The New Soviet Union - Surprise, Surprise...

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August 20, 2008

SouthAmerica:

On Jul 18, 2008 I noticed the column on the FT about “Too Chinese to Fail” – according to the article the poor mainland Chinese investors are stuck with over $376bn of the agency long-term debt as of June 2007 and that represents less than 1/3 of the amount invested by foreign investors on this latest fiasco.

That means that the poor bastards (foreigners) are stuck with more than US$ 1.3 trillion dollars of Fannie and Freddie long-term debt as of June 2007.

If we deduct from that total the amount that China is holding then other foreigners still holding almost US$ 1 trillion dollars of Fannie and Freddie long-term debt and Russia is among the suckers that are holding that melting investment – according to the US Treasury report Russia had US$ 75 billion of these Fannie and Freddie long-term debt.

You can see the entire list of suckers at:

Source: http://www.ustreas.gov/tic/shlhistdat.html

Note: Agency = Fannie Mae and Freddie Mac


Russia can show how displeased they are with the agreement that the United States has signed with Poland today by dumping whatever they still have left of that US$ 75 billion toxic waste that they were holding a year ago.


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Fannie and Freddie shares hit 18-year low
Reuters - Wednesday August 20, 2:57 pm ET

NEW YORK (Reuters) - Shares of Fannie Mae (NYSE:FNM - News) and Freddie Mac (NYSE:FRE - News) dove to their lowest levels in more than 18 years on mounting fears of a government bailout that would wipe out shareholders of the two U.S. housing finance giants.

Freddie Mac executives are due to meet Treasury officials on Wednesday, possibly to get clarity about how the government will support the company and to reassure investors, according to The Wall Street Journal.

A Treasury spokeswoman, however, said that while it is in regular contact with the government-sponsored enterprises, it declined to confirm whether it was meeting with Freddie officials on Wednesday.

Anxiety about the companies has risen in recent days following a weekend report in Barron's that government officials may have no choice but to effectively nationalize Fannie and Freddie.

Fears the companies will need to be bailed out forced Freddie Mac to pay record high yield premiums on a $3 billion debt sale on Tuesday.

Freddie Mac's share slumped more than 24 percent to $3.15, the lowest since 1990, and Fannie Mae shares slid more than 21 percent to $4.74, the lowest since 1989.

… Early Wednesday, Fannie Mae sold $2 billion of bills at higher interest rates than it did for similar securities a week ago.

Foreign investment is being keenly monitored, as ebbing demand means higher funding costs for Fannie and Freddie and thus rising home loan rates, analysts have said.

Overseas central banks dumped nearly $11 billion of agency-related securities over in the past month.

Russia, for one, is not planning to rapidly raise or cut exposure to debt issued by Fannie Mae and Freddie Mac, Russia's deputy finance minister said on Wednesday .

Source: http://biz.yahoo.com/rb/080820/fannie_freddie_shares.html

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Reg. Fannie Mae and Freddie Mac. It's a classic example what happens when bureaucrats fuck with the markets. Fucking political filth.
 
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August 20, 2008

SouthAmerica: Reply to Cesko

In January 2008 when the politicians in Washington approved the Economy Rescue Pact and I realized that they also included the following:

“Both sides reached agreement to allow Fannie Mae and Freddie Mac -- government-sponsored companies that are the two biggest U.S. financers and guarantors of home loans -- to buy loans much larger than the current $417,000 limit, aides and lobbyists said. Frank said that lending cap might reach as high as $700,000 in areas with the highest home prices.”

Then I realized that those idiots had gone completely mad.

That was a way for US Financial Institutions to dump more toxic waste on Fannie and Freddie.

And that gave the signal to the smart money that it was time to jump from this sinking ship.

And the Russians and most foreigners for that matter are stupid if they don’t dump wherever they still are holding of this toxic waste before they become completely worthless.

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SA - your information is important but your conclusions are suspect.

For years on ET I warned that the falling dollar was and inevitable and correct response to China's export and peg policies.

