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Politics : Ask Michael Burke
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To: Knighty Tin who wrote (115667)9/6/2008 1:20:28 PM
From: Cynic 2005  Read Replies (2) of 132070
 
KT,

Re FRE and FNM debt: Huge disparity in the yields of the treasuries and the GSE debt. Doesn't this cause and arbitrage trade? Why would I buy Treasuries if I can buy GSE debt with much better yield with essentially the same full faith and credit guarantee of the US tax payer?

Either the Dollar and the Treasuries will tank or GSE debt should tank.

Also, I know the common is dead. But, the preferred shares of GSEs held by institutions should result in steep losses at some banks.

DO you think that market has priced in all these complexities?

What says the pro?
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