
health....
-------------
Zimbabwe inflation hits 2.2 million percent

by Godfrey Marawanyika Wed Jul 16, 7:58 AM ET

HARARE (AFP) - The annual rate of inflation in Zimbabwe, already
the highest in the world, has hit a new record level of 2.2
million percent, the central bank's governor revealed on
Wednesday.

For complete article and picture of 5 million dollar bills click
on
http://news.yahoo.com/s/afp/20080716...4mrB JAtvaA8F

The highest denomination is now 50 billion Zimbabwean dollars
(worth one U.S. dollar).
http://www.detnews.com/apps/pbcs.dll...TION/807160341
also see
http://www.telegraph.co.uk/news/worldnews/africaandindianocean/zimbabwe/2236777/Robert-Mugabe's-Zimbabwe,-where-baked-beans-cost-$30-billion.html


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Wed, 16 Jul 2008 03:10:26 -0700, "John R. Carroll"
wrote:

David R.Birch wrote:
John R. Carroll wrote:

So you say.
I say the basis for any forward looking plan will be rooted in
restoring the fundamental integrity of our system of Justice
(Legal), Legistlative (Congress) and Executive but most importantly,
the seperation/ cjeck and balance of the three.
This is what has made America great and it's why capital has flowed
inward. That it's now outbound has everything to do with eight years
of disregarding this truth.

8 years? How about 28? Republicans have no monopoly on dismantling the
Constitution and Bill of Rights.

No, but the last eight or ten years have been especially bad in this regard.


Your BDS and opinion are again noted

On Wed, 16 Jul 2008 04:48:51 -0700, "John R. Carroll"
wrote:

cavelamb himself wrote:
Today is off to an interesting start:


http://abcnews.go.com/Business/Perso...5381997&page=1


A stumbling economy and a potential federal bailout of home mortgage
giants Fannie Mae and Freddie Mac appear to have prompted some traders
to question even one of the most stable investments: U.S. Treasury
bonds. treasury bonds
The benchmark 10-year bond note yield fell and its price rose in the
wake of a grim economy... Expand
The benchmark 10-year bond note yield fell and its price rose in the
wake of a grim economy assessment by Federal Reserve Chairman Ben
Bernanke.

Concern that the government may take on trillions of dollars of debt
from mortgage giants Fannie Mae and Freddie Mac is creating the
perception of instability in the bond market.

As first reported by the Wall Street Journal, certain types of
derivatives trades that profit from the perception of instability in
the bond market have increased. Last week, the price of protection
against a government default on a 10-year Treasury note doubled.

"There are some cracks in the confidence in the United States and the
financial markets," said T.J. Marta, an analyst at RBC Capital
Markets.

But, analysts and financial advisors told ABC News that Treasury bonds
remain a safe, stable investment.

The price of the benchmark 10-year bond note rose on Tuesday in the
wake of Federal Reserve Chairman Ben Bernanke's grim assessment of
the state
of the economy, sending the bond yield down to 3.83 percent. Bond
prices and yields move in opposite directions.

You have only to think back a little to remember when our President was
hawking T-bills that were in the SS Trust Fund as "worthless paper" Richard.

I'll bet he'd like to take those words back if he could, especially as the
markets are coming around to agreeing with him.
Regime change can't come too soon for America but it's a little late. To bad
the Dems didn't have a decent candidate in 2004.....

Or in 1934

Ed Huntress wrote:
"cavelamb himself" wrote in message
...
Ed Huntress wrote:
"Ignoramus30183" wrote in
message ...

On 2008-07-16, John R. Carroll jcarroll@ubu wrote:

Ignoramus30183 wrote:

On 2008-07-16, Larry Jaques novalidaddress@di wrote:

On Tue, 15 Jul 2008 20:18:57 -0500, with neither quill nor
qualm, Ignoramus19502
quickly quoth:


On 2008-07-15, John R. Carroll jcarroll@ubu wrote:

You know reconditioning well Chudov but apparently not
finance.

I have a Master of business administration degree in finance
from University of Chicago. Which is admittedly not that much,
but at least I studied it a little bit.

Well, at least you gave it up for something more real and
honest: hawking wares on eBay and doing new/used metalworking.



That's not my day job,

Well you are very good at it.



Thanks John. I respect your opinions, experience etc. But at the
same time I also think that these GSEs created an enormous market
snip
As always with financial institutions, the fallout from Reaganomics
deregulation has led to some serious screwing of the public.

