No Limits on the GSEs

[SD Realtor]

Wow I am surprised that there is no discussion on the limits being removed from the GSEs… They can buy as many mortgages as they want now.

[Deal Hunter]

There’s a big difference between Fannie and Freddie “buying” mortgages and “insuring” them.

They still need to “buy” the mortgages, which means they still need to have capital or credit to do so. Back to the same problem everyone else has. Just because caps were lifted doesn’t mean money will now be thrown at them to buy up all those “iffy” mortgages for “iffy” people.

So with limited capital, they will need to stick to insuring mortgages instead of buying them outright – to make the limited capital go farther. Now, to insure mortgages, they have to asses risk – which means insuring the better loans under stricter standards.

Er, seems we’re back where we started.

[SD Realtor]

Yes I agree they do have to raise the capital to buy them and I don’t know how they will get it. However not having a restriction is a first step wouldn’t you agree?

Not that it matters in the long run. Wouldn’t you say that if the secondary market locked up somehow, that our favorite federal government would step in? Don’t they already take junk debt as collateral at the discount window? I heard the ECB has already taken on 90B worth of it as well….

If you are as jaded as I am I think you would agree that nothing happens in one fell swoop. In the long run one can look back and see several steps that occurred and it all pieces together quite nicely. Down the road when things get worse there will be other more desperate measures that the government will need to resort to. Larger plans get implemented in piecemeal manners. To me this is one of them.

I guess we will see what happens yeah?

SD Realtor

[patientrenter]

Spot on, SDR! This just allows the GSEs to wade in deeper. They want to, and they are being told to. They will wade in deeper.

If and when they stumble and are in danger of getting submerged, the federales will arrive. There will be shock, absolute shock, at the discovery that 80-95% non-recourse loans that were made at today’s So Cal prices are going bad. Since no one could have known that, there will be a rescue for the good ol’ Fannie and Freddie brownies/boy scouts, and the homeowners and investors all. It’s so patently obvious what’s happening.

Patient renter in OC

[patientrenter]

Spot on, SDR! This just allows the GSEs to wade in deeper. They want to, and they are being told to. They will wade in deeper.

If and when they stumble and are in danger of getting submerged, the federales will arrive. There will be shock, absolute shock, at the discovery that 80-95% non-recourse loans that were made at today’s So Cal prices are going bad. Since no one could have known that, there will be a rescue for the good ol’ Fannie and Freddie brownies/boy scouts, and the homeowners and investors all. It’s so patently obvious what’s happening.

Patient renter in OC

[patientrenter]

Spot on, SDR! This just allows the GSEs to wade in deeper. They want to, and they are being told to. They will wade in deeper.

If and when they stumble and are in danger of getting submerged, the federales will arrive. There will be shock, absolute shock, at the discovery that 80-95% non-recourse loans that were made at today’s So Cal prices are going bad. Since no one could have known that, there will be a rescue for the good ol’ Fannie and Freddie brownies/boy scouts, and the homeowners and investors all. It’s so patently obvious what’s happening.

Patient renter in OC

[patientrenter]

Spot on, SDR! This just allows the GSEs to wade in deeper. They want to, and they are being told to. They will wade in deeper.

If and when they stumble and are in danger of getting submerged, the federales will arrive. There will be shock, absolute shock, at the discovery that 80-95% non-recourse loans that were made at today’s So Cal prices are going bad. Since no one could have known that, there will be a rescue for the good ol’ Fannie and Freddie brownies/boy scouts, and the homeowners and investors all. It’s so patently obvious what’s happening.

Patient renter in OC

[patientrenter]

Spot on, SDR! This just allows the GSEs to wade in deeper. They want to, and they are being told to. They will wade in deeper.

If and when they stumble and are in danger of getting submerged, the federales will arrive. There will be shock, absolute shock, at the discovery that 80-95% non-recourse loans that were made at today’s So Cal prices are going bad. Since no one could have known that, there will be a rescue for the good ol’ Fannie and Freddie brownies/boy scouts, and the homeowners and investors all. It’s so patently obvious what’s happening.

