I wonder if the real effect this will have will be to push the colapse onto another administration in 2010. The takeover was great for the end of 2008, and will help 2009 not suck as much as it is forecast to. However, the GSE’s have to sell off 10% of the portfolio in 2010, and again every year after until they are at 250B.
ASSUMING they actually follow through on that, which they wont, getting a morgage in 2010 is gonna be a bitch. Even in the best of times Fannie and Freddie were half the market, just before takeover they were the market. So they become net sellers in 2010? WHO is buying morgages then? The banks who just got burned and managed to survive only because they DIDNT have huge morgage exposuer? Foreign buyers who just lost hundreds of Billions? The American public with our lame savings rates and inflation reduced incomes? FHA, so well just trade one government sponsored morgage provider for another? (Please remember that 2010 is when alot of those option ARM loans start imploding, so it isnt like they are gonna be awsome investments.)
There isnt anyone, that is who. And so the former GSE’s either wont be able to sell or buy anything, or will rape J6Pk with new taxes/deficit spending to raise new capital. The idea is that by 2010 we will have hit bottom, will be on the rebound, and itll all be ok. But that will be as accurate a prediction as their “Subprime is contained” idea, or maybe the “rebound by Q3 2008” manure they were spreading in March.
So, we have bought 2 years of time. At the end of those 2 years one of two things will happen. The housing crisis will reignite as people can’t get financing, OR the Federal Government will loose Billions upon Billions of dollars it doesnt have.(projected DEFICIT for 2009 is over $400 Billion, before the GSE’s get a cut) Either way, the biggest thing this takeover does is make this whole problem someone elses problem.
