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Phase 2 of the Real Bailoutâ„¢ is here


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2008 Feb 27, 2:33am   26,886 views  273 comments

by HARM   ➕follow (0)   💰tip   ignore  

Fannie Mae, Freddie Mac Portfolio Caps Will Be Lifted (Update2)

Phase 1 : Congress raised the GSE (Fannie and Freddie) conforming loan limit from $417,000 to $729,000.

Phase 2 : Congress instructs the OFHEO to lift portfolio caps on the GSEs (which were placed there because of GSE "accounting irregularities" and concerns about the GSE's size/share of market).

Next up...

Phase 3 : Eliminating all qualifying “standards” on the type of mortagages the GSEs can buy: allowing no-docs/NINJAs, neg-ams, I/Os, option ARMs and assorted hybrids.

Phase 4 : Congress making implicit GSE guarantees explicit, and taxpayers assuming/liquidating the portfolios of the soon-to-be bankrupt GSEs (RTC, part II)

Can’t happen, you say? Never say “never” where a bought-off "Socialize all losses" Con-gress and whining, clueless, bleating "why me?" sheeple are concerned.

HARM

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210   Malcolm   2008 Feb 27, 2:37pm  

That's my worst case fear. Mexico is already firing across our border at the border patrol. We could have a real body count from pissed off investors going in and shooting some of these investment firms up. Nothing like finding out the servicer didn't complete the paperword properly so basically you bought someone else a house free and clear.

211   B.A.C.A.H.   2008 Feb 27, 2:37pm  

Malcolm,

If you look at my post again, you'll see that I didn't write that you were wrong, nor did I say that you were offensive. I merely said my substitution of street terms for your politically correct characterization of "most" of us is just another way of saying the same thing.

I wasn't disagreeing. And I didn't say you were being offensive, and I didn't take offense. So if you wanna say that I'm the offensive one, go ahead. "Some" or maybe as you said "most" mainstream Americans who grew up in mainstream USA and learned physics and math but failed in social skills took our social un-intelligence with us to engineering school and the workplace. Hardly surprising that some (or as you put it "most") of us lack the social intelligence to recognize things like your irrational exuberance or whatever. So that's one caste.

There's another, from elite upbringings in places all over the USA and all over the world, with all the perks and best resources and opportunties afforded by their birthright, including the most elite engineering schools. Coddled much of their life by hearing accolades about how special and smart they are, drawn from all over the world to the "Silicon Valley" or "tech" cache, you really think they're gonna listen to anything that you or me or anyone else has to say when they have been told their whole lives how smart they are, when they "know" that real estate only goes up? So there's those types, too.

212   Malcolm   2008 Feb 27, 2:38pm  

Have a good night man.

213   Peter P   2008 Feb 27, 2:39pm  

Mexico is already firing across our border at the border patrol.

We need that double-layered fence built ASAP.

214   Randy H   2008 Feb 27, 2:42pm  

Depression is a political term. The "Great Depression" was a deflationary recession in economic terms. The "Great Depression" in Europe was (in many countries) the opposite -- hyperinflation. What made them depressions was the fact that the event threatened and changed governments.

I believe we are all but immune to hyperinflation, for the reason Peter points out -- we have a credible military. It's hard to collect from people who won't pay and have a lot of carrier fleets. Other examples would be Russia in the 90s, Israel years earlier.

But we aren't immune, however, to a good old fashioned liquidity trap.

215   Peter P   2008 Feb 27, 2:44pm  

But we aren’t immune, however, to a good old fashioned liquidity trap.

For that, we have the printing press! :)

216   Peter P   2008 Feb 27, 2:46pm  

It is very important to maintain a credible military. It is one of the few things that cannot be privatized.

God help us.

217   Malcolm   2008 Feb 27, 2:46pm  

Yes, the most arrogant ones of those castes that I encountered were from European countries where they are never questioned, and always had job security due to the social caste systems there. We even had one of those guys commit suicide at Metallic Power after he managed to get himself fired for this atitude.
So I do think I've encountered my fair share. On the flip side, some of my closest friends were from those days and they definitely were not intreverted nerds, although even they joked about how badly their peers were at understanding economics or logistics. Then there was a group of very smart nerdy types who were so insecure they could never commit to something, they always doubted everything, and created more stumbling blocks than they solved. Nothing ever got completed because of this almost anti social behavior. I've seen it all.

218   B.A.C.A.H.   2008 Feb 27, 2:47pm  

Randy,

Well glad that I was wrong that you only "used to" post here.

Didn't say I hated you.

