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Wait A Second... Haven't I Seen This Film Before?
Dealbreaker —
... $700 billion Troubled Asset Relief Program.
[...]
``For now, they're under conservatorship and they have to be used to keep the flow of capital going to the housing market,'' former Treasury Secretary Lawrence Summers said in an interview on Bloomberg Television's ``Conversations with Judy Woodruff.'' ``They're important to maintaining the flow of government finance'' and need to be used actively, he said.
I mean, they are kidding, right?
Fannie, Freddie to Buy $40 Billion a Month of Troubled Assets [Bloomberg]
Unlearning the lessons in 30 days or your money back guaranteed
Mises Economics Blog —
Four weeks later Fannie and Freddie have been ordered to acquire $40 billion a month in "troubled assets."
I recently ran into a moving bus and have forgotten the reason why the two GSEs were originally "rescued."
Was it because they bought a lot of tulips? Was it because they speculated in the Mississippi river basin? Did they invest heavily in beanie babies?
Srsly, what exactly are they drinking in DC?
Via Robert Wenzel.
See also: The Bailout Reader
The Recession Reader
Paulson Sends Fannie and Freddie to the Rescue
The Baseline Scenario —
Many readers will see that as an ironic title, but I don’t mean it that way. Federal regulators have directed Fannie Mae and Freddie Mac to buy $40 billion per month in troubled mortgage-backed securities - the same ones targeted by the $700 billion bailout bill. As with the Paulson plan, price is still a question mark - too low and it does no good, too high and it will create losses for Fannie and Freddie - but we see this as a positive step. Fannie and Freddie were effectively nationalized, so we can think of them as part of the Treasury department at this point. One major question about the Paulson plan is whether $700 billion is enough to have a major ...
Fannie, Freddie Commit to Waste $40 Billion a Month Taxpayer Money
Mish's Global Economic Trend Analysis —
Not content to waste $700 billion of taxpayer money, Fannie and Freddie are going to waste another $40 Billion a month buying troubled assets. Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 billion a month of underperforming mortgage bonds as the Bush administration expands its options to buy troubled financial assets and resuscitate the U.S. economy, according to three people briefed about the plan. Fannie and Freddie began notifying bond traders last week that each company needs to buy $20 billion a month in mostly subprime, Alt-A and non-performing prime mortgage securities, according to the people, who ...
Government Intervention Problematic Despite Rally (Tradecraft)
SmartMoney.com —
The recent carnage in the financial markets was capped off with an 18% plunge in the Dow Jones Industrial Average last week, the worst five-day stretch in history. The stock market is now down 25% in October and hasn't risen for a single day this month. Corporate bonds, loans and commodities have also tumbled. The collapse has come even amid historic measures taken by the federal government to attempt to restore investor confidence. Yet as I've repeatedly pointed out, the more the government has done to " fix ...
Gold Report - Monday, October 13
GoldSeek.com —
-- Posted Monday, 13 October 2008 | Digg This Article Digg It! | Source: GoldSeek.com Oct 13 a.m. ( USAGOLD ) -- The G7 met over the weekend with the hope of re-instilling confidence in global financial markets. The communiqué was the standard "we're prepared to do whatever is necessary" message. Of course no details were provided, but what is abundantly clear at this point is that they're prepared to throw as much money at the crisis as they possibly can. The limits on dollar swap lines have been completely abandoned. According to this morning's press release, "swap lines between the Federal Reserve and the BoE, the ECB, and the SNB will be ...
What Price Financial Stability?
Rolfe Winkler —
Brad Setser recently commented: “All major financial institutions in the G-10 ultimately now have access — through their national central bank — to the Fed.” To avoid another Lehman style bankruptcy, the Fed has basically guaranteed, well, the worldwide banking system. The problem is that an “unlimited guarantee requires unlimited access to financing.” No one, not even the Fed, has unlimited access to financing. The Fed only has unlimited access to a printing press. If the dollar loses all its value due to hyperinflation, it won’t be worth much to anyone as insurance against loss.
And ...
