Peter Orszag, CBO director, said: “It is the CBO view that Fannie Mae and Freddie Mac should be directly incorporated into the federal budget.” The move blows the whistle on the US administration’s efforts to keep Fannie and Freddie off the books
It appears they are warning of a government default and that the costs of insuring against one are starting to rise.
I have a hard time believing that would cause a default in comparison to the Iraq spending.
We spent political capital to save Boeing this spring from the Tanker Deal vs EADS. Patty Murray went to bat for Boeing and its workers. Now they stab us in the back with outsourcing.
The objective of providing affordable housing isn't consistent with maximizing returns for shareholders, Ferlauto said. At the same time, risks the companies took to boost profits don't align with the companies' mission of serving the public
They are now claiming the CEOs were very talented and that it's all due to a flawed business model.
I could not find the reference, else I would have written it up in the Intapopulist that some middle east entity was trying to buy part of a defense contractor. I heard a little blurb on CNN and it wasn't even in the transcript.
But, beyond the foreign investment aspect, how is this going to stabilize the US housing market as they claim?
I mean are they just going to let more foreclosures go on...that's what is implied and the US taxpayer absorb the debt or ?
Is it fair to say without sounding CT that our government has now nationalized corporations so corporations are the government (officially)?
A recurring theme in these discussions of Fannie Mae and Freddie Mac seems to be that this collapse is going to push Chinese investment offshore.
Is that the case? Or will the Chinese decide to end portfolio investment in favor of direct investment so that they can go an asset stripping rampage if things turn to shit?
I keep thinking that both Ford and GM are looking awfully damn cheap right now, with Ford having a market cap around $10 billion and GM coming in a paltry $6.16 billion.
If one of these Chinese SWFs were to swoop in, and and make a move, they could go an asset stripping rampage taking the capital assets of the corporation back to China, and screwing over the American workers. And the most valuable assets are arguably the company's intellectual property (i.e. the brand names and the product designs)
China has an auto aftermarket industry, but the value added by that activity is minor as compared to what happens when you can put all those disparate parts together into the finished product.
But of course, in America we are an ownership society, so these companies are owned by individual American citizens.
Or not?
If you follow the links above on GM and Ford, you'll see that GM is 95% institutionally owned, and Ford 74% so.
While some of this is probably pension funds, how much of that is independently managed by the pension fund? And how much has been turned over to an investment firm that's going to have the power to broker a deal if they can get top dollar for their shares?
Now that we've broken the ice with the nationalization of these two financial firms, I think that it's time that GM, Ford, and Chrysler be brought into a type of conservatorship that sees them nationalized, reformed, and then partially privatized with the government retaining a minority share, and negotiating the sale of a second share to the UAW's VEBA that would give the two a controlling stake so that the industry can be kept in American hands.
Contracts on U.S. government debt increased 3.5 basis points to a record 18 basis points, up from 6 basis points in April, according to CMA Datavision prices for five-year credit-default swaps at 4 p.m. in London. Credit-default swaps on German government bonds cost 8 basis points and Japanese bonds 16.5 basis points.
"The bailout of Freddie Mac and Fannie Mae is weakening the balance sheet of the U.S. and that is causing a deterioration of credit worthiness," said Mehernosh Engineer, a credit strategist at BNP Paribas SA in London. "The market is anticipating there might be more bailouts."
Credit-default swaps, contracts conceived to protect bondholders against default, pay the buyer face value in exchange for the underlying securities or the cash equivalent should a country or company fail to adhere to its debt agreements. A rise indicates deterioration in the perception of credit quality; a decline, the opposite.
That you are the real Dan Owens and welcome to EP and yes it's ok to mention your business/conference. I almost didn't let this be posted for I thought it was copyright violation until I realized it's your own editorial.
On the study itself, she did note that a flurry of bankruptcies did occur right before the bankruptcy law changed and then there was a lull because so many had filed before the law was changed and then the new law made it so difficult for people to get out of their debt, hence....less actual bankruptcies. I think your observation is valid on this point but on the other hand, is it valid to compare the number of two different laws...the 2nd forcing people to not be able to get out of debt when they probably should be?
In other words, less bankruptcies being allowed by the courts doesn't necessarily imply that's a good thing...for the bankruptcy law itself is horrific in not letting people escape debt who really need relief.
The other criticism I can see on this study is the percentages are still low, in aggregate. Not every senior is going broke, not even close...but the overall dramatic increase, I think is a valid statistic.
I don't think the authors were trying to manipulate an election, seriously, is either party really going to do something to help seniors? ;) But I think they are trying to point out an increasing trend here and I believe the trend lines in showing an increase in senior bankruptcies is valid.
