US Gov takes over Fanny & Freddy
The two largest mortgage finance companies in the US, Fannie Mae and Freddie Mac have been taken over by the US government in an effort to become the most expensive financial bailout in US history. ..no sorry, that’s not the underlying goal.. They’ve been taken over because they were ‘too big to fail’ – their collapse would have caused turmoil in financial markets in the US and around the world.
No final word on how much this bail-out will cost American tax payers, but the rough estimate of $25 billion has been called ‘too optomistic’.
The plan also commits the government to provide as much as $100 billion to each company to backstop any shortfalls in capital. It enables the Treasury to ultimately buy the companies outright at little cost. It bans them from lobbying the government, putting an end to their ability to use their political machine on Capitol Hill.
It also eliminates dividend payments to current shareholders while protecting the principal and interest payments on the debt, now held by foreign central banks, financial institutions, pensions funds and others.
The Treasury will force both companies to shrink their portfolios over the long term; they now hold or guarantee about half of the country’s mortgages. In addition, the government plans to buy significant amounts of their mortgage-backed securities on the open market, beginning with the purchase of $5 billion worth this month. This step, never before undertaken by the government, could begin to restore some confidence in the credit markets and lead to lower interest rates for home mortgages.
In Canada the CMHC has taken steps to try to minimize speculation and the risk of bubble markets by eliminating the insurance of zero down and fourty year mortgages introduced a couple of years ago. Have these barndoors been closed too late? Will a collapsing housing market in Canada bring a taxpayer bailout of the CMHC?
September 10th, 2008 at 7:24 pm
…American men have a five-year survival rate of 66 percent — compared to only 47 percent for European men.
Have to be careful looking at things in isolation. While UK has lower cancer survival rates than the US, the US has a higher cancer death rate than the UK. Basically, your odds of surviving cancer *should you get it* are (arguably) higher in the US – but the odds of actually getting cancer are also quite a bit higher in the US. The net effect is that Americans are more likely to die from cancer than residents of virtually any other G7 country.
Further, cancer death rates inside the US have tremendous variation following a fairly distinct geographical pattern. Basically, there are large swaths of the US where your odds of dying from cancer are 50% higher than in other regions.
September 9th, 2008 at 6:34 pm
US Is "More Communist than China": Jim Rogers
"This is madness, this is insanity, they have more than doubled the American national debt in one weekend for a bunch of crooks and incompetents. I'm not quite sure why I or anybody else should be paying for this," Rogers told "Squawk Box Europe."
http://www.cnbc.com/id/26603489
September 9th, 2008 at 3:52 am
"Important to consider: The UBC report is specific to detached homes, not condos or townhouses."
Prof. Sommerville et al are claiming roughly 2-3% real growth for detached properties. That is significantly above the population growth rate. Real growth for detached homes cannot exceed real income growth and population growth because, despite rumours to the contrary, there is still vacant land on which to build.
Perhaps, instead of being lost in the morass of underutilised asset valuations, they should have started with determining fair valuations of fully densified condos.
September 8th, 2008 at 11:09 pm
Important to consider: The UBC report is specific to detached homes, not condos or townhouses. That said, the 11% decline seems low. Based on my own living situation calculated using Mohican's fair value formula, the place that I rent needs to fall by 40% before it's fairly priced.
September 8th, 2008 at 10:08 pm
mk "Tsur is smoking crack." No I read on another blog that he's into cream cheese and bagels, in fact I think I saw him behind a dumpster snorting some cream he'd just bought from Cameron!