Posts Tagged ‘Fannie and Freddie’

Obama Terrified Of Another Leg Down In Housing, As Fannie Mae And Freddie Mac Are Set To Go In Dramatic New Direction

Obama Terrified Of Another Leg Down In Housing, As Fannie Mae And Freddie Mac Are Set To Go In Dramatic New Direction

Courtesy of Joe Weisenthal at Clusterstock/The Business Insider

fanniemaehqWhen the Treasury announced on Christmas Eve that it was lifting the limit on how much Fannie Mae (FNM) and Freddie Mac (FRE) could receive, one point that may have been lost on people was that neither of the GSEs were yet anywhere close to the $200 billion they’d been alloted.

It’s not like there was a need, under the current system to give them a permanent, unlimited blank check to cover their losses.

So then, maybe that’s not what’s going on.

Maybe it’s this, via MarketWatch:

The government’s decision to provide unlimited support to Fannie Mae and Freddie Mac probably presages more aggressive action to prop up the U.S. housing market.

The government may put a mortgage-modification effort, called the Home Affordable Modification Program, or HAMP, into overdrive in coming years, pushing for reductions in the principal outstanding on home loans overseen by Fannie and Freddie Bose George, an analyst at Keefe, Bruyette & Woods, wrote in a note to investors Monday.

So basically, Fannie and Freddie will be called on to do everything humanly possible to prop up the housing market in the coming years. Mortgage purchases, principal reductions… everything. And as it goes nuts in its efforts, it will need a blank check so that its lenders don’t even get slightly nervous.

Another serious dip in housing would be killer to this recovery and Obama’s Presidential career. That can’t be let to happen.

See Also: 

Here’s The Secret Reason We Eliminated The Bailout Caps On Fannie And Freddie

 


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You Stupid Fool (Bernanke)

You Stupid Fool (Bernanke)

Courtesy of Karl Denninger at The Market Ticker

Does anyone remember my ranting at Paulson when he was talking about his "Bazooka"?  Here is what I said:

This joins the list of other "dead wrong" statements you’ve made, of which I am keeping a running copy and sent them around on the 19th of July. 

How many times do you get to be wrong as Treasury Secretary Hank before you resign in shame?

And now I must ask again – is that really a Bazooka in your pocket, or an empty launcher?  I’m not the only one that’s curious you know; the bond market seems to think it smells like BS, and so does the stock market.

Fannie and Freddie collapsed, remember?

Paulson was proved - and rather quickly so - to be completely full of crap.

Bernanke’s comments today may have just provoked a dollar catastrophe – a collapse move that may have just begun.  Witness this chart:

The market took about 10 minutes to discern that Bernanke’s "concern" was BS, and now has pushed in the chips – "all in" – breaking key support below 75 – and still going.

The carry traders have redoubled their bets and obviously intend to force Bernanke to either put up or shut up.

The problem with Paulson’s claim is that when the market called the bluff he wound up sticking the taxpayer for up to $400 billion, of which more than $100 billion has now been dissipated.

It appears the FX market intends to force Bernanke (and Geithner) to either defend the dollar or allow it to collapse.  The violence of this move and the concurrent "ramp job" that accompanied it in the S&P 500 makes clear a few points though.

  • The "efficiency" of transmission between this move down and the move up in the stock market is lower than the previous moves have been, although the correlation remains intact.
  • The FX markets will press this bet incessantly as they did when Geithner last mouthed the "strong dollar" mantra.

The Fannie and Freddie game wound up bankrupting both firms and forcing the government to bail them
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How The Government Is Manipulating And Distorting Markets In Everything

Government manipulation--the slide show.  Is this the "change" we voted for? – Ilene

How The Government Is Manipulating And Distorting Markets In Everything

obama biden worried tbiCourtesy of Joe Weisenthal at Clusterstock

A recent CBO report estimated that the government spends about $300 billion to intervene in the housing market each year. That’s based on a range of activities, from direct subsidies to homebuyers, to the mortgage interest tax deduction, and the backstop of Fannie and Freddie.

And thus it’s no surprise that the housing market doesn’t work like other markets, and that we had a major bubble there. Even now, Goldman Sachs estimates, the government is adding at least 5% to the cost of each home, through its various "affordability" measures.

But it’s not just housing. Virtually every important sector of the economy is being manipulated in some way.

