9/8/8 Special Weekly Report - Freddie/Fannie Aftermath

Originally posted by kosmicjack
This is literally the most important thread o ATS today and not even a full page of attention has been given to it. Whether members realize or not, this will effect everyone in the long run...the bill will come due.

I hate to say it, but it seems the only way to get attention to a thread, or this forum is to flag the sheets out of it. We need to get this forum on the radar screen. I'm giving all I can to do that, but I'm just an FSME and I can't even bump it, or any others here.

Honestly, there are a lot of people reading these threads but too few responses and no flags.

Pick one of the posts in this thread (not necc. mine - the best response and flag it). Okay, the original post already has the most flags - a measley 3. * cries*



[edit on 9/8/2008 by Relentless]

Okay...here are some links for the bump and to get members fired up:

Jim Rogers: Socialism For The Rich

www.contrarianprofits.com...

And yikes! What exactly does this mean?

www.bloomberg.com...

Sept. 8 (Bloomberg) -- Investors may be forced to settle contracts protecting more than $1.4 trillion of Fannie Mae and Freddie Mac bonds against default after the U.S. seized control of the companies in a bid to bolster the housing market.

Thirteen ``major'' dealers of credit-default swaps agreed ``unanimously'' that the rescue constitutes a credit event triggering payment or delivery of the companies' bonds, the International Swaps and Derivatives Association said in a memo obtained by Bloomberg News today. Market makers for the privately traded contracts will discuss how to settle them in a conference call at 11 a.m. in New York, the document said.

``This is a big deal,'' said Sarah Percy-Dove, head of credit research at Colonial First State Global Asset Management in Sydney. ``The market is not experienced at settling a credit event for a name of this size, so it is a bit of an unknown.''

And for those who may grow weary of watching Capitalism eat itself:

links.org.au...

reply to post by mybigunit


MBU, the markets WILL NOT hold.. the surge on the DOW and other world markets was led by financials, which surged to much to fast. There will obviously be retreating as people jumped in "for a deal" and it does not reflect the health of the industry. Small surge, for the time being, but all in all will make little difference.

reply to post by Maxmars


Democracy was an expirement on Enlightenment ideologies. Once we forget what those ideologies where, then there is no longer a need for Democracy, as Democracies purpose and function was to represent and protect those ideas. Essentially time destroyed this expirement, greed, corruption, and the natural process of Humanity to consolidate wealth and power, all led to it's downfall.

"Who gets to lead and why?" .. Who ever has the power, as that is the only course Nature approves of.

Now as for layman's terms..

I would say your close, enough anyways, for the topic at hand is incredibly complex.

Essentially when an investor buys a share in a company they are "owning" part of this company. They are not loaning money to the institution to "make their money grow", the entire purpose of stocks is to collect Dividends while the stock increases, but it only increases in respect to how much equity the companies, through profits, accumulate.

The Companies use Capital and Profit, minus whats given in Dividend, to invest in other companies, via portfolios, and to advance their own method of generating wealth. For banks this means loaning money out for interest via loans, credit cards and Mutual Funds, 401(k) etc.

The Companies produce profit, and give money to share holders.

The companies don't produce profit the share holders get nothing, and most likely the stock "drops".

That is the case with the two big F's here.

Bond holders have all their debts secured, and when a company liquidates bond holders are the first to be paid off. This is because Bonds are "low risk investment" with a structured interest rate over a certain period of time.

Countries use bonds as investments to insure their funds meet expected inflation, maintaining wealth status as compared to other countries, this is why China invest so heavily in American markets. This is also why America is doing every thing it can to secure our own Bond markets, because not only do companies rely on them to survive and operate, ironically so does our Government, which other countries buy.

When you hear "national debt" and how we spend "more then what we have" .. we as a Government sell Federal Bonds mostly to corporations and other countries to pay for the remaining balance on our balance sheets. When we say taxes pay interest, Federal Bonds have interest that MUST be paid, and the reason we CANNOT default on our interest payments is security in the bond markets would plummet, and no one would invest in our government meaning we could ONLY spend what money we have. Essentially destroying us..

Most bonds sold by the Federal Government are 1yr - 10yr notes.

Which is why the Fed is so willing to hand a blank check over to Fannie and Freddie because the potential losses in a unsecured bond market at the federal level would destroy this country.

