Here's a question ken needs to answer 'how likely is that you will change your mind in the next 6 months?'. gartman is notorious for coming out with bold statements that xyz is a sure thing, next day the market goes against him, he gets out is listing 4 arguments against his position. heebner might be one of those, warren buffet or jim rogers on the other hand will stand massive moves against(like a 50% correction in chinese shares) them because they mean what they say
Writing is on the wall. If it weren't for the FED, some of the biggest names in the financial game would be HISTORY. Oh yea, things are just peachy.
Key US mortgage lenders in shares meltdown Jul 11 10:05 AM US/Eastern Shares of US mortgage finance giants Fannie Mae and Freddie Mac were in a freefall Friday on heightened concerns the trillion-dollar firms may face insolvency or a government takeover. Freddie Mac plunged 48 percent to 4.10 dollars at the Wall Street open following a 22 percent slide on Thursday and Fannie Mae lost 46 percent to 7.07 dollars after a 14 percent drop in the prior session. The latest action came amid a new report saying the government could put the finance giants in receivership, which would make the shares worthless. The shares of the two firms have lost over 80 percent since the start of the year. The New York Times said the administration of President George W. Bush is weighing the possibility of having to place one or both companies in a conservatorship to protect them from the snowballing collapse of the US mortgage finance market. The Wall Street Journal, which first reported Thursday that the Bush administration was weighing strategies to keep the firms afloat, said Friday that pressure was on them now to raise fresh capital. Under a 1992 law, if either is seen as being severely undercapitalized, it would have to be placed into government conservatorship. One research note this week said the two firms may have to raise tens of billions of dollars in fresh capital under new accounting rules to offset massive losses in their home loan portfolios. The two firms, which have no explicit government backing despite their government charter, provide liquidity to the housing market by buying mortgages and repackaging them into securities sold to investors. Freddie Mac has a loan portfolio of 1.5 trillion dollars and Fannie Mae's is over 700 billion. Together they own or guarantee some 5.2 trillion dollars in loans, or about 40 percent of the total value of home loans in the United States.
Listen, The only thing the Fed can do is inflate. Increase the money supply faster than available production = steady or lower interest rates. This propels commodities, energy, and now import-product costs (no surprise there) further, to new highs. Day-after-day... The American consumer pays more for less. That means Americans consume less. In an economy that is 72% consumption-based, thats a BIG problem. Dosen't matter what Bernacke does now. He's boxed in. Low rates only save banks and finance-sector. At the same time, those low rates procrastinate an inevitable crash whose severity only worsens the longer those rates stay low.