Check ‘em out >>

 


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Meet The Next Fannie And Freddie

Meet The Next Fannie And Freddie (FNM, FRE)

20061218 foreclosure 2

Courtesy of Joe Weisenthal at Clusterstock

Imagine that. Our government is still guaranteeing all-manner of ugly, ill-conceived mortgages, even after the epic blowups at Fannie Mae (FNM) and Freddie Mac (FRE).

The Wall Street Journal turns attention to Ginnie Mae and the Federal Housing Administration.

Only last week, Ginnie announced that it issued a monthly record of $43 billion in mortgage-backed securities in June. Ginnie Mae President Joseph Murin sounded almost giddy as he cheered this “phenomenal growth.” Ginnie Mae’s mortgage exposure is expected to top $1 trillion by the end of next year—or far more than double the dollar amount of 2007. (See the nearby table.) Earlier this summer, Reuters quoted Anthony Medici of the Housing Department’s Inspector General’s office as saying, “Who would have predicted that Ginnie Mae and Fannie Mae would have swapped positions” in loan volume?

Ginnie’s mission is to bundle, guarantee and then sell mortgages insured by the Federal Housing Administration, which is Uncle Sam’s home mortgage shop. Ginnie’s growth is a by-product of the FHA’s spectacular growth. The FHA now insures $560 billion of mortgages—quadruple the amount in 2006. Among the FHA, Ginnie, Fannie and Freddie, nearly nine of every 10 new mortgages in America now carry a federal taxpayer guarantee.

Herein lies the problem. The FHA’s standard insurance program today is notoriously lax. It backs low downpayment loans, to buyers who often have below-average to poor credit ratings, and with almost no oversight to protect against fraud. Sound familiar? This is called subprime lending—the same financial roulette that busted Fannie, Freddie and large mortgage houses like Countrywide Financial.

And it’s not like the problems are far-off in the future. Defaults are already double what’s considered a healthy rate; delinquencies on these loans are soaring, and reserves have fallen so low, that Ginnie has a 33-1 leverage ratio. Get read for another bailout.

Read the whole thing >

Fannie Mae

See Also:

The White House Denies Horrible Plan For Fannie And Freddie (FNM, FRE)

 

 


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Kimble Charting Solutions

Dow Megaphone Breakout Continues, As It Tests 77-Year Breakout Level

Courtesy of Chris Kimble

I’ve heard many times over the past 39-years I’ve been in the financial services business that charts have memories? Is it true they do? Is it possible that they have very long-term memories?

This theory looks to be put to a big test by the chart above, which looks at the Dow Jones Industrial Index since 1910.

The Dow has spent the majority of the past 77-years, inside of rising channel (1). While inside of this channel, it looks to have created two very long-term megaphone patterns.

It broke above the first megaphone pattern in the early 1980s, where ...



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Phil's Favorites

As Fed Pumps $3 Trillion into Repo Market, Morgan Stanley and Goldman Sachs Practice Borrowing from the Fed's Discount Window

Courtesy of Pam Martens

James Gorman (left) Chairman and CEO, Morgan Stanley; David Solomon (right) Chairman and CEO, Goldman Sachs

Last week, Jim Grant, the Editor of Grant’s Interest Rate Observer, was interviewed by CNBC’s Rick Santelli. Grant said that since September 17, the Fed has pumped “upwards of $3 trillion” in repo loans to Wall Street. Santelli asked if the Fed had effectively nationalized the repo market. Grant said “there is no more price discovery and we are dealing with administe...



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Zero Hedge

If Not-QE Is QE, Then Is Not-A-Blowoff-Top A Blowoff Top?

Courtesy of ZeroHedge View original post here.

Authored by Charles Hugh Smith via OfTwoMinds blog,

Can $300 billion, or $600 billion, or even $1 trillion continue to prop up an increasingly risk-riddled, fragile $330 trillion global bubble in overvalued assets?

When is "Not-QE" QE? When Federal Reserve Chairperson Jerome Powell declares QE is not QE. We can constructively recall the story that Abraham L...



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Lee's Free Thinking

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

 

NY Department of Welfare Announces Increased Subsidies for Primary Dealers, Thank God!

Courtesy of , Wall Street Examiner

Here’s today’s press release (11/14/19) from the NY Fed verbatim. They’ve announced that they will be making special holiday welfare payments to the Primary Dealers this Christmas season. I have highlighted the relevant text.