This is also why the Soviet Union collapsed, and America did not, we had a much, much larger base of investors who would purchase American Debt.. mainly Britain, Germany, and Japan. Now China is our biggest purchaser.

And all this with fiat money that is little more than 'make believe'?

A Fiat is a command, order or explicit instruction. A Fiat Currency is a currency that has a demanded value, that is to say, "You will except this in exchange for goods and services". So long as you can actually trade for goods and services, with your money, it has value. It's value is measured by "How much can I get with $1" .. If one year $3 buys you a gallon of gas, and the next it takes $5 it means your currency's value drops. Still worth something, still valuable.

Gold works the same way, the misconception that currencies MUST be backed by "something" is .. odd. People still have to accept the Gold for goods and services, just like a typical Dollar. And with a Dollar you can still purchase it's value in Gold.. the weaker the dollar, the less Gold. In a Gold Standard, the more Gold one nation has, the less the ounce can buy, supply and demand, if everyone has it, you must acquire greater and greater quantities.

So essentially, in our markets, 1% of the population would have all the Gold, and we would scrounge around for silver and copper.

Hope that's Layman's enough for you..

kosmicjack:

Some people who purchased the Bonds want them re-paid for fear the Gov or the companies won't pay them back... Of course, that cannot happen as .. well the two companies wouldn't be worth anything..

I'm going to read the opening post and all the responses very carefully.

also, remember the fellow Obama put on his vp committee stepped down from the committee and also stepped down from heading Fannie Mae in the same two-step: www.abovetopsecret.com...

I know why Johnson stepped down off Obama's team AND why he resigned from Fannie Mae. My opinion is that it's to avoid the press finding out that Johnson and Pearl's investment bank, Perseus, LLC. includes on its board the Bush organization -- (not only Carlyle Group) -- but the following nazi and neo-nazi affiliates.
UNION BANK
Michael L. Miller -- He founded and led UBS Capital GmbH, the Frankfurt-based private equity investment unit of the Union Bank of Switzerland Group in Germany. (**This is a direct connect to the Bush dynasty's current networking w/Third & Fourth Reigns & NWO-Bormann org.**)

BROWN BROTHER'S HARRIMAN
J.T. Mauk -- Mr. Mauk worked for Brown Brothers Harriman & Co
ANOTHER BUSH NAZI & NEO-NAZI LINK to the NWO-Bormann organization.

ENRON
John T. Schwieters (Washington, D.C.) is a Vice Chairman of Perseus. Prior to joining Perseus, Mr. Schwieters was the Managing Partner of Arthur Andersen (accountant firm for Enron)
THIS IS A DIRECT LINK TO BUSH/CHENEY/AFGHANISTAN PIPELINE RIP-OFFS OF CALIFORNIA BILLIONS.

DEUTCH BANK, BROWN BROS HARRIMAN - direct Nazi & neo-Nazi/NWO-Bormann activity.
Christian T. Staby is a Managing Director of Perseus’ affiliate in Germany, Perseus Beteiligungsberatung GmbH. a former Vice President in the Corporate Strategy Division of Deutsche Bank AG. While there, he led the development of the Global Corporate and Investment Banking unit’s five-year strategic plan. Mr. Staby was a Case Team Leader in the Munich office of Bain & Company from 1996 to 1999, and has also held positions at Sal. Oppenheim Jr. & Cie., Brown Brothers Harriman & Co., and Massalin Particulares S.A. Mr. Staby is a member of the Board of Directors of SEVA Energie AG.

---
In the meantime (while I read all of this and do errands), here's a press release I just sent to the local tv news station (using the letterhead of a nonprofit I work with -- I hope they bite:

offered as an exclusive to KTVU's so & so
press release

lead-in: No one will believe you, but it's true: a “30-year fixed mortgage” (see chart, below) is actually a variable mortgage, and the rate you really pay is higher than you can imagine and eliminates financial freedom.

story: The so-called 6% 30-yr fixed rate mortgage ... is really a 580% variable mortgage. That's right ... the first year you pay 580% interest, which drops month by month over a five year period, to 102%. Then over the next 25 years the interest rate you pay drops slowly and only on the last day of the 30th year, you interest rate drops to 6%. There's your smoking gun.

