U.S. to bail out Fannie Mae, Freddie Mac

[bascule]

http://www.washingtonpost.com/wp-dyn/content/article/2008/09/05/AR2008090503351.html

 

And the economy continues to unravel...

[Pangloss]

And yet remain oddly sound...........

[bascule]

And all it took was the government assuming $5,000,000,000,000 in liabilities...

 

http://money.cnn.com/2008/09/07/news/companies/fannie_freddie

 

But hey Pangloss, if you want to toot the "EVERYTHING IS FINE" horn, be my guest

[ParanoiA]

But hey Pangloss, if you want to toot the "EVERYTHING IS FINE" horn, be my guest

 

I don't know, but I'm betting more of a "Let's not make this into an economic 9/11" kinda horn. You know how emotion can effect the perspective.

[john5746]

OK, so let me see if I have this right:

 

I pay property tax to the local government. Then, I pay interest on my mortgage to the mortgage company, who in turn pays interest to Fannie or Freddie, who get their money from my income taxes?

 

Kinda like paying a loan shark to squeeze my money out of me.

[Pangloss]

But hey Pangloss, if you want to toot the "EVERYTHING IS FINE" horn, be my guest

 

It's frustrating when people use an ellipses to hint at something, but won't really come out and say it, isn't it?

 

At any rate, this is good news, not bad news. The bad news is what we already knew, that these companies were mismanaged and poorly overseen even though they controlled vast sums of government-backed money. That shouldn't have happened, it IS the Bush administration's fault even though the process started during the Clinton administration, and that's where we're at.

 

The good news is that the government is taking the proper course of action to straighten it out. And just as happened with the S&L "crisis", we'll get it taken care of and move forward. The sky won't fall, and the economy won't "unravel".

 

All the stories today are about how the financial world views this as a positive sign. Well, all except for Bascule, who sees this as a sign of further "unraveling".

[iNow]

I haven't yet decided for myself where I stand on this issue, but this is flat out wrong (and also an appeal to ridicule and derision against Bascule):

 

 

All the stories today are about how the financial world views this as a positive sign. Well, all except for Bascule, who sees this as a sign of further "unraveling".

[bascule]

All the stories today are about how the financial world views this as a positive sign. Well, all except for Bascule, who sees this as a sign of further "unraveling".

 

http://money.cnn.com/2008/09/06/news/economy/Fannie_Freddie_rescue_cost/index.htm?postversion=2008090619

 

NEW YORK (CNNMoney.com) -- If only it were the $64 million question. The taxpayer bill for rescuing Fannie Mae and Freddie Mac could turn out to be the $64 billion question. Or more - or less.

 

The fact is: Nobody really knows yet.

 

Until the housing market recovers, there's no telling how much an intervention in Fannie and Freddie could cost taxpayers. But if it costs anything, the cost will likely be in the billions, not the millions.

 

That's not painting a very positive picture.

[Pangloss]

I haven't yet decided for myself where I stand on this issue, but this is flat out wrong (and also an appeal to ridicule and derision against Bascule):

 

All the stories today are about how the financial world views this as a positive sign. Well, all except for Bascule, who sees this as a sign of further "unraveling".

 

Uh, it's a statement of fact quoting the first post of this thread, iNow.

 

And the economy continues to unravel...

 

Wups, I added "-ing" to the end. Somebody call a lawyer.

 

---

line[/hr]

 

That's not painting a very positive picture.

 

Not if you cherry pick carefully enough, wading through thousands of articles about the market being up over the news and analysts all across the United States and Europe being happy with the decision.

 

Here are 6,702 articles that say so:

http://news.google.com/?ncl=1241810220&hl=en&topic=h

 

Looks like a couple of those express concerns similar to the ones you raised. And I happen to agree with you -- those are valid concerns. But they're not a reason to declare that the economy is "unraveling". You should be more honest with your intentions, and admit that you wouldn't be interested in this story if it couldn't be spun anti-Bush.

Edited September 8, 2008 by Pangloss
multiple post merged

[bascule]

Not if you cherry pick carefully enough, wading through thousands of articles about the market being up over the news and analysts all across the United States and Europe being happy with the decision.

 

Did I say I was unhappy with the decision? Better the government assume more liabilities and throw money at the problem than having the entire market collapse.