The Open Market Trading Desk (the Desk) at the Federal Reserve Bank of New York has released the schedule of repurchase agreement (repo)...



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The Technical Traders

VIX Warns Of Imminent Market Correction

Courtesy of Technical Traders

The VIX is warning that a market peak may be setting up in the global markets and that investors should be cautious of the extremely low price in the VIX. These extremely low prices in the VIX are typically followed by some type of increased volatility in the markets.

The US Federal Reserve continues to push an easy money policy and has recently begun acquiring more dept allowing a deeper move towards a Quantitative Easing stance. This move, along with investor confidence in the US markets, has prompted early warning signs that the market has reached near extreme levels/peaks. 

Vix Value Drops Before Monthly Expiration

When the VIX falls to levels below 12~13, this typically v...



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Insider Scoop

HP Rejects Xerox's Buyout Offer: Experts Debate What's Next

Courtesy of Benzinga

HP Inc. (NYSE: HPQ) rejected Xerox Holdings Corp (NYSE: XRX)'s $33-billion takeout offer Sunday, and experts are divided on what will occur next in the ongoing saga between two tech...



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Biotech

Why telling people with diabetes to use Walmart insulin can be dangerous advice

Reminder: We are available to chat with Members, comments are found below each post.

 

Why telling people with diabetes to use Walmart insulin can be dangerous advice

A vial of insulin. Prices for the drug, crucial for those with diabetes, have soared in recent years. Oleksandr Nagaiets/Shutterstock.com

Courtesy of Jeffrey Bennett, Vanderbilt University

About 7.4 million people ...



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Chart School

Dow Jones cycle update and are we there yet?

Courtesy of Read the Ticker

Today the Dow and the SP500 are making new all time highs. However all long and strong bull markets end on a new all time high. Today no one knows how many new all time highs are to go, maybe 1 or 100+ more to go, who knows! So are we there yet?

readtheticker.com combine market tools from Richard Wyckoff, Jim Hurst and William Gann to understand and forecast price action. In concept terms (in order), demand and supply, market cycles, and time to price analysis. 

Cycle are excellent to understand the wider picture, after all markets do not move in a straight line and bear markets do follow bull markets. 



CHART 1: The Dow Jones Industrial average with the 900 period cycle.

A) Red Cycle:...

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Digital Currencies

Is Bitcoin a Macro Asset?

 

Is Bitcoin a Macro Asset?

Courtesy of 

As part of Coindesk’s popup podcast series centered around today’s Invest conference, I answered a few questions for Nolan Bauerly about Bitcoin from a wealth management perspective. I decided in December of 2017 that investing directly into crypto currencies was unnecessary and not a good use of a portfolio’s allocation slots. I remain in this posture today but I am openminded about how this may change in the future.

You can listen to this short exchange below:

...



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Mapping The Market

How IPOs Are Priced

Via Jean Luc 

Funny but probably true:

...

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Members' Corner

Despacito - How to Make Money the Old-Fashioned Way - SLOWLY!

Are you ready to retire?  

For most people, the purpose of investing is to build up enough wealth to allow you to retire.  In general, that's usually enough money to reliably generate a year's worth of your average income, each year into your retirement so that that, plus you Social Security, should be enough to pay your bills without having to draw down on your principle.

Unfortunately, as the last decade has shown us, we can't count on bonds to pay us more than 3% and the average return from the stock market over the past 20 years has been erratic - to say the least - with 4 negative years (2000, 2001, 2002 and 2008) and 14 positives, though mostly in the 10% range on the positives.  A string of losses like we had from 2000-02 could easily wipe out a decades worth of gains.

Still, the stock market has been better over the last 10 (7%) an...



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Promotions

Free eBook - "My Top Strategies for 2017"

 

 

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Phil has a chapter in a newly-released eBook that we think you’ll enjoy.

In My Top Strategies for 2017, Phil's chapter is Secret Santa’s Inflation Hedges for 2017.

This chapter isn’t about risk or leverage. Phil present a few smart, practical ideas you can use as a hedge against inflation as well as hedging strategies designed to assist you in staying ahead of the markets.

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About Phil:

Philip R. Davis is a founder Phil's Stock World, a stock and options trading site that teaches the art of options trading to newcomers and devises advanced strategies for expert traders...

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