Mortgages are “front-end loaded for interest” (which means you pay interest heavily over principle), you start off at 580% and the mortgage never reaches a 6% rate until the last year of the 30-year term. Regarding the real interest rate of the loan, the 15-yr is much lower than the 30-year. The following table compares the effective rate on a 6%-30 vs. a 5%-15.

Year--------30yr mortgage --------15yr mortgage
1------------580%--------------------161%
3------------182%--------------------51%
5------------102%--------------------28%
7------------68%---------------------18%
10-----------43%---------------------11%
15-----------24%----------------------5%
20-----------15%----------------------paid off
25-------------9%----------------------paid off
30-------------6%----------------------paid off

Here’s another way to look at it, using for example, a $150,000 30-yr fixed-rated mortgage at 6%:
Yr---interest pd-------principal pd-------balance owed
1----$8,949.89--------$1,842.02----------$148,157.98
2----$8,836.28--------$1,955.53----------$146,202.35
.
.
.
30---$342.70----------$10,449.21---------$0.00
(see thread referenced at bottom for complete figures)

Nationally, homeowners keep their mortgages an average of 5 years before refinancing … that “30-yr-6%” mortgage rate is a minimum of 107%. When foreclosed houses are re-sold, bankers are able to re-finance and 580% all over again -- NOT 6%.

Aside from the fact we owe the Fed 9 trillion dollars and we owe Fannie Mae & Freddie Mac 5 trillion dollars ... in less than 100 years ... people overlook the fact that both institutions are owned privately, by the same people.

---

that is from my thread at www.abovetopsecret.com...

now I need to go shopping then return and read this thread --

[edit on 8-9-2008 by counterterrorist]

reply to post by Maxmars


From what I gather, that is basically the rundown. The mortgages basically get floated remarkably similar to the fraudulent act of check-kiting in which people right rubber checks, deposit them in other banks, and then they can write good checks with money that doesn't exist. At least that's what I'm getting from all this. Only this is happening on such a massive scale that it affects everyone who pays taxes (at least it will now) and instead of kiting checks through multiple banks, they're kiting mortgages.

And isn't it funny how all of this was JUST talked about in a recent congressional comittee hearing in which Ron Paul grilled Ben Bernanke and that worthless treasury secretary of ours. And people wonder why we have an economic system that makes no sense. Neither of these 2 men even know who is in charge of the value of the dollar. Ron Paul has yet to have an answer to that big mystery. The dollar today is worth but a tiny fraction of what it was worth when the dollar was first printed because banks can get money almost for free from the central bank (at like 1 or 2 percent interest).

Those in positions like Ben Bernanke have ALWAYS screamed that the problem is that we need MORE regulation. For example, when we had the savings and loan crisis in the early nineties which was literally repaired by Bush Senior. If he wouldn't have done that, it would have been a boon of the Reagan administration. So , at least in a way, Reagan has Bush Sr. to thank for saving the Reagan legacy. And, historically, the solution to the economic problems of the U.S. since the dollar was printed was.. PRINT MORE MONEY. Which makes the dollar worth less and less over time..





I guess you could say what we are seeing right now is our government doing everything it can to prevent a bank run (which is inevitable anyway because of our ridiculous economic system).

-ChriS

[edit on 8-9-2008 by BlasteR]

[edit on 8-9-2008 by BlasteR]

[edit on 8-9-2008 by BlasteR]

This is amazing.

Why are people being allowed to profit when times in one moment then allowed to transfer their losses, when times are bad, on the American tax payer at the next?

Why are the people who create a scheme get to profit on it then have the American tax-payer deal with the mess when the scheme falls apart?

The private equity investors and foreign bankers got off free with this takeover. They put in billions buying mortgages which in turn churned the market and yet they don't have to take the loss?

If I buy a bad investment and it tanks shouldn't I take that as a loss?

What is it with this class of people that can win it both ways?

Originally posted by Rockpuck
reply to post by mybigunit

 

MBU, the markets WILL NOT hold.. the surge on the DOW and other world markets was led by financials, which surged to much to fast. There will obviously be retreating as people jumped in "for a deal" and it does not reflect the health of the industry. Small surge, for the time being, but all in all will make little difference.