On CNN they reported that the Fannie/Freddie Lobbyists gave money to Chris Dodd, John Kerry, Obama and Clinton in that order.
I'm sure Bush Corporation received tons of money from them.
So, this all leads me to this question. We now have tons of reports on how Freddie and Fannie were too big to fail and it would have brought down the entire economy and so on...
but precisely how does this make it all better? How does this stabilize the market or turn bad debt into good debt?
How does this enable people to refinance to be able to even afford any house with the prices still being way above the average medium income?
Iraq is the ultimate budget buster so I cannot compare that expenditure to this but $200B dumped onto a ballooning deficit, in seemingly just one year is not chump change.
Has anyone read anywhere from any financial expert or economist precisely why this is such a great thing?
“Bankruptcy Rising Among Seniors” was the screaming headline in newspapers around the country. The accompanying article quoted a study by Harvard Law Professor and Huffington Post blogger Elizabeth Warren that reports that seniors are rushing to bankruptcy courts in huge numbers because of economic conditions and high healthcare costs.
As director of the 10-year-old grassroots National Active Retirement Association (NARA), a group that carefully studies the boomer and beyond “Age Wave,” I was astounded. Through NARA research, I know that 77 percent of all assets in America are held by those 50+. I also know that 50+ folks on average have higher disposal incomes, savings, pensions and equity than those entering the workforce, young newlyweds and those starting a family.
As NARA is preparing to host regional and national 50+ industry experts at the 9th annual NARA business conference at the Myrtle Beach (SC) Hilton Resort Oct. 1-3 (www.retirementlivingnews.com), I decided to investigate this study a little more.
The main statistic presented was that bankruptcy among citizens aged 75-84 had soared over 400 percent from 1991-2007. The study also referred to huge bankruptcy increases among Baby Boomers, as well. Sounds horrifying, doesn’t it? My initial reaction was our government must do something! What else could possibly pull at the heartstrings of Americans more than the image of the elderly entering bankruptcy court in huge numbers?
But, wait a minute….did the study say the starting point in the survey was 1991? Wasn’t that a time when George H.W. Bush (Dubya’s dad) was president and the late Carroll Campbell was governor? Why send out an emergency alert that alarms people based on a time frame that stretches back three presidents? Could it be that more recent data just didn’t reflect the facts that were presented?
A closer inspection of this AARP-sponsored study did bear out the fact that more recent bankruptcy statistics are actually more favorable than any since 2001, the tail end of the Clinton Years. Based on the study’s actual statistics and an overlay of census data, the following is true:
* Far, far fewer bankruptcies – just a little more than one-half the number - were filed in 2007 than in 2001. In fact, there were over 900,000 fewer bankruptcies in 2007 than in 2001 and almost 200,000 fewer bankruptcies in 2007 than in 1991. All age segments filed fewer bankruptcies in 2007 than in 2001.
* How about the bankruptcies among the 75-84 senior citizen age segment? Those numbers also fell by 8,500 from 2001 to 2007 to just over 20,000 bankruptcies while the number of citizens in this age group rose rapidly. When you look at the number of bankruptcies as a percent of the population, bankruptcies actually fell among these seniors from just under four tenths of one percent in 2001 to about one quarter of one percent in 2007.
* When you look at the 2007 bankruptcy data as a percentage of population, you find that more bankruptcies are being filed among Gen Xers (27-43) and Millenials (26 and younger) than the Baby Boomer and beyond generation, as well as elderly residents. Folks aged 35-44 were the number one age group filing for bankruptcy in 2007. Not too far behind were those aged 25-34.
So, with about 1.1 million (out of a total U.S. population of 300 million) filing for bankruptcy in 2007, just over 54 percent were aged 44 and younger; just under 46 percent were aged 45 and older. So, why would a prominent educator/commentator try to paint a picture that retirees and seniors are all going broke?
Could it be that the study reaches so far back in history to try to create as much gloom and doom as possible from voters before the election to make the case for change?
Hypocritically, AARP, a sponsor of this alarming study, touts in its media materials that the median income of its 34 million 50+ AARP The Magazine readers has increased 16 percent in the past three years. Additionally, the magazine claims its readers gained $663 billion – yes, that’s billion – in total household income in the past three years.
So, which is it? Are boomers and beyond broke or wealthy? Sadly, a certain percentage is like all Americans – having to tighten their belt to non-essential spending. However, at NARA, we know that many retirees have plenty of money to spend and invest. We see states and towns around the South gearing up to attract as many retiree couples from other states as they can get. And, in this challenged economy, more often than not, it’s the buyers with gray hair you’ll see at the closing table.