 

That said, this is indicative that deep seated problems remain.

 

You should be more honest with your intentions, and admit that you wouldn't be interested in this story if it couldn't be spun anti-Bush.

 

I'm a mortgagor and as such I have a vested interest in the housing market, regardless of who's president. Perhaps you should be more honest with your intentions and admit you want to spin everything I say as being anti-Bush.

[waitforufo]

I'm more than a little uncomfortable with the government owning that much private debt. I hope they divest it as soon as possible.

[iNow]

Uh, it's a statement of fact quoting the first post of this thread, iNow.

 

I was commenting on your use of the qualifier "All," and if I've misinterpreted your tone against bascule (though this seems unlikely) I apologize.

[Pangloss]

Did I say I was unhappy with the decision? Better the government assume more liabilities and throw money at the problem than having the entire market collapse.

 

That said, this is indicative that deep seated problems remain.

 

Oh? What problems remain that the bail out of Fannie and Freddie point at?

 

 

I'm a mortgagor and as such I have a vested interest in the housing market, regardless of who's president.

 

Then this should be a strong indicator to you that the sky is actually not falling. Er, I mean, the economy is not "unraveling".

 

 

Perhaps you should be more honest with your intentions and admit you want to spin everything I say as being anti-Bush.

 

It's not the anti-Bush that prompts me to respond with my own opinions. It's the spin.

[john5746]

Oh? What problems remain that the bail out of Fannie and Freddie point at?

 

That it will not solve any fundamental problems. It will provide some short term confidence, but if people keep losing jobs, have stagnent wages with increasing inflation and falling property value, then we will just spin in a larger hole. If China and other countries can find better investments and leave only us to pay our bills, we will finally realize that we really are bankrupt.

 

We have to stay positive though. Maybe things will turn around before its our turn to run off the cliff.

[bascule]

Oh? What problems remain that the bail out of Fannie and Freddie point at?

 

The fact they need bailed out at all is indicative that the weight of bad mortgages is continuing to drag the economy down. Are you trying to say that the government assuming $5,000,000,000,000 in liabilities is a sign that all is well? Nobody here's arguing that it isn't a good move, but it's a good move to deal with a lousy situation.

 

Then this should be a strong indicator to you that the sky is actually not falling. Er, I mean, the economy is not "unraveling".

 

I think the government assuming FIVE TRILLION DOLLARS in liabilities is a sign that all is not well.

 

It's not the anti-Bush that prompts me to respond with my own opinions. It's the spin.

 

What "spin"? That the government bailing out mortgage lenders to the tune of hundreds of billions of dollars and assuming five trillion dollars of private debt is a sign that all is not well with our economy? I'm sorry, I thought it was pretty obvious that that was a bad sign.

[iNow]

What spin?

 

 

Toward the end of last week, the US stock market declined precipitously. Within the space of a few days, we learned that unemployment is way up, more than nine percent of U.S. mortgages were delinquent or in foreclosure, the FDIC closed the 11th bank so far this year (two were closed in 2007, none in 2006 or 2005), and retail sales are down; on the international scene, yen carry trades are collapsing, and the People’s Bank of China (China's central bank) may have to turn to the Chinese Treasury for money.

 

 

The above was just the opening paragraph of the following:

http://scienceblogs.com/corpuscallosum/2008/09/hows_that_economy_working_for.php

 

 

How bad is this going to be? Impossible to tell, but here's a

clue

:

 

From the normally measured

Paul Jackson

:

This is no longer the worst mortgage crisis since the Great Depression; this is the worst mortgage crisis, period.

 

From

Michael Shedlock

:

In theory this is a bottomless sinkhole, especially in light of the fact that systemic risk will be increasing over the next 16 months (and probably beyond that).

 

From

Ben Bitroff

:

Tomorrow morning equities are gonna fly, especially financials... for how long, I can't even begin to predict. But one thing is for certain. The crash is going to be spectacular.

 

 

 

 

 

According to this article, the bailout of Fannie and Freddie is just a band-aid:

http://www.bloomberg.com/apps/news?pid=20601087&sid=arc1_32y8rcg&refer=home

 

 

... but maybe that's really one of those stories that are "viewing this as a positive sign."