I agree - the markets CAN'T hold actually, there is nothing left but toilet paper backing the financials. I'd really love to know how they are stick saving this, but I'm guessing yesterday had something to do with the fact that the MOAB kick started enough foreign markets before our open, because this bailout was for them. Our markets responded in kind blindly.

For anyone out there who still thinks the government seizing these two lending giants, I emplore you to check out the Lehman Brothers stock. It lost roughly 44% today. I haven't recently talked about them, but they could be the first company to disclose more losses. Citi would be second, probably Wachovia and JP Morgan in that order. Yesterdays gain is going to be today, and tomorrows loss. Sad that people get optomistic...

reply to post by ChrisJr03


Yep, and that's why I started this thread. The info in the original post pretty much says it all. These guys (the financials) are all in deep doo doo now.

(And for whoever said BOA is okay - don't count on it. Anyone who had mortgage exposure - and who didn't? - has a problem right now.)

Very interesting day for the aftermath. A lot of stocks are having odd problems today.

from what i've been told in the media,
the investors that chose to buy Freddie/Fannie 'Bonds' will come out OK...

now if the Soverign Wealth Funds like China & Russia & a bunch of our political enemies bought those Bonds --- well, good for them...

All the U.S. banks had the same opportunity to buy the Bonds, but most of the hundreds & hundreds of domestic banks chose to invest in the 'Preferred Stocks' of Freddie & Fannie ->
as it turns out that was a bad decision!...
So, all this squawking on this thread about foreign banks/central banks getting 'bailed out' is a bunch of sour grapes... & has no true foundation!


next, the Freddie & Fannie black-hole finally dawned on all the market speculators that pumped the market yesterday...and the market responded by falling 280 on the DOW and 297 on the NYSE today (Tuesday)...
bringing a sort of sensibility & rational thought into the insanity that began last Friday.


let's see what gets 'nationalized' next... the Auto industry or the Airlines??



me... i'm in hog- heaven-on-earth... as i'm buying gold & precious metals at a price that i only seen 2 years ago.... & i sure hope the govt & the manipulators keep tightening the economy for the remainder of this 3rd Quarter (when the Social Secutity COLA is calibrated) so that the momentum carries into Nov-Dec... & then i will have-to-be satisified with all those cash infusions into my ROTH acct, and enjoy the outrageous profits i was lucky enough to foresee while most everyone else was lamenting their misfortune



Smile...
i sure am

[edit on 9-9-2008 by St Udio]

reply to post by St Udio


It has everything to do with Bonds, that's where this supposed "bazooka" came from, to scare people into thinking the Gov can fix it if need be to protect the bond markets.

Fact is, foreign governments invested heavily into bonds, they are getting bailed out.

reply to post by counterterrorist




before the school system made it mandantory to 'dumb-down' the populace,
it was common knowledge (at least to the WWII returnees) that a starter home would cost Twice the buying price...
& that helped that generation be a heck-of-a-lot more frugal than the rock-&-roll generation that followed.

of course, because the house usually grew a little in value...
the homebuyer saw the home as more than a shelter...
later when inflation started big time... the home became a investment item instead of a Families 'Castle'... & that idea became a driving force which made high interest rates tolerable..

reply to post by Rockpuck


What if...... just think about it a moment.

What if the only solution in the end is to say the bonds have failed too?

It's like a divorce situation where the offended spouse maxes out all the credit cards and then calls foul. What if that's what is going on here?

The only thing left is the gov't bonds. Suppose the gov't bails on them?????

I don't know why, but this thought occurred to me a few months back, and , geez - I don't even want to think about it - but lets face it - gov't bonds are worthless. What if everyone suddenly admits it?

Um here's an article referencing what the actual liabillitis of these two companies are, and where those liabillities will end up.

From FT

Peter Orszag, CBO director, said: “It is the CBO view that Fannie Mae and Freddie Mac should be directly incorporated into the federal budget.”

SNIP------

The two mortgage companies have between them $5,400bn in liabilities, equal to the entire publicly traded debt of the US, alongside mortgage-related assets of about equal value.

reply to post by jefwane



Well, if that doesn't scare the sheets out of everyone - I don't now what will.

Originally posted by wutone
This is amazing.

Why are people being allowed to profit when times in one moment then allowed to transfer their losses, when times are bad, on the American tax payer at the next?

