interpretation of FNM/FRE news

If Hank Paulson is involved, you may rest assured that what will happen will be best for GS and the rest of Wall Street to the detriment of the American taxpayer and the US Dollar.
 
Quote from Digs:

The big winners PIMCO, China and Japan. Major owners of bonds in FRE/FNM.

Looser: USA taxpayer !

http://www.marketoracle.co.uk/Article5436.html



The big concern is "Where does it stop?" Opening up a $15 billion dollar window will be the first of 10 such operations. This is likely the start of a U.S. Taxpayer Bailout of China . Disgustingly it is a U.S. Taxpayer bailout of PIMCO as well. Flashback May 23, 2008.

Bill Gross Triples Bet On Mortgages

The Financial Times reported Pimco's Bill Gross triples bet on mortgages.

Bill Gross, whose Pimco Total Return fund (PTTRX) is the world's largest bond mutual fund, has tripled his bet on mortgage debt, which now comprises about 61 percent of the fund's assets, the Financial Times said on Friday.

The chief investment officer of Pacific Investment Management Co said his decision to raise exposure in recent months stemmed from the U.S. government's implicit guarantee of debt issued by Fannie Mae (FNM) and Freddie Mac (FRE), the government-sponsored mortgage financiers.

"Government policy is moving to sanctify the status of the government-sponsored agencies," Gross said, according to the newspaper. "It became a question of which institutions would be sheltered by the government umbrella."

"Operation Rescue Fannie" has now morphed into a taxpayer bailout of Bill Gross, China, and anyone else that levered into buying Fannie Mae garbage. It is a moral hazard to the highest degree, for bondholders to be made whole in this mess.
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ok someone here as 0 idea what there talking about (i could be me)
bill gross=looser. wasn't he betting the us govt would guarantee the implied backing, i think?
He was betting that by doing this GSE agency bonds would be the same as treasury. if gse bonds=treasury, then the price of that bond goes up and that is what bill gross was betting on. right now the spread ws normal friday of around 40 basis points i think? today the spread will probally increase a little.
please someone who knows what they are talking about let us know whos right here. and winer=us tax payer, we do now own fre and fnm, we didnt take allt he debt for now.

looser china=gse bonds are not treasurys still
 
If the treasury buys an equity position in the GSEs, it will be preferred equity that converts into debt or something, in any case it will be HUGELY diluting to the common holders. I cannot imagine a different scenario, anything else would be a nightmare scenario for taxpayers.
 
Quote from m22au:

I read a few pieces about FRE and FNM this morning, and think this one:

http://www.portfolio.com/views/blog...ulson-the-fannie-and-freddie-bailout?rss=true

is probably one of the best.

It's noticeable that (at the time of writing) that FRE is up "only" 27% versus a gain of 32% for FNM.

I don't think the Paulson plan does anything for equity holders, and ultimately in the coming days or weeks, FRE and FNM will either be forced to raise equity and/or be nationalised.
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good one - thank you. especially the end is entertaining...:p
 
it is clear that we are in trouble when the only solution is buy low/sell high for the fed,taking advice from a former wallstreet whale is our only hope,we are in huge trouble,wasn't it wallstreet and the hedge funds who fleeced the banks in the first place,why not let all the convicted bank robbers out of jail and ask them to fix our banking problems
 
Freddie Mac's auction of $3 billion of short-term debt Monday sold at better than expected prices as the offering was well received by investors.

-WSJ
 
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