I'd hardly call it fall out Ed.
I get a lot of gas about this but pension money and the lack of willingness
to take a lump and learn a lesson started all of this from a legal and
finance perspective.
Culturally speaking, putting unearned wealth into the hand of nearly always
yields the same result - Lotto Winners.
Have a look at what a blessing winning a big lottery prize turns into
sometime.

Our current housing market looks just like that. To much money chased to few
deals down a rat hole and it couldn't have happened had American regulators
not allowed the F&F impramature of mortgage backed securities. Mortgage
backed securities wouldn't exist and there wouldn't have been a flood of
401K money into real estate. Everyone, and I mean everyone, involved WANTED
to get access to all of that money. The brokers, the lenders, the States and
the Feds.

The situation was only viewed from the perspective of the investmant
community. No thought at all was given to the fundamental nature of the
changes being made in spite of the fact the the exact nature and mechanics
were very well understood.

Then, at the end of the 90's as the economy softened, something that wasn't
working well in the first place was amplified rather than terminated. Not
only could Banks expand into investment banking but investmant banks and PE
firms got to enter the banking bussiness. History, American history, had
already provided an example of what the result would be and at this point no
one ought to be surprised that we are in this pickle.

What will likely happen is that the cascading of bad news, some of which
will be significant and some not so, will continue the fake collapse we are
witnessing today and it will become very real. The weight of the higher
floors collapsing onto lower ones will quickly become inexorable.

That is why I thing the Federal gov't. ought to sieze both Freddie and
Fannie, kick out the equity as an example and recreate new hardware that
properly reflects the nations needs, the best interests of it's citizens and
the realities of Americas role in the world as a financial power.

It's something the markets would validate in a big hurry.


--

John R. Carroll
www.machiningsolution.com

Ignoramus30183 wrote:
On 2008-07-16, John R. Carroll jcarroll@ubu wrote:
Ignoramus30183 wrote:
On 2008-07-16, Larry Jaques novalidaddress@di wrote:
On Tue, 15 Jul 2008 20:18:57 -0500, with neither quill nor qualm,
Ignoramus19502 quickly quoth:

On 2008-07-15, John R. Carroll jcarroll@ubu wrote:

You know reconditioning well Chudov but apparently not finance.

I have a Master of business administration degree in finance from
University of Chicago. Which is admittedly not that much, but at
least I studied it a little bit.

Well, at least you gave it up for something more real and honest:
hawking wares on eBay and doing new/used metalworking.


That's not my day job,

Well you are very good at it.



Thanks John. I respect your opinions, experience etc. But at the same
time I also think that these GSEs created an enormous market
distortion and should be phased out (at least as "government
sponsored" entities).

The mortgage backed securities industry needs to dissapear. That was the
distortion.
The value of the institutions to society is to great to cast aside and it
shouldn't be.
That doesn't mean I don't believe in castor oil in large doses for the
appropriate parties. It maens that the proper odious "cure" in the
appropriate dossage is in order and soon.


If the value of mortgages decliness further, and if the government
steps in and assumes guarantees given by Freddie and Fannie, this
could potentially expose it to very large liabilities.

The problem with declining values presents a lot less systemic risk that
being unable to properly value or monetize assets.
One of the biggest problems I see right now is that you can't really say
what a lot of the largest financial institutions in the world are actually
worth. It isn't any wonder that investment is grinding to a halt.

--

John R. Carroll
www.machiningsolution.com

"John R. Carroll" wrote in message
...
Ed Huntress wrote:
snip

As always with financial institutions, the fallout from Reaganomics
deregulation has led to some serious screwing of the public.

I'd hardly call it fall out Ed.
I get a lot of gas about this but pension money and the lack of
willingness
to take a lump and learn a lesson started all of this from a legal and
finance perspective.
Culturally speaking, putting unearned wealth into the hand of nearly
always
yields the same result - Lotto Winners.
Have a look at what a blessing winning a big lottery prize turns into
sometime.

Our current housing market looks just like that. To much money chased to
few
deals down a rat hole and it couldn't have happened had American
regulators
not allowed the F&F impramature of mortgage backed securities. Mortgage
backed securities wouldn't exist and there wouldn't have been a flood of
401K money into real estate. Everyone, and I mean everyone, involved
WANTED
to get access to all of that money. The brokers, the lenders, the States
and
the Feds.

The situation was only viewed from the perspective of the investmant
community. No thought at all was given to the fundamental nature of the
changes being made in spite of the fact the the exact nature and mechanics
were very well understood.

