Yawn. This is getting so old. Any problem in America.... Print more money, and hand out corporate welfare. Did anyone not see this coming? Oh well, the market reversed temporarily on the joyous sounds of helicopters in the distance. I haven't brought out this picture in months - I've missed it. I continue to laugh in the face of "strong dollar" proponents. Everything we do is a destruction of those current greenbacks in your pocket.- Federal Reserve Chairman Ben Bernanke told Freddie Mac chief Richard Syron that his company and Fannie Mae could take advantage of the emergency discount window, said a source familiar with a conversation between Bernanke and Freddie Mac chief Richard Syron.
- Bernanke and Syron spoke by phone Thursday afternoon and in that call the central bank chief said he intended the discount window to be open to the two companies, said a source familiarwith the phone conversation.
- The Fed declined comment on whether its discount window might be opened to GSEs. Freddie Mac spokesman Douglas Duvall declined to comment when asked about the phone call.
It is sort of fun to watch them scramble - finally reaping what they (and predecessors) created. I wonder what Easy Uncle Al ---> is thinking as he watches the empire of easy credit he built crumble around him. Kick the can - recessions won't be allowed to happen - kick the can - recessions don't happen on my watch - kick the can. My guess? "Got out just in time". The can is hitting the fan.
6 comments:
Oil is forcing us to recognize the impact of the moral hazard being exhibited by U.S government & Federal reserve.
It's sad, but true.
Hopefully, "we the people" will force the fed to raise rates. We shall see...
I'm thinking about starting a company, letting it fail and then seeing if I can get access to the free money known as the discount window.
I think my company will be that gives out no-doc home loans to people. I'll go one step further and won't even require any documentation about the house they say they are buying. Anyone else with me?
Michael, missing important middle step - make sure you hire lobbyists.
What effect will this have, practically-speaking?
It will further devalue our currency and USA credit rating.
Check this...
Treasury Default Swaps Reach Record on Fannie, Freddie Concern
By Abigail Moses
http://www.bloomberg.com/apps/news?pid=20601087&sid=acaaEZ.cfruo&refer=home
What are Credit Default Swaps?
Credit-default swaps are financial instruments that are used to speculate on a country's, or company's, ability to repay debt. A rise indicates deterioration in the perception of credit quality; a decline, the opposite.
...The cost of credit-default swaps linked to Treasuries is double that for German bunds, according to CMA prices. It's also higher than contracts on the debt of France, the Netherlands, Sweden and Denmark.
OUCH!
July 11 (Bloomberg) -- The cost of protecting against losses on Treasuries rose to a record on speculation any financial support for mortgage lenders Fannie Mae and Freddie Mac may cost the U.S. government its AAA rating.
Credit-default swaps insuring Treasuries for five years increased 8.5 basis points to 17 after trading as high as 17.5, according to CMA Datavision prices at 4:50 p.m. in London. The previous record of 15.5 was on March 17, when the Federal Reserve backed the bailout of New York-based brokerage Bear Stearns Cos.
Fannie Mae shares tumbled as much as 50 percent today, and Freddie Mac dropped 51 percent on speculation the government may be forced to provide financial support. U.S. Treasury Secretary Henry Paulson, seeking to reassure investors, said the Bush administration wants to keep Fannie and Freddie as shareholder- owned companies with federal charters.
``The ratings agencies said the risk for the U.S., if it bails out Fannie and Freddie, is it could lose its AAA rating,'' said Andrea Cicione, a credit strategist at BNP Paribas SA in London. ``It is clearly a possibility, albeit a remote one.''
A remote possibility? Its a good thing that remote possibilities almost never occur! oh wait....thats not true.
Mike, for those in power without their head in the sand, people were talking about the potential loss of Triple A rating - I wrote an entire piece here.
http://tinyurl.com/5gsdjy
Of course, we are so arrogant "it could never happen to us". Sort of like Rome.
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