This is why we are focusing on the tremendous business opportunities that the fast-growing boomer and beyond market is presenting to businesses everyday. It’s a topic that our business members are excited about discussing at our upcoming business conference.
################## 30 ####################
Yahoo's, most popular article today is about, of all things, Obama and McCain's tax plans.
Who would ever imagine the most popular article of all news stories would be an overview of the costs of tax plans?
It shows that both of them will push up the budget deficit even higher. This nation is so in the red it's affecting the US dollar and is not sustainable.
Yet all we hear are tax cuts, tax cuts, tax cuts as if that is the only economic policy prescription possible.
The key words tax cuts must do very well in focus group testing for in terms of economic plans, this is seemingly irresponsible from both parties and will hurt the US economically.
The Press barely mentions the issue is offshore outsourcing of jobs. I know Ford, GM have outsourced so much design what happens is the internal expertise simply become bean counter, contract managers.
Global supply chain, shipping costs and time, plus the loss of valuable internal expertise never seems to cross executive management minds.
On green jobs. Without serious modifications, which most refuse to mention, those can be offshore outsourced. This entire thing I question, especially with taxpayer money if they do not tie those investments to US workers, American jobs.
Friedman, well he probably got his text from some CEO somewhere wanting him to promote whatever agenda they have. That's pretty much all of his so called economics text, public relations spin.
I'd have to see this one, if I can stomach it, but I strongly suspect there is a rat in their somewhere.
By himself, I question whether Friedman can add two numbers together.
Supply Side Economics has been tried *several* times in the last 120 years or so- AND EVERY SINGLE TIME THE RESULT HAS BEEN A BUBBLE THEN A RECESSION OR DEPRESSION.
But of course, that's what the elites want- a return to third world economics, not a functioning country.
This is priceless, according to Bloomberg the entire seize is simply a stop gap measure and they are going to dump the mortgage crisis on the next administration.
So glad they are going to clean up their own mess.
But for homeowners already behind on their mortgage payments, or who owe more than their homes are now worth, the plan unveiled Sunday by Treasury Secretary Henry Paulson offers little in the way of extra relief
May have the answer....pander. But Jez in terms of the pander vote, what's going on here for does anyone in the US beyond the super rich think those are a great idea?
These are individual taxes vs. corporate taxes where things get more muddied.
Although some super rich hedge fund whatever assuredly doesn't want those tax cuts repealed but who the hell ever said they were a good idea in the first place beyond a few "drown the US government in a bathtub" super rich lobbyists?
Financial Times quotes the CBO:
It appears they are warning of a government default and that the costs of insuring against one are starting to rise.
I have a hard time believing that would cause a default in comparison to the Iraq spending.
We spent political capital to save Boeing this spring from the Tanker Deal vs EADS. Patty Murray went to bat for Boeing and its workers. Now they stab us in the back with outsourcing.
this quote caught my eye:
They are now claiming the CEOs were very talented and that it's all due to a flawed business model.
I could not find the reference, else I would have written it up in the Intapopulist that some middle east entity was trying to buy part of a defense contractor. I heard a little blurb on CNN and it wasn't even in the transcript.
But, beyond the foreign investment aspect, how is this going to stabilize the US housing market as they claim?
I mean are they just going to let more foreclosures go on...that's what is implied and the US taxpayer absorb the debt or ?
Is it fair to say without sounding CT that our government has now nationalized corporations so corporations are the government (officially)?
A recurring theme in these discussions of Fannie Mae and Freddie Mac seems to be that this collapse is going to push Chinese investment offshore.
Is that the case? Or will the Chinese decide to end portfolio investment in favor of direct investment so that they can go an asset stripping rampage if things turn to shit?
I keep thinking that both Ford and GM are looking awfully damn cheap right now, with Ford having a market cap around $10 billion and GM coming in a paltry $6.16 billion.
If one of these Chinese SWFs were to swoop in, and and make a move, they could go an asset stripping rampage taking the capital assets of the corporation back to China, and screwing over the American workers. And the most valuable assets are arguably the company's intellectual property (i.e. the brand names and the product designs)
China has an auto aftermarket industry, but the value added by that activity is minor as compared to what happens when you can put all those disparate parts together into the finished product.
Impossible? Just as impossible as some Indian firm buying out MG Rover.
But of course, in America we are an ownership society, so these companies are owned by individual American citizens.
Or not?
If you follow the links above on GM and Ford, you'll see that GM is 95% institutionally owned, and Ford 74% so.