Not at all. It was I who solicited your opinion, because I respect and learn from what you wrote here, about the gold.

I asked your opinion (not advice) about gold, and you gave it. Something about the only good that would come from it would be to use it to flee the country (like maybe, some Vietnamese did after the fall of Saigon), but also something about that in that case, someone else would probably rob me for it. I took it as a double entendre, like the robbery might be the imposition of some kind of capital controls like the failed ones Mitterand imposed early in his first term.

I also noticed you expressed that sentiment to others at other price points too.

Well I didn't take your opinion as advice, but I did take note of it.

219   Peter P   2008 Feb 27, 2:49pm  

Yes, the most arrogant ones of those castes that I encountered were from European countries where they are never questioned, and always had job security due to the social caste systems there.

They need to understand that intelligence is just a commodity nowadays. If they are not flying around in private jets, they have no business being arrogant.

220   Peter P   2008 Feb 27, 2:51pm  

We are back to the days of 200+ comments per day. :)

221   Malcolm   2008 Feb 27, 2:53pm  

Didn't know it was a challenge. I have to stop myself sometimes, if you get me on a rant, I'll get it up to 250 :(
I know I can't help it.

222   Randy H   2008 Feb 27, 2:53pm  

Sybrib

It's all good. It's been a while, and honestly I don't remember you particularly hating me. I was referring to the "goldbugs" who came on here with eerily regularity pasting links, pushing some "brokerage" or another, and invoking hellfire and damnation as a reason to load up on gold eagle coins.

Gold is a great component of a reasonable portfolio, in my opinion. Commodities in general might be pretty good for the near term, due to inflation. My only point was don't expect to "spend" your gold. It's not money. And I always prefer investments into things that produce cash flows.

223   Malcolm   2008 Feb 27, 2:54pm  

Yes, that's what I used to say to (nicely) and about them. In this country you're worth what you can actually deliver, don't try flaunting some status thing around like you're indisposable.

224   Peter P   2008 Feb 27, 2:55pm  

Gold is just a trading vehicle to me. I am completely detached when it comes to investments.

225   Malcolm   2008 Feb 27, 2:56pm  

Anyway, I'm good with leaving it as is. Just please know I don't look down on anyone who is genuine.

Take care.

226   Peter P   2008 Feb 27, 2:59pm  

It’s not money.

Gold coins *are* legal tenders, so they are technically money. However, you probably don't want to "spend" them at their face values. :)

227   EBGuy   2008 Feb 27, 4:58pm  

Yes, I went physical, and yes at one time I had a 10oz bar which used to make me nervous.
That is so freakin' cool. Would you open the top of the toilet tank and point out your "water saver" to guests? Seriously, though, 10 oz. is about the break even point with the GLD ETF, which looses .4% a year. A Wells Fargo safety deposit box is $40 a year. And this still doesn't take into account security issues of buying and selling physical gold.
I am still in shock over the Euro. Any idea of who will blink first, the Fed or the ECB? And speaking of which, currency swaps are/were a huge part of the Fed SOMA portfolio. I am assuming this means that the Fed is holding a bunch of Euros, which, so far, seem to be getting more valuable. Ahh sweet, we lose but the Fed wins! Hurray for out team... let's devalue our way to prosperity.

228   Lost Cause   2008 Feb 27, 5:02pm  

People are going to be crushed under the palettes of $100 bills.

229   HeadSet   2008 Feb 27, 10:22pm  

Randy H says:
And I always prefer investments into things that produce cash flows.

Here! Here!

230   Malcolm   2008 Feb 27, 11:34pm  

I don't have an opinion on Euros. I don't even follow it but a friend emailed me yesterday and said, hey I just made some money with Euros.

Holding a 10 oz bar is a very interesting feeling. Pure gold is a beautiful substance.

231   Patrick   2008 Feb 27, 11:58pm  

Gold is beautiful but wicked. Like certain women.

232   Malcolm   2008 Feb 28, 12:09am  

I think there is a relationship there. The more gold you get, the more women you can get. The more women you get, the less gold you have left over.

233   DennisN   2008 Feb 28, 12:29am  

It is just scary reading the 10 planks of the Communist Manifesto and matching that with US history of the period.

I think you would like reading Jonah Goldberg's new book, LIBERAL FASCISM, in which he explores the thesis that fascism and Nazism are left-wing phenomina, rather than the standard mainstream-media take that they are right-wing phenomina.

Randy, make sure you pick up the DVD of John Milius'

234   DennisN   2008 Feb 28, 12:32am  

THE WIND AND THE LION. It shows Theodore Roosevelt the way he should have been (it adds some Hollywood touches).

