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Banned
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All aboard!!! The Fed, the treasury secretary, former GS chairman Hank Paulson, the congress and the rest of the Bush administration are revealing their hand.... We are fucked....but the dollar is intended to be reduced to "midget" size. They are actually mortally afriad of deflationary depression, and it will come as the next stage, after this disasterous attempt to inflate:
Quote:
http://boards.prudentbear.com/bbs_re...snsa=A#M650189
It is now logical to assume Weimarization will be the way chosen to fight the credit collapse, with the announcement that the capital requirements of Fannie and Freddie will be lowered.
So, Fed isn't the only entity being enlisted to fight the fires of deflation. Fannie and Freddie will be increasing both their portfolios and their MBS guarantees, as their capitalization requirements will be lowered by OFHEO.
It is notable that hese two entities already own or guarantee $4.5 trillion in mortgages/MBS, and do so on tiny slivers of capital.
Also not to be forgotten is the "Other GSE", the FHLB banks, which guarantees another $1 trillion or so in mortgage debt, and is expected to grow this year as well.
The Fed, of course, (along with other central banks) will be buying the MBS paper that Freddie, Fannie and FHLB create.
Therefore, the only logical conclusion to which one can arrive is Weimarization.
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Quote:
http://www.freddiemac.com/news/archi...nitiative.html
For Immediate Release
March 19, 2008
Contact: corprel@freddiemac.com
or (703) 903-3933
OFHEO, FANNIE MAE AND FREDDIE MAC ANNOUNCE INITIATIVE TO INCREASE MORTGAGE MARKET LIQUIDITY
McLean, VA – OFHEO, Fannie Mae and Freddie Mac today announced a major initiative to increase liquidity in support of the U.S. mortgage market. The initiative is expected to provide up to $200 billion of immediate liquidity to the mortgage-backed securities market.
OFHEO estimates that Fannie Mae's and Freddie Mac's existing capabilities, combined with this new initiative and the release of the portfolio caps announced in February, should allow the GSEs to purchase or guarantee about $2 trillion in mortgages this year. This capacity will permit them to do more in the jumbo temporary conforming market, subprime refinancing and loan modifications areas.
To support growth and further restore market liquidity, OFHEO announced that it would begin to permit a significant portion of the GSEs' 30 percent OFHEO-directed capital surplus to be invested in mortgages and MBS. As a key part of this initiative, both companies announced that they will begin the process to raise significant capital. Both companies also said they would maintain overall capital levels well in excess of requirements while the mortgage market recovers in order to ensure market confidence and fulfill their public mission.
OFHEO announced that Fannie Mae is in full compliance with its Consent Order and that Freddie Mac has one remaining requirement relating to the separation of the Chairman and CEO positions. OFHEO expects to lift these Consent Orders in the near term. In view of this progress, the public purpose of the two companies, and ongoing market conditions, OFHEO concludes that it is appropriate to reduce immediately the existing 30 percent OFHEO-directed capital requirement to a 20 percent level, and will consider further reductions in the future....
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This is not a "liquidity" problem, it is a credit worthiness and a price problem.
<h3>Until the average person, the one with average income and average outstanding debt and net worth can afford to pay the price asked for an average priced home</h3>, putting a down payment of 20 percent into the purchase and obtaining a mortgage with total monthly payments, including taxes and insurance (MTI), or no more than 36 percent of monthly income, home prices must continue to fall.
If "the government" absorbs most of the mortgages already outstanding, it will take the hit for the defaults of the mortgagees, as home prices decline to the level of affordability I just described. It is this simple, and obvious.
The tax payer will owe the addtional debt that is the consequence of millions of people not able or refusing to make their mortgage payments on the mortgage loans already made, and now "absorbed" by the government.
The government will print new money, out of thin air, to monetize this new borrowing, as these "purchased" mortgage loans held by Fannnie and Freddie become worthless. By extension, the dollar will (it's already on that road) <h3>become worthless!</h3>
Quote:
http://www.pbs.org/wgbh/commandinghe...inflation.html
The German Hyperinflation, 1923
Excerpt from Paper Money by "Adam Smith," (George J.W. Goodman), pp. 57-62.
......More than inflation, the Germans feared unemployment. In 1919 Communists had tried to take over, and severe unemployment might give the Communists another chance. The great German industrial combines -- Krupp, Thyssen, Farben, Stinnes -- condoned the inflation and survived it well. A cheaper Mark, they reasoned, would make German goods cheap and easy to export, and they needed the export earnings to buy raw materials abroad. Inflation kept everyone working.
So the printing presses ran, and once they began to run, they were hard to stop. The price increases began to be dizzying. Menus in cafes could not be revised quickly enough. A student at Freiburg University ordered a cup of coffee at a cafe. The price on the menu was 5,000 Marks. He had two cups. When the bill came, it was for 14,000 Marks. "If you want to save money," he was told, "and you want two cups of coffee, you should order them both at the same time."
The presses of the Reichsbank could not keep up though they ran through the night. Individual cities and states began to issue their own money. Dr. Havenstein, the president of the Reichsbank, did not get his new suit. A factory worker described payday, which was every day at 11:00 a.m.: "At 11:00 in the morning a siren sounded, and everybody gathered in the factory forecourt, where a five-ton lorry was drawn up loaded brimful with paper money. The chief cashier and his assistants climbed up on top. They read out names and just threw out bundles of notes. As soon as you had caught one you made a dash for the nearest shop and bought just anything that was going." Teachers, paid at 10:00 a.m., brought their money to the playground, where relatives took the bundles and hurried off with them. Banks closed at 11:00 a.m.; the harried clerks went on strike.
The flight from currency that had begun with the buying of diamonds, gold, country houses, and antiques now extended to minor and almost useless items -- bric-a-brac, soap, hairpins. The law-abiding country crumbled into petty thievery. Copper pipes and brass armatures weren't safe. Gasoline was siphoned from cars. People bought things they didn't need and used them to barter -- a pair of shoes for a shirt, some crockery for coffee. Berlin had a "witches' Sabbath" atmosphere. Prostitutes of both sexes roamed the streets. Cocaine was the fashionable drug. In the cabarets the newly rich and their foreign friends could dance and spend money. Other reports noted that not all the young people had a bad time. Their parents had taught them to work and save, and that was clearly wrong, so they could spend money, enjoy themselves, and flout the old.
The publisher Leopold Ullstein wrote: "People just didn't understand what was happening. All the economic theory they had been taught didn't provide for the phenomenon. There was a feeling of utter dependence on anonymous powers -- almost as a primitive people believed in magic -- that somebody must be in the know, and that this small group of 'somebodies' must be a conspiracy."
<h3>When the 1,000-billion Mark note came out, few bothered to collect the change when they spent it.</h3> By November 1923, with one dollar equal to one trillion Marks, the breakdown was complete. The currency had lost meaning........
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Last edited by host; 03-19-2008 at 06:21 AM..
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