Patient renter in OC

[Deal Hunter]

The government is trying to send out Fannie and Freddie in the same way they were deployed back in the Great Depression – the last time credit siezed up this badly. It won’t work this time.

My usual response to the question, “how will the credit markets go back to normal?” is HIGHLY cyncial (so beware):
Massive, drastic and massively drastic tax reform. Most notable features of the tax reform is eliminiation of capital gains tax, privitazaion of social security, abolishment of the estate tax and limitation of mortgage interest deduction to mortgages under the national median home price (sorry CA, Fl, & NY).

A series of booms (including another housing boom) will follow this degree of tax reform as the tax burden is lifted from business and investments and summarily dumped on the shoulders of wage earners and their descendants. Everyone will rejoice and dance in the fields and quickly forget the stresses of 2007-2008. Everything will be wonderful, until that fateful day when the very first barrel of crude is sold with Euro.

[patientrenter]

Deal Hunter, how did you conclude that the most likely outcome of all this is a massive victory for hard-core Republican political goals? I don’t care about the politics, but I can see that the Republican party’s agenda is near-dead. In November, no one thinks that either the House or Senate will go Republican. The only question is whether the character of the Republican candidate can overcome the political groundswell in favor of the Democrat agenda.

The long-term outcome of this still-emerging massive bail-out will be the same as for every other temporary expansion of government in the last 100 years – a permament expansion. From now on, home prices will be determined directly by the Federal govt’s finger on the money spigots. When next prices go down after this little event, they will have lots of new spigots to open.

Patient renter in OC

[Deal Hunter]

Because when you look closely enough there is NO difference between Republicans and Democrats.

The rhetoric of privitization is hallmark Republican, but the mechanism of privitization can be easily worked into a Democratic agenda. Same goes for elimination or limitation of mortgage interest deduction. Can you see a Democratic congress or president twisting mortgage interest reform as a way to “take from the rich and give to the poor?” Yep, piece of cake.

And other anomalies like, “Wall Street loves Clinton (both Bill and Hill).” Or, why do “free-market, Reagan/Goldwater Republicans” tolerate the existence of the Federal Reserve?

Again, pardon my extreme cynicism, but I did warn you.

[Deal Hunter]

Because when you look closely enough there is NO difference between Republicans and Democrats.

The rhetoric of privitization is hallmark Republican, but the mechanism of privitization can be easily worked into a Democratic agenda. Same goes for elimination or limitation of mortgage interest deduction. Can you see a Democratic congress or president twisting mortgage interest reform as a way to “take from the rich and give to the poor?” Yep, piece of cake.

And other anomalies like, “Wall Street loves Clinton (both Bill and Hill).” Or, why do “free-market, Reagan/Goldwater Republicans” tolerate the existence of the Federal Reserve?

Again, pardon my extreme cynicism, but I did warn you.

[Deal Hunter]

Because when you look closely enough there is NO difference between Republicans and Democrats.

The rhetoric of privitization is hallmark Republican, but the mechanism of privitization can be easily worked into a Democratic agenda. Same goes for elimination or limitation of mortgage interest deduction. Can you see a Democratic congress or president twisting mortgage interest reform as a way to “take from the rich and give to the poor?” Yep, piece of cake.

And other anomalies like, “Wall Street loves Clinton (both Bill and Hill).” Or, why do “free-market, Reagan/Goldwater Republicans” tolerate the existence of the Federal Reserve?

Again, pardon my extreme cynicism, but I did warn you.

[Deal Hunter]

Because when you look closely enough there is NO difference between Republicans and Democrats.

The rhetoric of privitization is hallmark Republican, but the mechanism of privitization can be easily worked into a Democratic agenda. Same goes for elimination or limitation of mortgage interest deduction. Can you see a Democratic congress or president twisting mortgage interest reform as a way to “take from the rich and give to the poor?” Yep, piece of cake.

And other anomalies like, “Wall Street loves Clinton (both Bill and Hill).” Or, why do “free-market, Reagan/Goldwater Republicans” tolerate the existence of the Federal Reserve?