Edited September 9, 2008 by iNow

[Pangloss]

That it will not solve any fundamental problems. It will provide some short term confidence, but if people keep losing jobs, have stagnent wages with increasing inflation and falling property value, then we will just spin in a larger hole. If China and other countries can find better investments and leave only us to pay our bills, we will finally realize that we really are bankrupt.

 

We have to stay positive though. Maybe things will turn around before its our turn to run off the cliff.

 

That wasn't really what I was asking. I wasn't suggesting the buyout solves all our problems, whatever they may be. I was suggesting that our problems really aren't that severe. And they aren't.

 

And the moment Obama is elected exactly 45% of the country will stop telling how bad things are and start telling you how good they are, and another 45% of the country will stop telling you how good things are and start telling you how bad they are. And that will tell us exactly squat about the economy, solve no problems, and move us forward not one inch.

 

At any rate, I don't disagree with your assessment.

 

The fact they need bailed out at all is indicative that the weight of bad mortgages is continuing to drag the economy down. Are you trying to say that the government assuming $5,000,000,000,000 in liabilities is a sign that all is well? Nobody here's arguing that it isn't a good move, but it's a good move to deal with a lousy situation.

 

You always seem to change the subject when I challenge you on one of your partisan statements. It never works, you know.

 

You said that the buyout pointed to problems that remain. I asked you what those were, and you listed stuff we already knew. That doesn't answer the question. Tell us what the buyout tells us that we didn't already know. What has it "pointed out"?

 

I think the government assuming FIVE TRILLION DOLLARS in liabilities is a sign that all is not well.

 

It isn't well. It's undergoing a period of "slow growth", at under 2% per year. But it's not "unraveling". You haven't made that case, and I suggest that you cannot.

 

This is no longer the worst mortgage crisis since the Great Depression; this is the worst mortgage crisis, period.

 

Mortgage crisis != economy. That would be, in answer to your question, an example of spin.

 

The economy isn't unraveling, it's simply struggling.

[ParanoiA]

I'm more than a little uncomfortable with the government owning that much private debt. I hope they divest it as soon as possible.

 

Same here.

 

The housing crisis absolutely sucks. It's kicking my ass. I'm drowing in left over debt from bad business management of flips and etc. And there's no getting out of it anytime soon. The market is just going to have to struggle and struggle until it levels out.

 

And the sky is not falling. The economy is humming right along. We're nowhere near the resemblance of a depression era any-damn-thing. We need to stop it with the unhealthy, illogical, paranoia that our entire economy is going to collapse over one market - it's not.

 

I don't agree with the bail outs, and now the government is getting more and more comfortable buying private debt. Scary. Really effin scary. And the more we cry and whine and make this out to be the 9/11 of the economy the more the government is going to do shit like this.

 

The economy will always have something wrong with it, it's a dynamic process. That's a given. Acting like every blip is hurricane katrina smacking down on our economic coastline is crying wolf at the sight of a Labrador.

 

And that sucks because we have real economic problems with the dollar and the way the federal reserve is manipulating the economy, but no, we're all carrying on about the housing crisis - giving them even more reasons to print more money and continue the destruction of our dollar, our number one problem, in my humbled opinion. Stop giving them reasons to continue making their bad decisions, drowning the poor in inflation. Tell them the economy is fine - quick! Before they print more freaking money!

[Dak]

hang on, is the US printing money to pay it's debts?

[iNow]

You said that the buyout pointed to problems that remain. I asked you what those were, and you listed stuff we already knew. That doesn't answer the question. Tell us what the buyout tells us that we didn't already know. What has it "pointed out"?

 

I can't speak for Bascule, but it has pointed out that previous operational attempts at resolving the issue did not work, and also points out how powerful the Fannie and Freddie lobbies have been for the past decade.

 

Among other things...

 

 

I think I'm missing where you're going with this, Pangloss. The fact is that we're in rough shape, and trying to put lipstick on this proverbial pig helps nobody.

 

It's not partisan or bush-bashing to speak about what is happening here authentically.

[Pangloss]

No, you're right, it isn't. Which is why I objected to the word "unravel".

[bascule]

You always seem to change the subject when I challenge you on one of your partisan statements. It never works, you know.

 

I'm sorry, it just feels like "partisan" bluster from you when you have to make everything about Bush even when I haven't mentioned anything of the sort.