I wondered who were the idiots holding this worthless mortgage paper? They were buying 100% no doc mortgages and giving 5% to the brokers and 3% to wall street before they began?

S.A that paper was worthless to begin with and it now worth less than 2 to 7 cents on the dollar. Let China dump it who cares? The fact they had an appetite for it contributed to the housing bubble.

The irony of all this is that George Bush actually looks good. I think I remember you chastising him for not being stronger with China. I remember him warning that they they had best un peg their currency. Looks like they should have listened and you should have been listening too.

Now that I know China owns a trillion of this debt I am much relieved. We had a party on China's dollar and now we will have to return to the way it should have been.

Exactly what Adam Smith would have predicted.
 
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Jem: S.A that paper was worthless to begin with and it now worth less than 2 to 7 cents on the dollar. Let China dump it who cares?


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SouthAmerica: Hi jem,

It has been a long time since I last heard from you.

I guess before the US government takes over and nationalizes Fannie and Freddie all this people who invested on this toxic waste has to lose 100 percent of their investment.

We are going to have a lot of unhappy foreign investors and that should teach them a lesson about investing in the US because this is supposed to be a safe heaven to protect their money.

Some of them are so dumb that they probably still will continue sending their money to be invested in junk in the United States.

Based on the US treasury list Brazil had invested only US$ 7 billion on that toxic waste.

The good news is that we have a lot of fools around the world who are willing to send their savings to the United States for this savings to be pissed away.

Which institution is going to have a major meltdown next? A major Wall Street investment bank or a major bank such as City Group?

I wonder what China is going to do with all the new Confetti that they are getting from the United States since they already are holding US$ 1.5 trillion dollars and very soon they will be holding US$ 2 trillion worth of confetti.


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jem: The irony of all this is that George Bush actually looks good. I think I remember you chastising him for not being stronger with China.


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SouthAmerica: I don’t remember ever saying anything about the US being strong with China. (Please show me the link to what I said if that is the case.)

I assume that you are talking about my articles blasting the outsourcing of jobs out of the US economy.

But I mentioned many times that the game that the United States and China were playing was very good for Brazil – and still is.

The United States have been buying a ton of stuff from China year after year on credit - like there was no tomorrow. In exchange for this massive infusion of money from China the United States exported millions of good paying jobs.

From the Brazilian perspective the game was great since they could increase the price of its major commodities at will and China was willing to pay the price. In the meantime Brazil paid all its international debts (to IMF and also to the Club of Paris) and also was able to build foreign exchange reserves equal to US$ 200 billion dollars.

The United States still bankrupt for all practical purposes and the US government still need some fools from around the world to finance the US government deficits – and one of the major sources of funding for this fiasco it is China.

The Chinese already looks foolish by holding US$ 1.5 trillion dollars in confetti, and now they are going to lose another US$ 400 billion worth of confetti that they invested in Fannie and Freddie.

The Chinese also lost some nickels and dimes when they Invested US$ 3.5 billion dollar in the Blackstone Group a year ago and today that investment it is worth only half that amount after just one year.

The good news is that today probably there are some Chinese who still are willing to buy Enron stock for US$ 50 per share – and they might thing that they are making a great investment.

The world is full of suckers and you don’t have to look further for prove than the fact that they keep sending 89 percent of world savings to be invested in the United States year after year because of their illusion that they are making a safe bet.


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jem: Now that I know China owns a trillion of this debt I am much relieved. We had a party on China's dollar and now we will have to return to the way it should have been.


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SouthAmerica: The poor bastards are stuck with US$ 1.5 trillion of confetti and very soon their holdings are going to reach US$ 2 trillion dollars.

I wonder what kind of fool would keep piling up an asset that is declining in value and based on the future of the US economy there only one way for the US dollar to go which is down.

The Federal Reserve has become the graveyard where Wall Street and the US financial system are burying the toxic wastes of the US economic system.

I am just waiting for the US dollar meltdown to materialize and the collapse of the entire international monetary system that has been operating around the US dollar.

For how long we can an international monetary system continue to function if the foundation of that international monetary system is based in Confetti?