Then, at the end of the 90's as the economy softened, something that
wasn't
working well in the first place was amplified rather than terminated. Not
only could Banks expand into investment banking but investmant banks and
PE
firms got to enter the banking bussiness. History, American history, had
already provided an example of what the result would be and at this point
no
one ought to be surprised that we are in this pickle.

What will likely happen is that the cascading of bad news, some of which
will be significant and some not so, will continue the fake collapse we
are
witnessing today and it will become very real. The weight of the higher
floors collapsing onto lower ones will quickly become inexorable.

That is why I thing the Federal gov't. ought to sieze both Freddie and
Fannie, kick out the equity as an example and recreate new hardware that
properly reflects the nations needs, the best interests of it's citizens
and
the realities of Americas role in the world as a financial power.

It's something the markets would validate in a big hurry.

Gee, if you wouldn't call that fallout, what *would* you call it? g

I hear what you're saying, John, but why wouldn't it function well if it
were regulated more like commercial banks, with higher capital requirements
and some other sensible regulations?

--
Ed Huntress

Ed Huntress wrote:
"John R. Carroll" wrote in
message ...
Ed Huntress wrote:
snip

As always with financial institutions, the fallout from Reaganomics
deregulation has led to some serious screwing of the public.

That is why I thing the Federal gov't. ought to sieze both Freddie
and Fannie, kick out the equity as an example and recreate new
hardware that properly reflects the nations needs, the best
interests of it's citizens and
the realities of Americas role in the world as a financial power.

It's something the markets would validate in a big hurry.

Gee, if you wouldn't call that fallout, what *would* you call it? g

History repeating itself in a country lacking eithe cultural or
institutional memory space.


I hear what you're saying, John, but why wouldn't it function well if
it were regulated more like commercial banks, with higher capital
requirements and some other sensible regulations?

I'm only advocating the demise of the existing institutions Ed. What's being
formulated is the equivalent of a million fingers to plug a million holes
that may not even exist. That's the problem. America needs F&F as
constituted and for all of the reasons you mentioned. Those institutions
need rock solid credibility and so does the process.

Mortgages were bought and sold long before Solomon Bros. created mortgage
bonds you know.
The process of bundling mortgages as securities removes a lot of the
scrutiny of the underlying value and you completely lose any accountability.
You could once get a read on the integrity of the product based on the
source. That ended.
Also, there is plenty of money at hand to fund mortgages , but by bundling
them into bonds and passing them through a broker once or twice - or as many
times as you have to to clean them up - you end up having to look more at
the markets demand for product rather than the long term return on the
underlying debt.

The fee then becomes the holy grail and since you really can't get in
trouble for passing worthless mortgages as part of your bundle you put 10
percent junk in with 90 percent quality. The entire process is tainted and
value is willingly traded for cash in hand.

I don't think you could regulate in proper transparency. Some smart guys
will always thread the needle around it.
The rewards of doing so for the few are as large as the risk to them is
small that the incentive to "missbehave" will never go away.

--

John R. Carroll
www.machiningsolution.com

On Wed, 16 Jul 2008 11:36:20 -0700, "John R. Carroll"
wrote:
snip
The situation was only viewed from the perspective of the investmant
community. No thought at all was given to the fundamental nature of the
changes being made in spite of the fact the the exact nature and mechanics
were very well understood.
snip
=========
A very clear and precise statement of the problem.

Where do we go from here (other than over the falls in a barrel)?

Much of the "money" involved has disappeared or never existed in
the first place, leaving the rest of us to clean up their mess.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Wed, 16 Jul 2008 15:07:14 -0400, "Ed Huntress"
wrote:
snip
That is why I thing the Federal gov't. ought to sieze both Freddie and
Fannie, kick out the equity as an example and recreate new hardware that
properly reflects the nations needs, the best interests of it's citizens
and
the realities of Americas role in the world as a financial power.

It's something the markets would validate in a big hurry.

Gee, if you wouldn't call that fallout, what *would* you call it? g

I hear what you're saying, John, but why wouldn't it function well if it
were regulated more like commercial banks, with higher capital requirements
and some other sensible regulations?
snip
My first thoughts also, but a quick examination shows that much
of the stock in F&F has been unloaded [who do I keep hearing "for
you I have such a deal..."] onto the pension funds, widows and
orphans.

Additionally, giving the stockholders a haircut down to their
knees will also involve the sovereign wealth funds, who also hold
much of the "synthetic structured collateralized mortgage backed
debt obligations." These sovereign wealth funds (and their
governments) currently supply major amounts of the money required
for the federal government to run the huge current deficits.

