The
Wheels of Justice Flatten Fannie Mae Fannie
Mae Directors Make No EDITOR'S
COMMENTS WHAT AN ABSOLUTE MESS! What an absolute mess. Blame for this debacle should be liberally spread around Washington, Wall Street and in Fannie's executive suite. And if it weren't for a couple of savvy short-sellers, OFHEO, a few clear-sighted folk in the Bush administration, and, yes, the press, Fannie would still be going about its main activity for the last five years -- the wholesale destabilization of the U.S. housing market. -- Peter Eavis The above articles are pretty much interwoven on the very bad movie plot unfolding right before our very eyes at Fannie Mae. 30% of mortgages in ARMs [adjustable rate] speaks well of the FED Chairman's urging for folks to shoot themselves in the foot when interest rates rise in order to attract foreign capital to the USA to the tune of $2 Billion a day. Given the lack of transparency at the GSEs, there's no telling how this very bad financial movie will ultimately play out. Most people believe that the Congress will bail the GSEs out, but it probably won't happen if their derivative book of business causes a nuclear financial implosion. Congress won't have to do much except sit back, have a brandy, and smoke their cigars. The lender of last resort, the FEDERAL RESERVE, is the ultimate lender of last resort to bail out the major derivative counter party Big Boys [Financial Houses on Wall Street] which are the counter parties to the GSEs derivative nuclear implosion, if and more likely when it occurs. This is not only inflationary with respect to the current money system, but also has serious ramifications for real estate. If the money system holds up, real estate prices can head past the moons of Jupiter. If the money system implodes, there could be a lot of REOs [real estate owned] in the GSE mortgage backed portfolios. Which will occur? I have no idea -- there are just too many variables. Never underestimate the power of the FED [the Dark Side of the Force] to keep Ponzi Shell Games going. Whether real estate prices reach the moons of Jupiter or simply implodes is what we call "the wholesale destabilization of the US housing market." Either picture given the current risk in the markets has serious ramifications for Main Street America. It is
time to go out to do some Christmas shopping... Ole Bear, Editor © 2004 Realty Reality |
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GLOBAL
REAL ESTATE MARKETS FORUM