Much worse. Because when I’ve thought about this, there is nothing short of a massive de-leveraging operation going on in the markets now. No one wants to loan to anyone else.
Trouble is, putting all of this leverage onto Uncle Sammy’s shoulders would make our deficits and national debt balloon to sizes seen only in nightmare scenarios.
People in high places (eg, inside the Fed, and Poole isn’t the only guy) have been saying for 10 years and FNM/FRE are unsustainable. In 2005, it was clear that their books were a shambles. And Congress’ idea of a “housing bailout” has been to allow Fannie to take on ever-larger “conforming” loans from places where housing is overly inflated.
Right now, the pay-option ARM’s are starting to reset. The foreclosure rate is going up and now we see the effects of reduces tax revenues on states and counties.
All the people who kept saying “Oh, sub-prime is overblown, this is all a media conspiracy” better think hard about what happened to the GOP the last time we went through this. The GOP was out in the cold for an entire generation, until the 50’s.
“No one wants to loan to anyone else.”
Thats been going since fall of last year when banks started hording cash and raised rates on jumbo loans.
FRE/FNM might of survived, but they became the final destination dumping ground for all the toxic waste that banks were looking to unload. Its finally catching up with the system.
You know what’s up. Glad there are others with a knowledge of history. The tax rate is going to go through the roof in a couple of years, crushing the already wobbly economy. The 97% of Americans without a golden parachute will have some nice food stamps and a one room EFFICIENT apartment, just like the socialists wanted for us. But in truth, we won’t take it lying down, now will we? Oh no, not this time. Some of us have resources and we will use them so we don’t have to wait for Emperor Hirohito to make his revived debut.
You couldn't prove that by the number of commercials on TV for various and sundry companies offering mortgage loans. They may have more stringent rules than they did two years ago, but they certainly ARE lending money to folks who want to buy homes, or pull equity, if they have any, out of the one they own now.
dittos