Again, pardon my extreme cynicism, but I did warn you.

[Deal Hunter]

Because when you look closely enough there is NO difference between Republicans and Democrats.

The rhetoric of privitization is hallmark Republican, but the mechanism of privitization can be easily worked into a Democratic agenda. Same goes for elimination or limitation of mortgage interest deduction. Can you see a Democratic congress or president twisting mortgage interest reform as a way to “take from the rich and give to the poor?” Yep, piece of cake.

And other anomalies like, “Wall Street loves Clinton (both Bill and Hill).” Or, why do “free-market, Reagan/Goldwater Republicans” tolerate the existence of the Federal Reserve?

Again, pardon my extreme cynicism, but I did warn you.

[patientrenter]

Deal Hunter, how did you conclude that the most likely outcome of all this is a massive victory for hard-core Republican political goals? I don’t care about the politics, but I can see that the Republican party’s agenda is near-dead. In November, no one thinks that either the House or Senate will go Republican. The only question is whether the character of the Republican candidate can overcome the political groundswell in favor of the Democrat agenda.

The long-term outcome of this still-emerging massive bail-out will be the same as for every other temporary expansion of government in the last 100 years – a permament expansion. From now on, home prices will be determined directly by the Federal govt’s finger on the money spigots. When next prices go down after this little event, they will have lots of new spigots to open.

Patient renter in OC

[patientrenter]

Deal Hunter, how did you conclude that the most likely outcome of all this is a massive victory for hard-core Republican political goals? I don’t care about the politics, but I can see that the Republican party’s agenda is near-dead. In November, no one thinks that either the House or Senate will go Republican. The only question is whether the character of the Republican candidate can overcome the political groundswell in favor of the Democrat agenda.

The long-term outcome of this still-emerging massive bail-out will be the same as for every other temporary expansion of government in the last 100 years – a permament expansion. From now on, home prices will be determined directly by the Federal govt’s finger on the money spigots. When next prices go down after this little event, they will have lots of new spigots to open.

Patient renter in OC

[patientrenter]

Deal Hunter, how did you conclude that the most likely outcome of all this is a massive victory for hard-core Republican political goals? I don’t care about the politics, but I can see that the Republican party’s agenda is near-dead. In November, no one thinks that either the House or Senate will go Republican. The only question is whether the character of the Republican candidate can overcome the political groundswell in favor of the Democrat agenda.

The long-term outcome of this still-emerging massive bail-out will be the same as for every other temporary expansion of government in the last 100 years – a permament expansion. From now on, home prices will be determined directly by the Federal govt’s finger on the money spigots. When next prices go down after this little event, they will have lots of new spigots to open.

Patient renter in OC

[patientrenter]

Deal Hunter, how did you conclude that the most likely outcome of all this is a massive victory for hard-core Republican political goals? I don’t care about the politics, but I can see that the Republican party’s agenda is near-dead. In November, no one thinks that either the House or Senate will go Republican. The only question is whether the character of the Republican candidate can overcome the political groundswell in favor of the Democrat agenda.

The long-term outcome of this still-emerging massive bail-out will be the same as for every other temporary expansion of government in the last 100 years – a permament expansion. From now on, home prices will be determined directly by the Federal govt’s finger on the money spigots. When next prices go down after this little event, they will have lots of new spigots to open.

Patient renter in OC

[SD Realtor]

Well Deal Hunter –

I have to say we may both be highly cynical but boy oh boy do I see us taking a much different direction at least in the short term. Over the next year I see about a 180 degrees opposite what you stated.

That is, I see a democratic executive and legislative branch. I see tax increases as well as substantially higher spending on social/welfare programs. Indeed I do see the resurrection of depression era programs. I see our government basically underwriting a faltering secondary market in the guise of providing affordable housing as a social benefit when in reality you and I know it is simply to keep an anemic secondary market afloat in the hopes that someday it will be healthy enough to live on its own.

I think there will indeed be programs where the government will help strapped homeowners out by underwriting undermarket financing and basically sending out IOUs to lenders.

