Investment

» Normxxx - Credit CrisisOver? A Derivatives Chernobyl?

Well, the current crisis, anyways.

Fed's Rescue Halted A Derivatives Chernobyl

http://normxxx.blogspot.com/2008/03/deri...

-- posted by Normxxx

» permabear - Goldman sees $1.2 trillion credit loss

-- posted by permabear

» permabear - The trillion-dollar mortgage time bomb

The trillion-dollar mortgage time bomb

Risks are rising that Fannie Mae and Freddie Mac may need a government bailout that could cost far more than previous rescues.

NEW YORK (CNNMoney.com) -- Among the nightmares lurking around the corner for the already battered housing and credit markets would be a meltdown at mortgage financing giants Fannie Mae and Freddie Mac.

Although few are predicting an imminent need for a bailout just yet, credit rating agency Standard & Poor's recently placed an estimated price tag on this worst case scenario -- $420 billion to $1.1 trillion of taxpayer's money.

This dwarfs how much it cost to help banks during the savings and loan crisis of the late 1980's and early 1990's. That cost taxpayers about $250 billion in today's dollars.

S&P added that saving Fannie (FNM) and Freddie (FRE, Fortune 500) might cost so much that the federal government's AAA credit rating, the top possible rating, might even be at risk. If that was lost, then all federal government borrowing would become more expensive.

-- posted by permabear

» Jas_Jain - Re: The trillion-dollar mortgage time bomb

--
Perma,

Is this inflationary or deflationary?

And what would be the distance between Communism and US Capitalism?

BTW, I am long puts on FRE and FNM. These Scams are toast no matter what the American People's Chosen Crooks do. Aren't Americans proud the method of choosing their Crooks? I personally prefer Chinese Communism as a better method of picking Crooks to run the economy.

Jas

-- posted by Jas_Jain

» permabear - Re: The trillion-dollar mortgage time bomb

Jas,

We'll just have to agree to disagree on the inflation/deflation debate and let events play out. I think that a bailout of Freddie and Fannie is a very high likelihood event. I think it would be highly inflationary if the government had to bail out Freddie and Fannie to the tune of a Trillion dollars. The Fed will print, print, print to keep the game going and the debts paid. The dollar will collapse. Treasury bond prices will collapse and rates will explode. (I'm still short the 30 year bond- winning trade so far). And inflation will accelerate going forward.

-- posted by permabear

» permabear - As loans dry up, so will economy- Markman

-- posted by permabear

» permabear - Why this crisis is still far from finished

Why this crisis is still far from finished
By Mohamed El-Erian

Published: April 24 2008 19:24 | Last updated: April 24 2008 19:24

During the past few weeks we have seen a growing number of market participants predict an end to the dislocations that erupted last summer and claimed victims throughout the financial system and beyond. While their predictions are understandable, they are premature. The dynamics driving the disruptions are morphing and may again move ahead of both the market and policy responses.

continued...

-- posted by permabear

» permabear - George Soros interview on the financial crisis

-- posted by permabear

» Normxxx - Credit Crisis Over?

By Jon Markman

http://normxxx.blogspot.com/2008/05/cred...

-- posted by Normxxx

» permabear - Credit Crisis Over?

None of us on these boards really understands these complex issues and problems to the degree needed to make a good analysis of how things stand. So in order to make a good assessment, the best thing to do is go to sources that really understand things to the nth degree. Robert Shiller is the man on Housing. Bill Gross on the bond market. Jim Rogers on commodities. And when it comes to derivatives, Satyajit Das, interviewed for Norm's article, is the man. He wrote the textbook on derivatives. Whenever I hear his name mentioned, I want to hear what he has to say about the status of the derivative problem. Well if you read Norm's article you can see that things are still not good in derivative land. And for all those soothsayers out there who say the worst is over for the credit crisis, I say read the article for yourself and what you'll find is that we have a long way to go.

-- posted by permabear