While some of this is probably pension funds, how much of that is independently managed by the pension fund? And how much has been turned over to an investment firm that's going to have the power to broker a deal if they can get top dollar for their shares?
Now that we've broken the ice with the nationalization of these two financial firms, I think that it's time that GM, Ford, and Chrysler be brought into a type of conservatorship that sees them nationalized, reformed, and then partially privatized with the government retaining a minority share, and negotiating the sale of a second share to the UAW's VEBA that would give the two a controlling stake so that the industry can be kept in American hands.
This is what it means.
That you are the real Dan Owens and welcome to EP and yes it's ok to mention your business/conference. I almost didn't let this be posted for I thought it was copyright violation until I realized it's your own editorial.
On the study itself, she did note that a flurry of bankruptcies did occur right before the bankruptcy law changed and then there was a lull because so many had filed before the law was changed and then the new law made it so difficult for people to get out of their debt, hence....less actual bankruptcies. I think your observation is valid on this point but on the other hand, is it valid to compare the number of two different laws...the 2nd forcing people to not be able to get out of debt when they probably should be?
In other words, less bankruptcies being allowed by the courts doesn't necessarily imply that's a good thing...for the bankruptcy law itself is horrific in not letting people escape debt who really need relief.
The other criticism I can see on this study is the percentages are still low, in aggregate. Not every senior is going broke, not even close...but the overall dramatic increase, I think is a valid statistic.
I don't think the authors were trying to manipulate an election, seriously, is either party really going to do something to help seniors? ;) But I think they are trying to point out an increasing trend here and I believe the trend lines in showing an increase in senior bankruptcies is valid.
That's what I want to know.
On CNN they reported that the Fannie/Freddie Lobbyists gave money to Chris Dodd, John Kerry, Obama and Clinton in that order.
I'm sure Bush Corporation received tons of money from them.
So, this all leads me to this question. We now have tons of reports on how Freddie and Fannie were too big to fail and it would have brought down the entire economy and so on...
but precisely how does this make it all better? How does this stabilize the market or turn bad debt into good debt?
How does this enable people to refinance to be able to even afford any house with the prices still being way above the average medium income?
Iraq is the ultimate budget buster so I cannot compare that expenditure to this but $200B dumped onto a ballooning deficit, in seemingly just one year is not chump change.
Has anyone read anywhere from any financial expert or economist precisely why this is such a great thing?
Explain it all to me someone.
Editorial Column
“Bankruptcy Rising Among Seniors” was the screaming headline in newspapers around the country. The accompanying article quoted a study by Harvard Law Professor and Huffington Post blogger Elizabeth Warren that reports that seniors are rushing to bankruptcy courts in huge numbers because of economic conditions and high healthcare costs.
As director of the 10-year-old grassroots National Active Retirement Association (NARA), a group that carefully studies the boomer and beyond “Age Wave,” I was astounded. Through NARA research, I know that 77 percent of all assets in America are held by those 50+. I also know that 50+ folks on average have higher disposal incomes, savings, pensions and equity than those entering the workforce, young newlyweds and those starting a family.
As NARA is preparing to host regional and national 50+ industry experts at the 9th annual NARA business conference at the Myrtle Beach (SC) Hilton Resort Oct. 1-3 (www.retirementlivingnews.com), I decided to investigate this study a little more.
The main statistic presented was that bankruptcy among citizens aged 75-84 had soared over 400 percent from 1991-2007. The study also referred to huge bankruptcy increases among Baby Boomers, as well. Sounds horrifying, doesn’t it? My initial reaction was our government must do something! What else could possibly pull at the heartstrings of Americans more than the image of the elderly entering bankruptcy court in huge numbers?
But, wait a minute….did the study say the starting point in the survey was 1991? Wasn’t that a time when George H.W. Bush (Dubya’s dad) was president and the late Carroll Campbell was governor? Why send out an emergency alert that alarms people based on a time frame that stretches back three presidents? Could it be that more recent data just didn’t reflect the facts that were presented?
A closer inspection of this AARP-sponsored study did bear out the fact that more recent bankruptcy statistics are actually more favorable than any since 2001, the tail end of the Clinton Years. Based on the study’s actual statistics and an overlay of census data, the following is true:
* Far, far fewer bankruptcies – just a little more than one-half the number - were filed in 2007 than in 2001. In fact, there were over 900,000 fewer bankruptcies in 2007 than in 2001 and almost 200,000 fewer bankruptcies in 2007 than in 1991. All age segments filed fewer bankruptcies in 2007 than in 2001.
