Linky goodness on the Fannie Mae and Freddie Mac clusterfuck
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I know even less about finance than I do about polling, so here's some linky goodness on the demise of Fannie Mae and Freddie Mac. Maybe somebody who does understand finance can make a post of it all:
* A roundup of reactions from Nouriel Roubine's RGE Monitor, from which comes
* Linky goodness on the mechanics of the plan from The Big Picture, from which comes
* This hilarious "simultaneous translation" of Paulson's statement from Jesse's Café Americaine:
"Fannie Mae and Freddie Mac are so large and so interwoven in our financial system that a failure of either of them would cause great turmoil in our financial markets here at home and around the globe. This turmoil would directly and negatively impact household wealth: from family budgets, to home values, to savings for college and retirement. A failure would affect the ability of Americans to get home loans, auto loans and other consumer credit and business finance. And a failure would be harmful to economic growth and job creation."
All the financial dons have agreed to this. They expect the foot soldiers to say nice things about it, and how necessary it is to our well-being. The usual sanctions of omerta apply. And we do not wish to hear any talk about Moral hazard and especially any whistle-blowing.
Can we afford the rich anymore?
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BondDad can explain it
Try this for an easy to comprehend reading of the situation.
http://www.huffingtonpost.com/hale-stewa...
China is demanding that their capital be protected, or the gravy train stops.
"Foreign central banks have financed the United States to keep their export sectors -- heavily dependent on U.S. consumer spending -- humming. But they now must weigh the benefits of providing the United States with such "vendor financing" against the rising costs of keeping the current system going."
Bonddad has this posted
on his own blog where you can get it straight from the horse's mouth.
Fannie/Freddie was the symptom, not the disease
Completely negligent regulators allowed private banks to originate subprime "liar loans", and sell these to investment banks, which securitized them and sold the securities to investors.
Banks were overleveraged, their assets were crap, and the housing markets were overvalued as a result of all these cheap loans to fund mortgages.
Fannie and Freddie were basically the repositories of a lot of the "good" stuff, as well as some of the "bad" stuff. The fact that they're in such dire straits is really a bad sign for the private banking sector, which is holding a lot more of the "bad" stuff and less of the "good" stuff.
Housing crash will continue for the next 1-2 years minimum.