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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (14274)	3/10/2003 2:41:37 PM
From: lurqer	Read Replies (3) \| Respond to of 89467

Not sure whether you interpreted my post correctly. the sentences He said the current difference in price between Tips and the equivalent bond, says the market believes that inflation will average about 2% for 20 years. He considers that to be extremely optimistic. means he thinks that inflation will be considerably more than any 2%. So I believe that he, you and I are "in the same boat" on inflation. Actually, as we've discussed, it's more likely to be stagflation. Sorry if my choice of words provoked confusion. lurqer

To: Jim Willie CB who wrote (14274)	3/10/2003 4:57:01 PM
From: stockman_scott	Read Replies (2) \| Respond to of 89467

Folks are wondering about Russia and how they might vote on authorizing the U.S. to invade Iraq... Last time I checked they have tremendous untapped oil reserves (it depends on the source you consider too) and the U.S. wants to ultimately reduce its dependence on oil from the Middle East...hmmm...I would say they have some leverage. Actually, Russia has the largest untapped natural gas reserves on this planet...fyi... brook.edu <<...Russia is to gas what Saudi Arabia is to oil—a fact that was lost in the euphoria of Moscow's standoff with OPEC. As crises in the Middle East and concerns about pollution and global climate change increase, international attention will inevitably focus on Russia's vast reserves of cheaper, cleaner natural gas. With 32 percent of proven total world natural-gas reserves, Russia outranks Iran at 15 percent, Qatar at 7 percent, Saudi Arabia and the United Arab Emirates at 4 percent, and the U.S. and Algeria at 3 percent. Single-handedly, Gazprom, Russia's giant gas company, holds 25 percent of world gas reserves (equivalent to Saudi Arabia's percentage holdings in oil)...>>

To: Jim Willie CB who wrote (14274)	3/10/2003 6:14:12 PM
From: stockman_scott	Respond to of 89467

Poole Says Crisis Possible at Fannie Mae, Freddie Mac By Craig Torres and Albert Yoon Washington, March 10 (Bloomberg) -- Government-sponsored mortgage lenders such as Fannie Mae and Freddie Mac may not be adequately capitalized to weather a financial shock and pose a risk to the financial system and U.S. economy, St. Louis Federal Reserve President William Poole said. ``Fannie Mae and Freddie Mac are not'' backed by the credit of the U.S. government ``and hold capital far below that required of regulated banking institutions,'' Poole said told an Office of Federal Housing Enterprise Oversight symposium. ``Should either firm be rocked by a mistake or by an unforecastable shock, in the absence of robust contingency arrangements the result could be a crisis in U.S. financial markets,'' he said. Fannie Mae and Freddie Mac buy mortgages from banks and other lenders and repackage them as securities for sale on the secondary market. Through mortgages purchased for their own portfolios or through guaranteed mortgage-backed securities, the two lenders controlled 42.5 percent of the mortgage market as of October, 2002. Fannie Mae and Freddie Mac own or guarantee $3.1 trillion in U.S. mortgages, including almost $1.4 trillion of mortgages held in their portfolios as investments. The government should withdraw an implied sponsorship for the institutions that financial market participants read as an guarantee that the U.S. would bail out the firms in time of trouble, Poole said. Both institutions should also boost their capital to levels more similar to that required for banks and other regulated institutions. Entire Economy at Risk Poole did not speak about the direction of interest rates or the state of the U.S. economy in the text of his remarks. The risks to the economy of problems at Fannie Mae or Freddie Mac are magnified by the fact that mortgage debt represents 30 percent of all debt issued by nonfinancial companies in the U.S., up from just 5 percent at the end of World War II. ``Any serious instability in the financing of residential capital stock has the potential for significant effects not only on the housing industry but also on the entire economy,'' Poole said. An event involving one firm would likely bring the other closer to crisis as well, he said. ``It is not sufficient for any single GSE to argue that its own financial condition is sound. If one GSE comes under a cloud, others may also,'' Poole said. ``It is the process economists call `contagion' whereby uninvolved or innocent firms are affected because the market has difficulty distinguishing solid firms from those at risk.'' Poole said that while both Fannie Mae and Freddie Mac use models to measure the quantifiable risks of changes in credit quality and interest rates, the danger resides in nonquantifiable risks and ``unpredicted crises,'' which, he said, occur far more often than is recognized. History and Contagion He cited the failure of the Penn-Central railroad, the hedge fund Long Term Capital Management, Continental-Illinois bank, Enron Corp. and Worldcom Inc. ``Major unforeseen events that can bring about a collapse in confidence or disruption to the normal function of financial markets without any warning can and do occur with some frequency he said. Too many market participants think the government will bail out the lenders, or investors, if there is a problem because Fannie Mae and Freddie Mac are ``too big to fail,'' he said. That is not true. ``There is tremendous ambiguity about the status of the'' government-sponsored enterprises, Poole said. ``The market prices the GSE's debt as if there were a federal guarantee, or a high probability of guarantee, standing behind their entire outstanding obligations. Yet there is no explicit guarantee in the law.'' The law permits the Secretary of the Treasury to buy Fannie Mae and Freddie Mac obligations up to $2.25 billion for each firm. That is too little to have an effect in the event of a crisis, he said, and could ``easily'' be replaced by credit lines at commercial banks. ``Eliminating the Treasury's authority to lend to the GSEs would provide a signal that the government is serious when it says that there is no government guarantee of GSE debt,'' Poole said. Fannie Mae Opposition Fannie Mae opposes that, said spokeswoman Sharon McHale. ``It's an important symbol'' for the government, she said. ``We've never drawn on it and cannot think of any reason for doing so.'' Poole also criticized the capital levels of the mortgage lenders, especially since their liabilities are dependent on short- term instruments. Any short-term funding squeeze could turn into a crisis in financial markets ``very quickly,'' Poole said. A 1992 law states that Fannie Mae and Freddie Mac have a core capital requirement of 2.5 percent of on-balance-sheet assets and 0.45 percent of outstanding mortgage-backed obligations. Government securities dealers carry capital of around 5 percent. Fannie Mae and Freddie Mac have capital of about 4 percent of their on-balance sheet assets, he said. ``Capital on the books of Fannie Mae and Freddie Mac is well below the levels required of regulated depository institutions,'' the St. Louis Fed president said. ``My sense is that the firms are vulnerable to nonquantifiable risks, because their capital position is low.'' ``Our capital standards are more stringent'' than banks, McHale said. ``Our capital is tied to risk, and we are in one single line of business which is the lowest-risk lending that is done. So when we tie risk to capital standards ours are much more stringent.'' Should either firm be rocked by a mistake or by an unforecastable shock, ``in the absence of robust contingency arrangements the result could be a crisis in U.S. financial markets that would inflict considerable damage on the housing industry and the U.S. economy.''

To: Jim Willie CB who wrote (14274)	3/10/2003 8:24:06 PM
From: lurqer	Read Replies (2) \| Respond to of 89467

Can you hear the Sterling music? investorshub.com lurqer

To: Jim Willie CB who wrote (14274)	3/11/2003 10:02:25 AM
From: TigerPaw	Read Replies (1) \| Respond to of 89467

It is getting increasingly difficult to get accurate and timely information. washingtonpost.com The White House's Office of Management and Budget is discontinuing the annual report called "Budget Information for States" -- the primary federal document reporting how much states get under each federal program. In fiscal 2003, the report ran 422 pages. In 2002, it was 415 pages. And for fiscal 2004? "The volume will not be produced this year,"