In fact I really believe there are no shortages of wild ideas and programs that will involve the FHA, all of the GSEs and even private industry. Once upon a time banks didn’t want to have anything to do with the government. Oh how times are going to change.

My last comment is that the BofA deal with Countrywide is a perfect example of what we will see. Do you honestly believe when BofA took on Countrywide that they didn’t have a plan for the government to bail them out?

Don’t get me wrong because I think in the long run, massive privatization with low taxes is the way out and it makes so much sense. However our country is going to have to get a good dose of Obama or Hillary before anything will happen. Whether it is 4 or 8 years is really the only question.

SD Realtor

[Deal Hunter]

Yeah, I’m with you on BofA. In December, my prognosticaions were that either BofA or Citigroup would fold and the government would scoop up the carnage. As of this week, Citigroup has a worse balance sheet, so it could be them.

If Obama is elected, he may successfully stave off privitization and other drastic tax concessions. I don’t have the same opinion if Hillary is elected. I think all her talk of fighting for the mid-class and poor will all fade in the early hours and she’ll be back to rubbing the feet of her devouted corporate backers. In my view, she’s as much a Democrat as W is a Republican.

Hey, have you heard of a book called, “The Sovereign Individual” by Lord William Reese-Mogg? Freaky book, but interesting. Reese-Mogg has consulted with George W during his campaign and now with Hillary’s people. The book predicts all this that is happening now (written in 1997), and heralds the end of American style capitalistic democracy. Totally OT, but thought you might find it interesting.

[SD Realtor]

No I have not read it but will look for it…

I need to read more and blog less…hehehehhe… probably will not happen though.

Forgotten Man is a good read about how our government dealt with our depression. That was a good read as well. Funny how privatization ultimately fixes things but intervention does not.

SD Realtor

[SD Realtor]

No I have not read it but will look for it…

I need to read more and blog less…hehehehhe… probably will not happen though.

Forgotten Man is a good read about how our government dealt with our depression. That was a good read as well. Funny how privatization ultimately fixes things but intervention does not.

SD Realtor

[SD Realtor]

No I have not read it but will look for it…

I need to read more and blog less…hehehehhe… probably will not happen though.

Forgotten Man is a good read about how our government dealt with our depression. That was a good read as well. Funny how privatization ultimately fixes things but intervention does not.

SD Realtor

[SD Realtor]

No I have not read it but will look for it…

I need to read more and blog less…hehehehhe… probably will not happen though.

Forgotten Man is a good read about how our government dealt with our depression. That was a good read as well. Funny how privatization ultimately fixes things but intervention does not.

SD Realtor

[SD Realtor]

No I have not read it but will look for it…

I need to read more and blog less…hehehehhe… probably will not happen though.

Forgotten Man is a good read about how our government dealt with our depression. That was a good read as well. Funny how privatization ultimately fixes things but intervention does not.

SD Realtor

[Deal Hunter]

Yeah, I’m with you on BofA. In December, my prognosticaions were that either BofA or Citigroup would fold and the government would scoop up the carnage. As of this week, Citigroup has a worse balance sheet, so it could be them.

If Obama is elected, he may successfully stave off privitization and other drastic tax concessions. I don’t have the same opinion if Hillary is elected. I think all her talk of fighting for the mid-class and poor will all fade in the early hours and she’ll be back to rubbing the feet of her devouted corporate backers. In my view, she’s as much a Democrat as W is a Republican.

Hey, have you heard of a book called, “The Sovereign Individual” by Lord William Reese-Mogg? Freaky book, but interesting. Reese-Mogg has consulted with George W during his campaign and now with Hillary’s people. The book predicts all this that is happening now (written in 1997), and heralds the end of American style capitalistic democracy. Totally OT, but thought you might find it interesting.

[Deal Hunter]

Yeah, I’m with you on BofA. In December, my prognosticaions were that either BofA or Citigroup would fold and the government would scoop up the carnage. As of this week, Citigroup has a worse balance sheet, so it could be them.

