Comments on: Foreign Investors Selling Freddie, Fannie Debt

By: Anonymous

Anonymous — Thu, 21 Aug 2008 15:33:00 +0000

The real question is what else is Paulson offering those central banks as inducement to hold GSE debt? As Enron demonstrated and Fannie/Freddie has proved, these wink-and-nod agreements are the true problem. You can bet Paulson is the link between the US gov’t, Wall Street and foreign central banks. Who knows what deals he’s cooking up between these three entities.

By: Pablo

Pablo — Mon, 18 Aug 2008 23:32:00 +0000

“Anyone have an explanation as to why foreign CBs would even want this stuff?”

To Avoid Systemic Risk.

By: Anonymous

Anonymous — Mon, 18 Aug 2008 05:27:00 +0000

Concessions (Georgia, Taiwan, or empty protests and denunciations, etc…) by the US could entice FCB’s to fund our financial institutions.

By: Juan

Juan — Mon, 18 Aug 2008 04:55:00 +0000

I think Michael Hudson made the argument in the early 1970s and then again in 2003 that the world is on a ‘U.S. Treasury bill standard’ that, by my recollection, means a process of dollar recycling in which surplus nations, in order to keep their economies turning over, have no choice but to fund U.S. deficit(s).

Progressively greater recycling is a quantitative which drives towards and into qualitative systemic change. This process has no national border but uneveness. House price bubble, its breaking down and perverse struggle to perpetuate unaffordabilities for the greater good of long overdone financialization may mark the ending of above mentioned standard. (and quite a bit more).

By: John

John — Mon, 18 Aug 2008 01:26:00 +0000

Re: more immigration…

yehbut, one of the corporate-fascist party’s “fundamental” platforms is that “those people” are the primary cause of `mericas problems. Without “those people” to scare the majority ethnic group, what ELSE would the corporate-fascist party have left? “Those OTHER people” or the fornication harlots? Tough to win an election on just “those people” now. The peasantry of the majority ethnic group needs LOTS of “those people” to fear in order to vote corporate-fascist. Allowing more immigration was never an option.

By: doc holiday

doc holiday — Mon, 18 Aug 2008 00:00:00 +0000

OT?

How to Prop Up the Housing Market
A proposal from Alan Greenspan:
http://gregmankiw.blogspot.com/2…ing- market.html

He did offer one suggestion: “The most effective initiative, though politically difficult, would be a major expansion in quotas for skilled immigrants,” he said. The only sustainable way to increase demand for vacant houses is to spur the formation of new households. Admitting more skilled immigrants, who tend to earn enough to buy homes, would accomplish that while paying other dividends to the U.S. economy.

By: Dean

Dean — Sun, 17 Aug 2008 23:49:00 +0000

In response to Anonymous, the lesson we have learned is that in an environment of lower yields, we all undertook higher risks (in search of higher yields) which have backfired.

By: DrunkenAmericanconsumer(aka shopaholic aided and abbetted by cheap foreign financing)

Sun, 17 Aug 2008 23:40:00 +0000

For those that say foreign CB's recycle USD's into treasuries and agencies to support consumption through low U.S interest rates and higher residential real estate prices supported by artificially low mortgage rates, you are correct Asia is pursuing mercantilist policies.

Unfortunately, this game has run its course and in the process destroyed the American balance sheet.

I want to extend a warm smile at all the foreign central banks that allowed the American consumer and government to choke on debt off all kinds.

We are now immersed in debt trap dynamics that lead to deflation.

Again, thank you...thank you very much.

By: Anonymous

Anonymous — Sun, 17 Aug 2008 23:29:00 +0000

THe lesson we have learned is that it is dangerous to reach for yield.

If you are a central bank, why risk losing capital for 200 lousy basis points? If you really want to earn a higher rate of return over Treasuries, you can purchase legitimate triple AAA corporate bonds.

Why anyone would want to touch Agency debt is beyond me, other than just for pure, unadulterated GREED.

By: tyaresun

tyaresun — Sun, 17 Aug 2008 23:13:00 +0000

http://www.reuters.com/article/newsOne/idUSN1747783620080817
The U.S. Treasury is growing increasingly likely to recapitalize Fannie Mae and Freddie Mac in the months ahead on the taxpayer’s dime, Barron’s reported in its August 18 edition.

The weekly financial newspaper said that such a move could wipe out existing holders of the agencies’ common stock, with preferred shareholders and even holders of the two entities’ $19 billion of subordinated debt also suffering losses.

An insider in the Bush administration told Barron’s that Fannie and Freddie “are being jawboned” by the Treasury Department and their new regulator, the Federal Housing Finance Agency (FHFA), to raise more equity.

But government officials don’t expect the agencies