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Unfortunately, we are still looking at a coming food crisis. I would be very surprised if WW3 does not break out within 10 years.
Dude, we have to pay farmers not to farm in order to keep commodity prices from falling through the floor. Food is not a problem.
Plus have you seen how effin' *FAT* most Americans are? A famine would do us good.
Another day, another bailout: This time homeowners get to benefit from mortgage-modification programs, designed to stem the tide of foreclosures by making it easier for borrowers to stay current on their loans.
But the latest plans from Fannie Mae and Freddie Mac, joining banks such as J.P. Morgan Chase and Citigroup, hold plenty of risks.
Take investors in mortgage-backed securities. Modifications to mortgage holders' interest rates could leave some MBS holders with reduced interest payments. Forgiveness of principal, meanwhile, could lead to capital losses.
A bigger worry could be that these modification programs are too effective. In that case, "many current borrowers will wave the white flag of surrender and also try to get a modification," Rod Dubitsky, a senior strategist for asset-backed securities at Credit Suisse, wrote in a recent report.
The danger is that loan holders who otherwise could meet their payments would decide to fall behind to get their cut of the bailout. That could unleash a chain reaction that drives default rates even higher.
That means another dose of moral hazard. Federal officials stopped worrying months ago about that for companies, as they piled up bailout upon bailout to keep the financial system from collapsing. Now officials risk injecting warped incentives into the behavior of individuals.
If the programs take pressure off house prices, MBS holders and borrowers could both make out better than if there weren't any modifications.
But the financial crisis has shown time and again that it is tough to anticipate the unintended consequences resulting from attempts to quell the turmoil.
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Saw this on my rss feed from Yahoo/Reuters just now:
Glimpse into a new financial system
The rest of the article does not actually say what this "new financial system" is - just a vague statement about fiscal stimulus from the G20. Does not quite match the more ambitious tone of the title. Is this a case where the original article was whitewashed to remove the details, but they forgot to change the title?
In any case, what will the new financial system look like? I have heard all the rumors, and have no idea what to expect when the crooks get together behind closed doors.
SP