The conservatorship of Fannie and Freddie has not completely wiped out the shareholders, both stocks still trade although for less than a dollar. As for the effect on the mortgage market and interest rates the goal was to restore confidence and liquidity to the market. Fannie issued $7billion in new debt which will likely be used to buy mortgages and keep the market functioning while 30yr fixed rates have dropped significantly. While I’m not a fan of govt run enterprises this takeover was preferable to allowing these two market makers to fail outright.
I agree… Letting them fail was NOT an option.
I’ve heard some interesting scenerios regarding upcoming interest rate moves in the mortgage markets. Some are not at all pleasant.
Your right I guess share holders weren’t wiped out but seeing their stock go from $12/share to 80 cents IS a wipe out in almost any sense.
Anyone buy those Ford Jan. 2010 $7.50 calls yesterday at .98???
Your up 20% ONE DAY later!!! (watch the BID)
Not bad considering how the DOW and S&P are fairing this year!!! (both down double digits)
Sorry,
Make that up 28% in ONE DAY on those Ford options.
This is all interesting to watch everyone’s opinions here. However, I’m noticing a difference on opinion when it comes to oil prices. I’m seeing how the price oil affects what people spend their money on. Its hard to out to dinner, buy this or that, when you have to heat your home and put food on the table. I watched an OPEC executive on CNN the other day say that if oil reaches $80 - $ 85/ barrel, they have a “contingency” in place to keep the price from going any lower. I think he meant reducing supply. Anyway, since the price of oil affects so much, can anyone tell me which direction oil prices will go and why? Its very confusing when you don’t know who to listen to… Keep up the great posts guys. I’m learning a lot.
Ok its been a while since I last posted…My QQQQ position has gone from up nicely to close to flat again…My closed end funds the same…Oil has pulled back nicely ,not that its any reprieve at the pumps…Looks like Lehman should be bought out and if not the markets will cave in further…Fannie and Freddie?..I have seen the posts on here and I agree and disagree with many…What I think the point everyone should look at is this…We are all either real estate investors or aspiring to be real estate investors…For that to happen we need credit (Money etc)…If the Fed didn’t step in and rescue these monsters the credit markets would take imho years longer to recover…And who would pay the price either way?..Us…Lack of funding would reach into every pocket…$ 5 Trillion in loans is huge…I had a conversation with fdjake privately about a few months ago and I told him that I didn’t like the equity markets as much as I should…I don’t know where we go from here but I can say that even the top %1 are hurting…There is no sense pointing fingers at who is to blame…We need viable tactics to repair this sinking ship because this ship can quickly get very ugly…In the event that nothing is done to stop these bank failures people will lose faith in our financial systems around the globe…And if the credit markets shut down every person will lose…401k’s,equity accounts,real estate investors,car buyers,any type of credit loans,business,home,commercial etc…There was little choice to save Freddie and Fannie…This was no double edged sword…Now to make matters worse Bernanke has boxed himself into a corner…He has to raise rates and that will compound the problem…
Anyone who is against this bailout,partnership,rescue whatever you want to call it I ask you this…What is your plan?..
Oil is down because the dollar rallied but that should be short lived. OPEC said yesterday they are cutting supply again so im pretty sure oil will go higher. The world is running out of oil, the trend for the long term is bullish and will continue to be bullish until we stop using oil completely.
Oil is going to the $70’s.
The dollar has been on a tear because all the BULLSH*T we’ve been fed by Wall St. has ONCE AGAIN been COMPLETELY WRONG!!
Remember the CHINA THEORY???
Wall St. told us that China was growing so fast it had “DE-COUPLED” from the U.S. economy. IN other words they told us China didn’t need the U.S. anymore :shocked
Oh REALLY???
Funny last time I checked damn near EVERYTHING I buy is made in China, now iF I and the majority of other Americans STOP or SLOW that buying, CHINA gets SCREWED. That is EXACTLY what is happening.
Anyone care to guess how the Chinese stock market has been doing this year??
We all know that our market has done from 13,000 down to the 11,000 range…That sucks right???
NO…not compared to CHINA’S market which has gone from almost 7000 to 2000 in about a year!!! NOW THAT REALLY SUCKS!!
7000 to 2000… THAT my friends is a HIT!!
Add in all the beat up markets and economies in EUROPE and THAT is the sole reason the U.S. dollar is FLYING!! We might be in bad shape, but a whole lot of other countries get their @sses handed to them when WE slow down.
This is a GLOBAL slow down…If oil can’t rally in the face of 3 MAJOR Hurricanes and a WAR with RUSSIA… IT’S OVER!!
Oil goes to $75 before the new year.
FDJAKE, great insight as usual. That’s the kind opinion backed up with an explanation that I’m looking for. I can see where oil can go lower, but not too low because of OPEC’s manipulation. I personally fee that if oil goes through the roof this winter, the U.S and global economies will contract further. Its hard to spend money on anything else but the the TRUE necessities when they cost so much.
I just read an article yesterday about Saudi Arabia walking out of an OPEC meeting because some of the other countries wanted to cut production to boost the price. Saudi said no thanks. I couldn’t find the same article as I read yesterday, but here’s one I found describing what happened:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/09/11/BUQM12RMQ6.DTL&feed=rss.business
The author of the other article said that Saudi going against the rest of OPEC takes away most if not all of OPEC’s power of manipulation.