Why are the people who create a scheme get to profit on it then have the American tax-payer deal with the mess when the scheme falls apart?

The private equity investors and foreign bankers got off free with this takeover. They put in billions buying mortgages which in turn churned the market and yet they don't have to take the loss?

If I buy a bad investment and it tanks shouldn't I take that as a loss?

What is it with this class of people that can win it both ways?

It's called laissez-faire capitalism. The alternative is to have regulated capitalism which is something the US hates with a passion. Ironic that the government had to step in

It's not this step that you should worry about, it could have been done differently, many alternates in fact, it does not matter. The bottom line is that at some point the tax payer has had to bail out the excessively rich speculators who are currently not worrying about their "way of life" (anybody seen a banker on the streets yet....no didn't think so). Worry about this : how will the tax payer be rewarded for helping, how will the bankers be punished for causing so much grief? If your taxes go up and Mr. Banker is still living in his trillion dollar mansion then you should get angry very very angry.......I'm 99% certain you will.

Will I be angry? Not really cos I'm here in the UK and I know what will happen here:

1. Economy stumbles along flat to the next general election (2 years)
2. Cameron (tories) voted in and Brown out.
3. Tory policies are pro big business.
4. Indefensible pro big business decisions are defended with the line "we have inherited a mess from the previous administration (labour) and have no choice". This will align fiscal policy with the US.
5. The conned (stupid) public believe every word.
6. Cameron works with Salmond towards Scottish independance.
7. Scotland gets indepenance, it's economy collapses (this is where I live).
8. The loss of 30-40 Labour seats in scotland and ZERO tory seats! gurantees the Tories permanent power in England&wales.
9. Engwaland (!) moves out of the EEC and joins the US as an economic block.

OK half number 9 is a stretch but the desire will be there.

Ron Paul tried to warn us.


Note the year.

Congressman Ron Paul
U.S. House of Representatives
July 16, 2002

Ironically, by transferring the risk of a widespread mortgage default, the government increases the likelihood of a painful crash in the housing market. This is because the special privileges of Fannie, Freddie, and HLBB have distorted the housing market by allowing them to attract capital they could not attract under pure market conditions. As a result, capital is diverted from its most productive use into housing. This reduces the efficacy of the entire market and thus reduces the standard of living of all Americans.

Mr. Speaker, it is time for Congress to act to remove taxpayer support from the housing GSEs before the bubble bursts and taxpayers are once again forced to bail out investors misled by foolish government interference in the market. I therefore hope my colleagues will stand up for American taxpayers and investors by cosponsoring the Free Housing Market Enhancement Act.


to bad it fell on deaf ears.

reply to post by lunchmanstan


Thats exactly what gets me about all the sheep. Just look at the numbers from the following forums:


Obama The Sexist: You can put lipstick on a pig
replies: 248

9/8/8 Special Weekly Report - Freddie/Fannie Aftermath
replies: 36

This is pretty demonstrative of the US citizens.

Ron Paul has been talking about this as the article notes, for years now. The corrupt politicians are too stupid to even inquire.

The Fractional Reserve Banking System is a Ponzi Scam ! The banks can llend $.90 of every dollar for which they own a debt obligation. The only problem is that when the payments on the loans stops coming in the Scam begins to fall apart which is what is occurring now.

What is sad is that this a result of the home mortgage crisis, we havn't yet experienced the next wave which shall be the commercial mortgages.

The Fraudulent Deposit Insurance Corp. is essentially bankrupt and can in now way or means cover the deposits. If people can't access their bank accounts there would exist a slight degree of disdain amongst the citizens I would imagine resulting in out and out rioting.

This makes me believe that the information leaked from the recent closed door session of congress back in March might just possibly come to be true.



I

Sheep? I prefer to think of them as lemmings in the land of the mandatory lobotomy. Waddling off the cliff to their deaths in perfect file, oblivious to the fact that there is - just beyond the realm of their comprehension - a great industry whose sole enterprise is harvesting the energy created by the infinite loop of these creatures who have been made to forget their very souls. And the lemmings march, too stupid now even to mourn the loss of their very souls.

It's utterly, horribly, disgustingly hilarious. Funnier still because most people don't understand its all a joke. Humanity, that is.