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This is a good thread.

I think the rise of Russia should be welcomed.

America's antics on the international arena are out of control, and it is time for some counterpunches from the Russians and Chinese...

Russian control of Georgia is a good thing, since it takes the pipeline out of the USA's clutches...

Russia and China will give what the world so badly needs... a counterweight to American hegemony...

But I do hope that Russia and the USA do still continue to work together on defeating Al-Quaeda, since there can be no compromise on terrorism...
 
I welcome the rise of Russia and China as well but for different reasons.

Russia and China don't care about anything. The will support the worst of the worst governments and after a period of time the world will be begging for the US to do something to stop them.

Remember, the US has made some mistakes the past few years but they can be easily corrected. You get Russia and China supporting a cast of characters like Bashir and perhaps 2 million people die and Russia starts taking over countries then by comparison the US looks like a much more attractive option.

Russia doesn't care about Al Queda and terrorism, they are the biggest supporters of Iran, Syria and other state sponsors of terrorism.

I think the good that can come out of this is the US and Europe realize that the dependance on oil by default makes us and them indirect state sponsors of terrorism and we find alterntives and tell the arabs, russians and other energy thugs to take their oil and nat gas and shove it up their arses.





Quote from candletrader:

This is a good thread.

I think the rise of Russia should be welcomed.

America's antics on the international arena are out of control, and it is time for some counterpunches from the Russians and Chinese...

Russian control of Georgia is a good thing, since it takes the pipeline out of the USA's clutches...

Russia and China will give what the world so badly needs... a counterweight to American hegemony...

But I do hope that Russia and the USA do still continue to work together on defeating Al-Quaeda, since there can be no compromise on terrorism...
More...
 
Quote from John_Wensink:

I welcome the rise of Russia and China as well but for different reasons.

Russia and China don't care about anything. The will support the worst of the worst governments and after a period of time the world will be begging for the US to do something to stop them.

Remember, the US has made some mistakes the past few years but they can be easily corrected. You get Russia and China supporting a cast of characters like Bashir and perhaps 2 million people die and Russia starts taking over countries then by comparison the US looks like a much more attractive option.

Russia doesn't care about Al Queda and terrorism, they are the biggest supporters of Iran, Syria and other state sponsors of terrorism.

I think the good that can come out of this is the US and Europe realize that the dependance on oil by default makes us and them indirect state sponsors of terrorism and we find alterntives and tell the arabs, russians and other energy thugs to take their oil and nat gas and shove it up their arses.
More...

Yo're a strange guy
All terrorist organization and regimes were created by US - Taliban, Al qaeda, Iran - all this was done by US
and current Russia is created by US greed and dependance on oil.
You're right here
by again - all those are USA creations

so the world can just be happy when US will eventually back off
 
That's a pretty simple rationalization of things.

I realize the US is responsible for every bad thing in the world including aids, communism, global warming, athlete's foot, menstrual cramps and over cooked steak but just wait.

I think everyone is picking the wrong heroes here and Russia will be far far worse as a world power than the US is. I don't deny the US has done some very stupid things but think of a world dominated by China and Russia with the Islamic states as sattelites which they support unconditionally.

Maybe you can ask somebody from Darfur how wonderful things are with China giving pretty much unconditional support to Bashir.


Quote from kashirin:

Yo're a strange guy
All terrorist organization and regimes were created by US - Taliban, Al qaeda, Iran - all this was done by US
and current Russia is created by US greed and dependance on oil.
You're right here
by again - all those are USA creations

so the world can just be happy when US will eventually back off
More...
 
Very interesting points....

You know when someone finances a criminal in the US, enabling them to progress in their criminal endeavors, then the financier is just as guilty as the criminal....

The same holds for the US....

The US is supporting terrorism by supporting foreign oil....

Thus this makes the US Financier a contributor to terrorism...and is therefore nothing more than an accomplice to terrorism, which is interesting since the fantasy followed is to eliminate terrorism....

This ranks right up their with the infinite wisdom of the SEC....namely interfering but not interfering with market price discovery.....
 
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