fannie-Freddie $1 trillion worst case

http://preview.bloomberg.com/news/2...60-billion-with-worst-case-at-1-trillion.html

So they say $1 trillion worst case scenario. And since their worst case is always way off, that means according to historical performance, it will DEFINATELY cost between $3 and $10 trillion to fix it.

 

These companies are so worthless!!!

But it doesn't matter the prop job continues and continues and continues and continues and continues.

 

This is key:

A 20 percent decline in housing prices is possible, said David Rosenberg, chief economist for Gluskin Sheff & Associates Inc. in Toronto. Rosenberg, whose forecasts are more pessimistic than those of other economists, predicts a 15 percent drop.

“Worst case is probably 25 percent,” he said.


Housing has not bottomed. This is a huge drag on the private economy, construction, banks, new loans, credit growth etc. The vicious circle. With that, comes higher, longer-lasting unemployment = more foreclosures = higher losses Fannie and Freddie must cover, as the guarantors.

It's a joke. But that's what our elected leaders have opted to pursue: a joke, ponzi economy.

 

A trillion here, a trillion there, pretty soon you're talking about some real money...

They've actually pulled the same scam twice, they put guarantees on loans and default and put the payback on the taxpayers... the S&L crisis was the same thing in a different form. They "deregulated" by taking all the requirements off the loans but leaving the "government" guarantees in place. Then they loaned money to all their Bat Shit Crazy friends who defaulted and the government arranged to have the taxpayers pay it back!! It's what the cool kids do!!

 

Historically, inflated asset values bottom out at pre-bubble levels +/- 10%.

That's the real leading indicator for renewed banking and credit health. Once we drop another 15-25%, losses should taper off, inventories decline, lending resumes, and recovery takes hold. Albeit with a hamstrung consumer, this time. But a recovery, nonetheless. The fly in the ointment is deficit spending and bond yields. Not enough consumer horsepower to pull the wagon unassisted coupled with a big dose of commodity inflation on the horizon.

 

Give this man a cookie.

 

This will be a hell of a recovery. Just like cheering at the recovery of the food industry while all of the consumers are patients undergoing a bulimia treatment without any success.