If Obama is elected, he may successfully stave off privitization and other drastic tax concessions. I don’t have the same opinion if Hillary is elected. I think all her talk of fighting for the mid-class and poor will all fade in the early hours and she’ll be back to rubbing the feet of her devouted corporate backers. In my view, she’s as much a Democrat as W is a Republican.

Hey, have you heard of a book called, “The Sovereign Individual” by Lord William Reese-Mogg? Freaky book, but interesting. Reese-Mogg has consulted with George W during his campaign and now with Hillary’s people. The book predicts all this that is happening now (written in 1997), and heralds the end of American style capitalistic democracy. Totally OT, but thought you might find it interesting.

[Deal Hunter]

Yeah, I’m with you on BofA. In December, my prognosticaions were that either BofA or Citigroup would fold and the government would scoop up the carnage. As of this week, Citigroup has a worse balance sheet, so it could be them.

If Obama is elected, he may successfully stave off privitization and other drastic tax concessions. I don’t have the same opinion if Hillary is elected. I think all her talk of fighting for the mid-class and poor will all fade in the early hours and she’ll be back to rubbing the feet of her devouted corporate backers. In my view, she’s as much a Democrat as W is a Republican.

Hey, have you heard of a book called, “The Sovereign Individual” by Lord William Reese-Mogg? Freaky book, but interesting. Reese-Mogg has consulted with George W during his campaign and now with Hillary’s people. The book predicts all this that is happening now (written in 1997), and heralds the end of American style capitalistic democracy. Totally OT, but thought you might find it interesting.

[Deal Hunter]

Yeah, I’m with you on BofA. In December, my prognosticaions were that either BofA or Citigroup would fold and the government would scoop up the carnage. As of this week, Citigroup has a worse balance sheet, so it could be them.

If Obama is elected, he may successfully stave off privitization and other drastic tax concessions. I don’t have the same opinion if Hillary is elected. I think all her talk of fighting for the mid-class and poor will all fade in the early hours and she’ll be back to rubbing the feet of her devouted corporate backers. In my view, she’s as much a Democrat as W is a Republican.

Hey, have you heard of a book called, “The Sovereign Individual” by Lord William Reese-Mogg? Freaky book, but interesting. Reese-Mogg has consulted with George W during his campaign and now with Hillary’s people. The book predicts all this that is happening now (written in 1997), and heralds the end of American style capitalistic democracy. Totally OT, but thought you might find it interesting.

[SD Realtor]

Well Deal Hunter –

I have to say we may both be highly cynical but boy oh boy do I see us taking a much different direction at least in the short term. Over the next year I see about a 180 degrees opposite what you stated.

That is, I see a democratic executive and legislative branch. I see tax increases as well as substantially higher spending on social/welfare programs. Indeed I do see the resurrection of depression era programs. I see our government basically underwriting a faltering secondary market in the guise of providing affordable housing as a social benefit when in reality you and I know it is simply to keep an anemic secondary market afloat in the hopes that someday it will be healthy enough to live on its own.

I think there will indeed be programs where the government will help strapped homeowners out by underwriting undermarket financing and basically sending out IOUs to lenders.

In fact I really believe there are no shortages of wild ideas and programs that will involve the FHA, all of the GSEs and even private industry. Once upon a time banks didn’t want to have anything to do with the government. Oh how times are going to change.

My last comment is that the BofA deal with Countrywide is a perfect example of what we will see. Do you honestly believe when BofA took on Countrywide that they didn’t have a plan for the government to bail them out?

Don’t get me wrong because I think in the long run, massive privatization with low taxes is the way out and it makes so much sense. However our country is going to have to get a good dose of Obama or Hillary before anything will happen. Whether it is 4 or 8 years is really the only question.

SD Realtor

[SD Realtor]

Well Deal Hunter –

I have to say we may both be highly cynical but boy oh boy do I see us taking a much different direction at least in the short term. Over the next year I see about a 180 degrees opposite what you stated.

That is, I see a democratic executive and legislative branch. I see tax increases as well as substantially higher spending on social/welfare programs. Indeed I do see the resurrection of depression era programs. I see our government basically underwriting a faltering secondary market in the guise of providing affordable housing as a social benefit when in reality you and I know it is simply to keep an anemic secondary market afloat in the hopes that someday it will be healthy enough to live on its own.

