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  • September 6, 2007 at 12:27 PM #10188
    markzuber
    Participant

    What do you think about this possibility of bailout?

    * Banks would originate mortgage loans with 1% interest rates.

    * The Federal Housing Administration and Department of Veterans Affairs would insure the loans against loss.

    * The Government National Mortgage Association, aka Ginnie Mae, would buy the mortgages at par from the banks, allowing the banks to make a small profit.

    * Ginnie Mae, taking a sizable loss, would then sell these loans to Fannie Mae (FNM, news, msgs) and Freddie Mac (FRE, news, msgs) at a discount so that the buyers would earn reasonable yields.

    * Fannie and Freddie would fund these purchases with low-cost, government-guaranteed debt.

    http://articles.moneycentral.msn.com/Investing/SuperModels/BushMortgageBailoutJustMightWork.aspx

    September 6, 2007 at 12:46 PM #83606
    SHILOH
    Participant

    Can banks originate 1% loans –aren’t they borrowing at over 5%?

    September 6, 2007 at 3:44 PM #83638
    kewp
    Participant

    I don’t really have a problem with that, the bank of japan did something like it with zero % rates and it didn’t stop the market from collapsing.

    Nothing can save domestic housing at this point, but if the bailout will keep the recession from becoming a depression, I’m all for it. People are still going to be punished, its just going to be like having one broken leg, instead of two.

    September 6, 2007 at 4:08 PM #83641
    schizo2buyORnot
    Participant

    “If insider buying is any indication, home builders and financial-services providers expect dramatic reversals of fortune in the coming months.”

    . . .

    “Bush 43 faces the same dilemma, only this time the bad loans are right here at home. His choices: He can thumb his nose at lenders who made stupid loans, castigate brainless homeowners who took out mortgages they could not repay, jail fraudster mortgage brokers who exploited a loosey-goosey system to generate exorbitant fees — and stand smugly by as families in Republican strongholds across the West and South lose their homes. Or he could follow his dad’s Brady bonds solution and basically forgive and forget by launching a mortgage bailout of unprecedented scope.”

    . . .

    “As a result . . . the nationwide housing collapse would disappear as an election theme for Democrats.”

    Watch out . . . PIGS love to dare “put your money where your mouth is.” When Wall Street gets wind of upcoming events and starts to put real money into it they are doing exactly this. Apparently at least some people (smart or fools . . . time will tell) are putting money on a semi-bailout leading to possible (emphasis on possible) “dramatic reversals” in the housing market. This bears watching.

    In search of a crystal ball . . . .

    September 6, 2007 at 4:17 PM #83644
    HereWeGo
    Participant

    That’s not going to happen. I’m all for a reduction in the FFR, given the current commercial paper crisis and the 91-day yield, but destroying the dollar would be a bad idea, and I suspect even Kudlow would agree on that one.

    September 6, 2007 at 5:29 PM #83650
    bsrsharma
    Participant

    destroying the dollar would be a bad idea

    Just like flying a bunch of hot nukes from North Dakota to Louisiana!

    September 6, 2007 at 9:15 PM #83666
    cr
    Participant

    People forget the housing bubble rescued us from the dotcom and 9/11 recessions, and any effort is only going to delay the inevtiable. Recessions are a normal part of the economic cycle.

    Never mind the moral issues behind it, how many homeowners will this truly help since most won’t qualify under new standards anyway? All this does is throw tomorrow’s money at today’s problems by putting a bandaid on a dam of bad debt. But of course no politician thinks past the 2 minute speech they are giving.

    So much for a free market system. At least communism is noble enough to take from the rich and give to the poor. Bush wants to take from the financially prudent and give to the foolish.

    Adam Smith is rolling in his grave, as Carl Marx says I told you so.

    September 7, 2007 at 12:07 AM #83689
    hipmatt
    Participant

    The dollar has been falling again lately and gold is over 700 per ounce. I predict the dollar falls much more.

    If you think inflation isn’t that bad.. maybe these articles from today will change your mind.

    Wheat and Bread Prices rise..
    http://www.chicagotribune.com/business/chi-thu_wheat_0906sep06,0,2298435.story

    Cattle and Hog prices rise..
    http://www.bloomberg.com/apps/news?pid=20601103&sid=a_qvoT7Ndz4I&refer=news

    Oil is back on the rise..
    http://www.bloomberg.com/apps/news?pid=20601087&sid=aWHx26cP1kzY&refer=worldwide

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