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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: yard_man who wrote (247878)7/1/2003 12:21:00 PM
From: Perspective  Read Replies (2) of 436258
 
Did I mention that companies like IMH and FNM stand square in the way of Greenspan's goal of fighting the deflation with inflation?

You can't inflate away the debt without crushing companies like these. What happens to the company when their 1.49% interest margin (borrowing at 3.0%, lending at 4.49%) goes negative, as borrowers get stuck in their overpriced houses and hang onto the mortgages, but short-term borrowing costs go back up? What happens to the housing market? And what happens to the economy?

If Greenspan truly pursues a campaign of inflation, he will sacrifice this company and others like it (FNM, FRE) in the process. It is illogical to simultaneously believe in a rekindling of economic activity *and* purchase shares of these companies.

BC
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