I think there will indeed be programs where the government will help strapped homeowners out by underwriting undermarket financing and basically sending out IOUs to lenders.

In fact I really believe there are no shortages of wild ideas and programs that will involve the FHA, all of the GSEs and even private industry. Once upon a time banks didn’t want to have anything to do with the government. Oh how times are going to change.

My last comment is that the BofA deal with Countrywide is a perfect example of what we will see. Do you honestly believe when BofA took on Countrywide that they didn’t have a plan for the government to bail them out?

Don’t get me wrong because I think in the long run, massive privatization with low taxes is the way out and it makes so much sense. However our country is going to have to get a good dose of Obama or Hillary before anything will happen. Whether it is 4 or 8 years is really the only question.

SD Realtor

[SD Realtor]

Well Deal Hunter –

I have to say we may both be highly cynical but boy oh boy do I see us taking a much different direction at least in the short term. Over the next year I see about a 180 degrees opposite what you stated.

That is, I see a democratic executive and legislative branch. I see tax increases as well as substantially higher spending on social/welfare programs. Indeed I do see the resurrection of depression era programs. I see our government basically underwriting a faltering secondary market in the guise of providing affordable housing as a social benefit when in reality you and I know it is simply to keep an anemic secondary market afloat in the hopes that someday it will be healthy enough to live on its own.

I think there will indeed be programs where the government will help strapped homeowners out by underwriting undermarket financing and basically sending out IOUs to lenders.

In fact I really believe there are no shortages of wild ideas and programs that will involve the FHA, all of the GSEs and even private industry. Once upon a time banks didn’t want to have anything to do with the government. Oh how times are going to change.

My last comment is that the BofA deal with Countrywide is a perfect example of what we will see. Do you honestly believe when BofA took on Countrywide that they didn’t have a plan for the government to bail them out?

Don’t get me wrong because I think in the long run, massive privatization with low taxes is the way out and it makes so much sense. However our country is going to have to get a good dose of Obama or Hillary before anything will happen. Whether it is 4 or 8 years is really the only question.

SD Realtor

[SD Realtor]

Well Deal Hunter –

I have to say we may both be highly cynical but boy oh boy do I see us taking a much different direction at least in the short term. Over the next year I see about a 180 degrees opposite what you stated.

That is, I see a democratic executive and legislative branch. I see tax increases as well as substantially higher spending on social/welfare programs. Indeed I do see the resurrection of depression era programs. I see our government basically underwriting a faltering secondary market in the guise of providing affordable housing as a social benefit when in reality you and I know it is simply to keep an anemic secondary market afloat in the hopes that someday it will be healthy enough to live on its own.

I think there will indeed be programs where the government will help strapped homeowners out by underwriting undermarket financing and basically sending out IOUs to lenders.

In fact I really believe there are no shortages of wild ideas and programs that will involve the FHA, all of the GSEs and even private industry. Once upon a time banks didn’t want to have anything to do with the government. Oh how times are going to change.

My last comment is that the BofA deal with Countrywide is a perfect example of what we will see. Do you honestly believe when BofA took on Countrywide that they didn’t have a plan for the government to bail them out?

Don’t get me wrong because I think in the long run, massive privatization with low taxes is the way out and it makes so much sense. However our country is going to have to get a good dose of Obama or Hillary before anything will happen. Whether it is 4 or 8 years is really the only question.

SD Realtor

[Deal Hunter]

The government is trying to send out Fannie and Freddie in the same way they were deployed back in the Great Depression – the last time credit siezed up this badly. It won’t work this time.

My usual response to the question, “how will the credit markets go back to normal?” is HIGHLY cyncial (so beware):
Massive, drastic and massively drastic tax reform. Most notable features of the tax reform is eliminiation of capital gains tax, privitazaion of social security, abolishment of the estate tax and limitation of mortgage interest deduction to mortgages under the national median home price (sorry CA, Fl, & NY).