Heck I'm a typical social-graceless tech guy too. Degrees in physics and applied math, worked as a circuit designer then later systems engineer before going off to the "soft geek" world of law school.

235   DennisN   2008 Feb 28, 12:34am  

We need that double-layered fence built ASAP.

Wouldn't a simple anti-personel mine field be a much cheaper and more effective barrier? You can't get over those with either a ladder or a coyote.

236   Peter P   2008 Feb 28, 12:35am  

fascism and Nazism are left-wing phenomina

Of course. I thought individual freedom (with attached responsibilities) is a "right wing" concept.

237   Peter P   2008 Feb 28, 12:36am  

Wouldn’t a simple anti-personel mine field be a much cheaper and more effective barrier?

Then we will need a double-layered fence to keep people from the mine field. ;)

238   DennisN   2008 Feb 28, 12:37am  

Only on this blog....

What happens when a disgruntled guest does an upper-decker into your gold bullion stash?

239   Malcolm   2008 Feb 28, 12:39am  

DennisN Says:
February 28th, 2008 at 8:34 am
"Wouldn’t a simple anti-personel mine field be a much cheaper and more effective barrier? You can’t get over those with either a ladder or a coyote."

Border security is a political problem meaning the goal isn't to actually make the border secure, it is to continuously talk about it and look like you are going to make it secure. You go and put a minefield there, you'll actually make the border secure and then what, nothing left to talk about.

240   Peter P   2008 Feb 28, 12:39am  

What happens when a disgruntled guest does an upper-decker into your gold bullion stash?

It is still golden.

241   Malcolm   2008 Feb 28, 12:41am  

Peter P Says:
February 28th, 2008 at 8:36 am
"Then we will need a double-layered fence to keep people from the mine field. "

The American corporate solution would be a warning label.

242   Malcolm   2008 Feb 28, 12:41am  

On the mines that is.

243   DinOR   2008 Feb 28, 12:42am  

"the less gold you have left over" LOL!

(Why do I always miss the Great Gold Debates?) Must be past my bedtime?

Great article in the "O" yesterday about "the real gold"! There's a lot of biblical references but Norway has opened a "doomsday vault" deep within an Arctic mountain where millions of crop seeds will be stored to safeguard against wars or natural disasters wiping out global food crops!

Really interesting stuff. I gues the P.I had one but (as you likely guessed)... it flooded during a typhoon.

www.croptrust.org

www.seedvault.no

God help us.

244   Malcolm   2008 Feb 28, 12:43am  

I saw a show about that. It was very interesting.

245   DinOR   2008 Feb 28, 12:48am  

Crop Diversity NOW Man!

All crops were created equal!

No seriously, I'm glad there's someone, somewhere in a think tank conjuring this stuff up. (I sure never would have thought of it?) I guess in that environment they say the seeds can be stored for up to 1,000 years.

Helps a guy sleep a little better at night. I'll trade you all of my crop seeds for all of your GOLD! Oh, uh... wait a minute...?

246   northernvirginiarenter   2008 Feb 28, 12:56am  

Bernanke says time for long-term mortgage answers

Thursday, February 28, 2008; 11:15 AM

WASHINGTON (Reuters) - Federal Reserve Chairman Ben Bernanke said on Thursday that it was time to move beyond temporary fixes to the subprime mortgage mess and look for long-term solutions.

"It's important for us and for the servicers to move beyond temporary palliatives ... and try to find more permanent, sustainable solutions," Bernanke told the Senate Banking Committee.

"I would urge you to continue to work on FHA modernization and GSE reform, two areas that can help us meet these challenges," Bernanke said. "Additional steps may be necessary in the future ... but I don't have any additional recommendations right now."

247   HeadSet   2008 Feb 28, 12:58am  

Concerning a New York Times article pity piece on "heavily mortgaged Americans ("Solutions the Public Hates", in the Patrick reading)

But readers aren't biting. More than 400 vehement reader comments on the Times' site ran 20-to-1 against any taxpayer rescue - with fairness and basic economics the main objections

Hope! Maybe the politicols will notice public outcry to a bailout and Harm's 3rd and 4th phases may be aborted.

248   DennisN   2008 Feb 28, 1:03am  

The worst thing about a 10 oz gold bar is how tiny it really seems. How big was it - the size of a large dog biscuit?

249   DennisN   2008 Feb 28, 1:11am  

The American corporate solution would be a warning label.

In English, American sign language, and braille-Spanish. :)

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