Another problem is that oil is priced in US dollars, and in
addition to everything else, If F&F more than hiccup, foreign
finance of our government and acceptance of the US Dollar will be
greatly affected.

If we think we have problems now, think what it would be with no
foreign treasury note sales in other than Euros at sky high rates
and no oil or other imports unless paid for in Euros or Yen, with
the huge amounts of US dollars from 25 years of trade deficits
pouring back into the US and anything not nailed down being
bought and exported.

They told him "cheer up -- things could be worse," so he
cheered up and sure enough things got worse.....

The fact that both McCain and Obama *WANT* to be president shows
they don't understand the situation.


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

On Wed, 16 Jul 2008 18:01:55 -0500, F. George McDuffee
wrote:
snip
These sovereign wealth funds (and their
governments) currently supply major amounts of the money required
for the federal government to run the huge current deficits.
snip
=======
I meant to include the following item about the sovereign wealth
funds.

The Financial Times is a UK publication.

Sovereign funds cut exposure to weak dollar

By Henny Sender in New York

Published: July 16 2008 22:35 | Last updated: July 16 2008 23:24

Some of the world’s largest sovereign wealth funds are seeking to
scale back their exposure to the US dollar in a sign of global
concern about the currency.

One big sovereign fund in the Gulf has cut its dollar-denominated
holdings from more than 80 per cent a year ago to less than 60
per cent, while China’s State Administration of Foreign Exchange
(SAFE) has been looking to strike deals with private equity firms
in Europe as a part of a strategy to reduce its dollar holdings.

==Sovereign wealth funds have played a leading role in helping
to recapitalise faltering US banks, but have lost money so far on
such investments. Continuing market turbulence has further shaken
their faith in US policy and policymakers.==

snip

for complete article click on
http://www.ft.com/cms/s/0/fc250ac2-5...nclick_check=1


Unka' George [George McDuffee]
-------------------------------------------
He that will not apply new remedies,
must expect new evils:
for Time is the greatest innovator: and
if Time, of course, alter things to the worse,
and wisdom and counsel shall not alter them to the better,
what shall be the end?

Francis Bacon (1561-1626), English philosopher, essayist, statesman.
Essays, "Of Innovations" (1597-1625).

Ignoramus19502 wrote:


I do not see any evidence for this.

Some people or businesses who invested in mortgage backed securities
that are guaranteed by these companies, would be a little poorer
without those guarantees. And home loans will be slightly more
expensive, as they should be. But I do not see a big fallout from
Fannie mae and Freddie Mac going bankrupt.

What you have to understand is that these institutions are
essentially a component of the US "central bank", and although
partly privatized, they are essential in maintaining liquidity
among the banks. Everybody in the financial sector depends on
this liquidity, and banks won't lend "commercial paper", ie.
short term loans that all sorts of companies use to buy stock
from day to day, unless thye know that these institutions will
be there to back up any daily shortage of cash.

At least, that's how I understand this stuff, which may be a bit
out of date. Without that liquidity, grocery store chains won't
be able to buy stock for their stores, newspapers won't have
paper to print on, gas stations won't have tankers delivering
fuel, etc. That won't be a complete shutdown, but a LOT of
deliveries would be delayed, store shelves would have less than
the normal quantities, etc. If that causes panic and hoarding,
it could get real ugly, real quick!

Jon

Ignoramus19502 wrote:

Yes, and brokers will sell debt through new means, vehicles etc.

Possibly these new means will require better capitalization of homes
and better returns (interest rates).

I do not see what the big deal is.


OK, banks are required by law (state and federal) to keep some
amount of cash on hand, and a certain ratio of cash vs. debits
on their books. They go and give loans to you to buy a house,
and now they need to shore up their cash position. They sell
your loan to Fannie Mae to keep their balance sheet in the
black. Joe the grocer needs to buy a load of bread for his
store, and he's short this week, so he asks for some commercial
paper from the bank to pay his bill, and suddenly, they say, Oh,
sorry, we're short this week, we can't write you any commercial
paper until we get our cash from Fannie Mae.

My understanding is that Freddie Mac and Fannie Mae (I hate
these names, Fannie Mae is really FNMA, Federal National
Mortgage Association, I can't remember what Freddie Mac stands
for) also buy and sell vast amounts of commercial paper between
businesses, for 30-day and under loans. I could be wrong about
that, but I believe that is so. This amounts to billions of $
of short-term money DAILY!

Jon