A series of booms (including another housing boom) will follow this degree of tax reform as the tax burden is lifted from business and investments and summarily dumped on the shoulders of wage earners and their descendants. Everyone will rejoice and dance in the fields and quickly forget the stresses of 2007-2008. Everything will be wonderful, until that fateful day when the very first barrel of crude is sold with Euro.

[Deal Hunter]

The government is trying to send out Fannie and Freddie in the same way they were deployed back in the Great Depression – the last time credit siezed up this badly. It won’t work this time.

My usual response to the question, “how will the credit markets go back to normal?” is HIGHLY cyncial (so beware):
Massive, drastic and massively drastic tax reform. Most notable features of the tax reform is eliminiation of capital gains tax, privitazaion of social security, abolishment of the estate tax and limitation of mortgage interest deduction to mortgages under the national median home price (sorry CA, Fl, & NY).

A series of booms (including another housing boom) will follow this degree of tax reform as the tax burden is lifted from business and investments and summarily dumped on the shoulders of wage earners and their descendants. Everyone will rejoice and dance in the fields and quickly forget the stresses of 2007-2008. Everything will be wonderful, until that fateful day when the very first barrel of crude is sold with Euro.

[Deal Hunter]

The government is trying to send out Fannie and Freddie in the same way they were deployed back in the Great Depression – the last time credit siezed up this badly. It won’t work this time.

My usual response to the question, “how will the credit markets go back to normal?” is HIGHLY cyncial (so beware):
Massive, drastic and massively drastic tax reform. Most notable features of the tax reform is eliminiation of capital gains tax, privitazaion of social security, abolishment of the estate tax and limitation of mortgage interest deduction to mortgages under the national median home price (sorry CA, Fl, & NY).

A series of booms (including another housing boom) will follow this degree of tax reform as the tax burden is lifted from business and investments and summarily dumped on the shoulders of wage earners and their descendants. Everyone will rejoice and dance in the fields and quickly forget the stresses of 2007-2008. Everything will be wonderful, until that fateful day when the very first barrel of crude is sold with Euro.

[Deal Hunter]

The government is trying to send out Fannie and Freddie in the same way they were deployed back in the Great Depression – the last time credit siezed up this badly. It won’t work this time.

My usual response to the question, “how will the credit markets go back to normal?” is HIGHLY cyncial (so beware):
Massive, drastic and massively drastic tax reform. Most notable features of the tax reform is eliminiation of capital gains tax, privitazaion of social security, abolishment of the estate tax and limitation of mortgage interest deduction to mortgages under the national median home price (sorry CA, Fl, & NY).

A series of booms (including another housing boom) will follow this degree of tax reform as the tax burden is lifted from business and investments and summarily dumped on the shoulders of wage earners and their descendants. Everyone will rejoice and dance in the fields and quickly forget the stresses of 2007-2008. Everything will be wonderful, until that fateful day when the very first barrel of crude is sold with Euro.

[SD Realtor]

Yes I agree they do have to raise the capital to buy them and I don’t know how they will get it. However not having a restriction is a first step wouldn’t you agree?

Not that it matters in the long run. Wouldn’t you say that if the secondary market locked up somehow, that our favorite federal government would step in? Don’t they already take junk debt as collateral at the discount window? I heard the ECB has already taken on 90B worth of it as well….

If you are as jaded as I am I think you would agree that nothing happens in one fell swoop. In the long run one can look back and see several steps that occurred and it all pieces together quite nicely. Down the road when things get worse there will be other more desperate measures that the government will need to resort to. Larger plans get implemented in piecemeal manners. To me this is one of them.

I guess we will see what happens yeah?

SD Realtor

[SD Realtor]

Yes I agree they do have to raise the capital to buy them and I don’t know how they will get it. However not having a restriction is a first step wouldn’t you agree?

Not that it matters in the long run. Wouldn’t you say that if the secondary market locked up somehow, that our favorite federal government would step in? Don’t they already take junk debt as collateral at the discount window? I heard the ECB has already taken on 90B worth of it as well….

