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To: pater tenebrarum who wrote (39903)	11/21/2000 11:39:21 PM
From: Spekulatius	Read Replies (1) \| Respond to of 436258

Heinz, I think the timing may not be that difficult. The stock market started to weaken in March 2000 and the time lag between stocks and the real estate is usually about 12 month. The real estate market will weaken as soon as the consumer confidence goes down, due to a weakening economy. FNM and FRE are the most vulnerable due to the incredible gearing ratio in their home grown business. Also both exploit the government guarantee and the AAA credit rating to increase their gearing ratio further and further to boost their earnings buy selling their government backed bonds and buying higher yielding (and of course more risky) mortgage backed securities and pocketing the spread. Both FRE and FNM increase are hungry for business and increase their market buy going to lower and lower quality loans down to 4% downpayment. They claim to have advanced computer models to predict credit risk, but do these models go back to the last real estate bust? Both companies run a wheel of fortune and once the music stops the consequences will be ugly.