 

You said that the buyout pointed to problems that remain. I asked you what those were, and you listed stuff we already knew. That doesn't answer the question. Tell us what the buyout tells us that we didn't already know. What has it "pointed out"?

 

That we're not anywhere close to the bottom yet. Major lending institutions are continuing to fail.

 

It isn't well. It's undergoing a period of "slow growth", at under 2% per year. But it's not "unraveling". You haven't made that case, and I suggest that you cannot.

 

I think iNow did a fairly good job of covering that:

 

http://www.scienceforums.net/forum/showthread.php?p=433447#post433447

 

I'm sure you'll come up with a definition of "unraveling" that sets the bar unreachably high. Is this just a semantic argument over one word? Seems like it. Oh, but I'm sure that one word makes the argument "partisan"...

 

And that sucks because we have real economic problems with the dollar and the way the federal reserve is manipulating the economy, but no, we're all carrying on about the housing crisis

 

I think I've given equal coverage to both. Pangloss, on the other hand, seems to be ignoring all the other problems like inflation, devaluation of the dollar in the international marketplace, the looming national debt soon to break $10 trillion, being driven higher by record deficits.

 

Mortgage crisis != economy. That would be, in answer to your question, an example of spin.

 

Yes, spin away Pangloss.

 

The economy isn't unraveling, it's simply struggling.

 

Yep, definitely a semantic argument. Pangloss, are you using the "partisan" (i.e. Republican) tactic of framing the debate in your language? I really hate when people do that.

 

I stand by my original statement. Do you have any substance to add to the discussion, or just bluster?

[Pangloss]

I'm sure you'll come up with a definition of "unraveling" that sets the bar unreachably high.

 

If I did that at least I'd be speaking my mind instead of hinting at something that I want people to think but that I don't have the guts to come out and say because I know I'd have to defend it. Oh look, here you go again:

 

Oh, but I'm sure that one word makes the argument "partisan"...

 

It's funny how you say it and also demonstrate its falsity in the same sentence.

 

 

I think I've given equal coverage to both.

 

No, you're selectively emphasizing worst-case scenarios that even analysts don't agree on. You're insisting that the worst must be true, in spite of the fact that it appears to be more like the lowest probability, not the highest.

 

If you were giving "equal coverage to both" you'd be posting threads about positive news. Falling gas prices. Rising home sales. Stuff like that. Odd that I haven't seen any such posts from you. Why is that?

 

 

Yep, definitely a semantic argument. Pangloss, are you using the "partisan" (i.e. Republican) tactic of framing the debate in your language? I really hate when people do that.

 

I know you do, that's why you feel you have to spin back in the opposite direction. The problem comes when the spin you feel you're encountering isn't there to begin with. This is the problem with assuming a partisan belief system -- it forces you to react to everyone else as if they're a partisan too, even when your reason and intuition are screaming at you that it's not the case.

 

But you're a smart guy; you'll figure it out eventually. Dr. Pangloss prescribes two Obama administrations, and call me in eight years.

[bascule]

[bluster]

 

Yep, another substance-free, invective-laced response with cries of "partisan!"

 

I suppose that's your new M.O. Can you actually respond with facts rather than cries of "partisan"?

[iNow]

.

 

http://www.cnbc.com//id/26563570

...most of what the federal government has done is meant to ease the popping of the housing bubble, which it created in the first place, thanks to artificially low interest rates, government-supported mortgage lenders and liberal lending requirements.

 

This past weekend's government takeover of mortage giants Fannie and Freddie was just the latest example of that. Still, many on Wall Street are skeptical that the bailout will do much to resolve the housing and credit crisis.

 

“The best thing to do is to let housing prices reach their natural level as soon as possible, so people know what's real and what's not,” Mitchell says.

 

 

 

 

That reminds me a lot of what Alan Greenspan told Charlie Rose earlier this year. We need to just let it run its course. The more we do to "soften" things, the longer and more drawn out those things will become. The ONLY way we are going to get through this is to let everything reach rock bottom, essentially hitting the reset button, and crawling forward again.

 

The more we keep intervening, the more uncertainty there is, and the less likely people will be to pump money into the critically needed areas. If, however, they know that bottom has been reached, they'll feel more confident and we'll see things move up.

 

Will it hurt if we do nothing? Yep. Will people be outraged if we do nothing? Yep. However, sometimes medicine that helps us most tastes the worst.