Mish's Global Economic Trend Analysis Message Board

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Strategies & Market Trends : Mish's Global Economic Trend Analysis

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To: mishedlo who wrote (12217)	9/24/2004 11:32:37 AM
From: CalculatedRisk	of 116555

I don't buy the "fix is in" argument, but it is very possible, in the event of a meltdown at FRE/FNM that the large financials will be "asked" to buy assets cheaply (with the taxpayers taking the losses). If FRE/FNM do collapse (unlikely in my view), I think the large financials would be in trouble too. As IGT11 pointed out, they are making very risky loans right now (typical for an easy money environment). I think rising interest rates are the biggest danger to FNM. And am not too concerned about mortgage rates rising in this environment. The second biggest danger is delinquencies / foreclosures on overpriced RE; that is more likely but it is a slow process that will give FNM time to react. Currently I'm more concerned about other aspects of our fiscal and public policy.

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