If you are as jaded as I am I think you would agree that nothing happens in one fell swoop. In the long run one can look back and see several steps that occurred and it all pieces together quite nicely. Down the road when things get worse there will be other more desperate measures that the government will need to resort to. Larger plans get implemented in piecemeal manners. To me this is one of them.

I guess we will see what happens yeah?

SD Realtor

[SD Realtor]

Yes I agree they do have to raise the capital to buy them and I don’t know how they will get it. However not having a restriction is a first step wouldn’t you agree?

Not that it matters in the long run. Wouldn’t you say that if the secondary market locked up somehow, that our favorite federal government would step in? Don’t they already take junk debt as collateral at the discount window? I heard the ECB has already taken on 90B worth of it as well….

If you are as jaded as I am I think you would agree that nothing happens in one fell swoop. In the long run one can look back and see several steps that occurred and it all pieces together quite nicely. Down the road when things get worse there will be other more desperate measures that the government will need to resort to. Larger plans get implemented in piecemeal manners. To me this is one of them.

I guess we will see what happens yeah?

SD Realtor

[SD Realtor]

Yes I agree they do have to raise the capital to buy them and I don’t know how they will get it. However not having a restriction is a first step wouldn’t you agree?

Not that it matters in the long run. Wouldn’t you say that if the secondary market locked up somehow, that our favorite federal government would step in? Don’t they already take junk debt as collateral at the discount window? I heard the ECB has already taken on 90B worth of it as well….

If you are as jaded as I am I think you would agree that nothing happens in one fell swoop. In the long run one can look back and see several steps that occurred and it all pieces together quite nicely. Down the road when things get worse there will be other more desperate measures that the government will need to resort to. Larger plans get implemented in piecemeal manners. To me this is one of them.

I guess we will see what happens yeah?

SD Realtor

[Deal Hunter]

There’s a big difference between Fannie and Freddie “buying” mortgages and “insuring” them.

They still need to “buy” the mortgages, which means they still need to have capital or credit to do so. Back to the same problem everyone else has. Just because caps were lifted doesn’t mean money will now be thrown at them to buy up all those “iffy” mortgages for “iffy” people.

So with limited capital, they will need to stick to insuring mortgages instead of buying them outright – to make the limited capital go farther. Now, to insure mortgages, they have to asses risk – which means insuring the better loans under stricter standards.

Er, seems we’re back where we started.

[Deal Hunter]

There’s a big difference between Fannie and Freddie “buying” mortgages and “insuring” them.

They still need to “buy” the mortgages, which means they still need to have capital or credit to do so. Back to the same problem everyone else has. Just because caps were lifted doesn’t mean money will now be thrown at them to buy up all those “iffy” mortgages for “iffy” people.

So with limited capital, they will need to stick to insuring mortgages instead of buying them outright – to make the limited capital go farther. Now, to insure mortgages, they have to asses risk – which means insuring the better loans under stricter standards.

Er, seems we’re back where we started.

[Deal Hunter]

There’s a big difference between Fannie and Freddie “buying” mortgages and “insuring” them.

They still need to “buy” the mortgages, which means they still need to have capital or credit to do so. Back to the same problem everyone else has. Just because caps were lifted doesn’t mean money will now be thrown at them to buy up all those “iffy” mortgages for “iffy” people.

So with limited capital, they will need to stick to insuring mortgages instead of buying them outright – to make the limited capital go farther. Now, to insure mortgages, they have to asses risk – which means insuring the better loans under stricter standards.

Er, seems we’re back where we started.

[Deal Hunter]

There’s a big difference between Fannie and Freddie “buying” mortgages and “insuring” them.

They still need to “buy” the mortgages, which means they still need to have capital or credit to do so. Back to the same problem everyone else has. Just because caps were lifted doesn’t mean money will now be thrown at them to buy up all those “iffy” mortgages for “iffy” people.

So with limited capital, they will need to stick to insuring mortgages instead of buying them outright – to make the limited capital go farther. Now, to insure mortgages, they have to asses risk – which means insuring the better loans under stricter standards.

Er, seems we’re back where we started.

[Author]

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