* How about the bankruptcies among the 75-84 senior citizen age segment? Those numbers also fell by 8,500 from 2001 to 2007 to just over 20,000 bankruptcies while the number of citizens in this age group rose rapidly. When you look at the number of bankruptcies as a percent of the population, bankruptcies actually fell among these seniors from just under four tenths of one percent in 2001 to about one quarter of one percent in 2007.
* When you look at the 2007 bankruptcy data as a percentage of population, you find that more bankruptcies are being filed among Gen Xers (27-43) and Millenials (26 and younger) than the Baby Boomer and beyond generation, as well as elderly residents. Folks aged 35-44 were the number one age group filing for bankruptcy in 2007. Not too far behind were those aged 25-34.
So, with about 1.1 million (out of a total U.S. population of 300 million) filing for bankruptcy in 2007, just over 54 percent were aged 44 and younger; just under 46 percent were aged 45 and older. So, why would a prominent educator/commentator try to paint a picture that retirees and seniors are all going broke?
Could it be that the study reaches so far back in history to try to create as much gloom and doom as possible from voters before the election to make the case for change?
Hypocritically, AARP, a sponsor of this alarming study, touts in its media materials that the median income of its 34 million 50+ AARP The Magazine readers has increased 16 percent in the past three years. Additionally, the magazine claims its readers gained $663 billion – yes, that’s billion – in total household income in the past three years.
So, which is it? Are boomers and beyond broke or wealthy? Sadly, a certain percentage is like all Americans – having to tighten their belt to non-essential spending. However, at NARA, we know that many retirees have plenty of money to spend and invest. We see states and towns around the South gearing up to attract as many retiree couples from other states as they can get. And, in this challenged economy, more often than not, it’s the buyers with gray hair you’ll see at the closing table.
This is why we are focusing on the tremendous business opportunities that the fast-growing boomer and beyond market is presenting to businesses everyday. It’s a topic that our business members are excited about discussing at our upcoming business conference.
################## 30 ####################
Says I told ya so. But what now Roubini? What does this all imply in the long term?
Yahoo's, most popular article today is about, of all things, Obama and McCain's tax plans.
Who would ever imagine the most popular article of all news stories would be an overview of the costs of tax plans?
It shows that both of them will push up the budget deficit even higher. This nation is so in the red it's affecting the US dollar and is not sustainable.
Yet all we hear are tax cuts, tax cuts, tax cuts as if that is the only economic policy prescription possible.
The key words tax cuts must do very well in focus group testing for in terms of economic plans, this is seemingly irresponsible from both parties and will hurt the US economically.
The Press barely mentions the issue is offshore outsourcing of jobs. I know Ford, GM have outsourced so much design what happens is the internal expertise simply become bean counter, contract managers.
Global supply chain, shipping costs and time, plus the loss of valuable internal expertise never seems to cross executive management minds.
On green jobs. Without serious modifications, which most refuse to mention, those can be offshore outsourced. This entire thing I question, especially with taxpayer money if they do not tie those investments to US workers, American jobs.
Friedman, well he probably got his text from some CEO somewhere wanting him to promote whatever agenda they have. That's pretty much all of his so called economics text, public relations spin.
I'd have to see this one, if I can stomach it, but I strongly suspect there is a rat in their somewhere.
By himself, I question whether Friedman can add two numbers together.
No more placing bets on Fannie and Freddie debt? - Bloomberg is reporting they will settle credit default swaps.
Supply Side Economics has been tried *several* times in the last 120 years or so- AND EVERY SINGLE TIME THE RESULT HAS BEEN A BUBBLE THEN A RECESSION OR DEPRESSION.
But of course, that's what the elites want- a return to third world economics, not a functioning country.
This is priceless, according to Bloomberg the entire seize is simply a stop gap measure and they are going to dump the mortgage crisis on the next administration.
So glad they are going to clean up their own mess.
Yet another $23 million for doing a bad job.
story.
WaMu is to lose $19B in mortgages this year.
more details:
has even more details.
He's mentioning the foreign investors, China specifically and how there is no way they are going to allow their investments to go to zero.
Good read. (He's also citing you New Deal).
CNN Money is saying it will cost an initial $200B.
May have the answer....pander. But Jez in terms of the pander vote, what's going on here for does anyone in the US beyond the super rich think those are a great idea?
These are individual taxes vs. corporate taxes where things get more muddied.
Although some super rich hedge fund whatever assuredly doesn't want those tax cuts repealed but who the hell ever said they were a good idea in the first place beyond a few "drown the US government in a bathtub" super rich lobbyists?
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