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YEEEEEEEEEEEEEEEEE-HAW!
Jul. 14th, 2008 08:42 amEverything is catching, yes, everything is catching on fiiiiiiiiiire!
Okay so this bailout - this blank cheque - that the Fed wants to back Fannie Mae and Freddy Mac is worth between US$500B and US$1.6T, and probably closer to the top end, but who knows for sure? Nobody! Certainly not Congress, which probably makes it more, not less, likely that they'll sign that cheque and send it off right away.
This is happening because China and a bunch of other ImportantPeople Countries Entities own Fannie Mae and Freddie Mac bonds (worth US$12T or so, I think) in truly large quantities. When the bond and forex markets figure out exactly how big a hook this is for US debt - and it's not gonna take very long, the overnighters figured it out already, it's the US equity people who are without clue as yet - the shitsplosion is going to be truly epic. Today, tho', people are piling into bonds.
Oh, meanwhile, all the mortgage rules changed back to old school this morning, so loans just got a lot harder to get (good) all at once (not as good, but what can you do?) and omg late (barn doors, horses got out, temporal inversion, all that) and residential property just gotmarked to reality a lot cheaper as of about an hour ago, particularly in whatever was left of the boom states. Here's the story! @wheeeeeeeeeee! To quote one of the regulars on one of the financial forums I read, "Nothing screams 'solid fundamentals' like emergency bailout proposals. My confidence is maximized."
Fed bans risky mortgage practices
By Ruth Mantell
Last update: 10:57 a.m. EDT July 14, 2008
Marketwatch
WASHINGTON (MarketWatch) -- As the economy continues to suffer from the housing downturn and fallout from risky mortgages, the Federal Reserve Board on Monday voted unanimously to bar lenders from making higher-priced mortgages without regard to a consumers' ability to repay. Regarding higher-priced loans, the Fed's new rules also prohibit lenders from: relying on income or assets that it does not verify to determine repayment ability; imposing prepayment penalties if the payment can change during the initial four years; and making a loan without establishing an escrow account for property taxes and homeowners' insurance for first-lien loans.
Okay so this bailout - this blank cheque - that the Fed wants to back Fannie Mae and Freddy Mac is worth between US$500B and US$1.6T, and probably closer to the top end, but who knows for sure? Nobody! Certainly not Congress, which probably makes it more, not less, likely that they'll sign that cheque and send it off right away.
This is happening because China and a bunch of other Important
Oh, meanwhile, all the mortgage rules changed back to old school this morning, so loans just got a lot harder to get (good) all at once (not as good, but what can you do?) and omg late (barn doors, horses got out, temporal inversion, all that) and residential property just got
Fed bans risky mortgage practices
By Ruth Mantell
Last update: 10:57 a.m. EDT July 14, 2008
Marketwatch
WASHINGTON (MarketWatch) -- As the economy continues to suffer from the housing downturn and fallout from risky mortgages, the Federal Reserve Board on Monday voted unanimously to bar lenders from making higher-priced mortgages without regard to a consumers' ability to repay. Regarding higher-priced loans, the Fed's new rules also prohibit lenders from: relying on income or assets that it does not verify to determine repayment ability; imposing prepayment penalties if the payment can change during the initial four years; and making a loan without establishing an escrow account for property taxes and homeowners' insurance for first-lien loans.
