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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: MulhollandDrive who wrote (17766)	2/24/2004 10:34:59 AM
From: J. P.	Read Replies (1) \| Respond to of 306849

Is this a new revelation with Greenspan? Why now? Wonder why he didn't say this 3 years ago.

To: MulhollandDrive who wrote (17766)	2/24/2004 10:42:49 AM
From: Elroy Jetson	Read Replies (1) \| Respond to of 306849

I think this is the crux of what Greenspan is after: Deep and liquid markets for mortgages are made using mortgage-backed securities that are held by non-GSE private investors. Fannie's and Freddie's purchases of their own or each other's securities with their debt do not appear needed to supply mortgage market liquidity or to enhance capital markets in the United States. Fannie and Freddie packaging loans into CMO's is not the problem. The problem is when these GSE's support the market for their CMO's by buying large quantities to support the price. If the price continued to decline, say if interest rates rose, then these GSE's would failure with huge losses and look to the government to cover the losses. If they do not maintain inventories of the CMO's they create, the losses would be borne by the non-GSE buyers, e.g. life insurance companies, mutual funds and pension funds. Our long term rates would not be as low as they are now if Japan were not purchasing hundreds of billions of dollars worth of U.S. debt securities. If they were to cease their purchases, our long term interest rates would rise very quickly.

To: MulhollandDrive who wrote (17766)	2/24/2004 5:25:58 PM
From: patron_anejo_por_favor	Read Replies (1) \| Respond to of 306849

<<Federal Reserve Chairman Alan Greenspan said the Fed is concerned about the growth of Fannie Mae and Freddie Mac, the congressionally-chartered mortgage giants>> Gee, ya'd think that Al "John Law Jr." Leeson-Greenspan coulda spoke up BEFORE he used the GSE's to create an enormous bubble in mortgage lending, so big that it's implosion will certainly imperil the US economy for years if not decades to come? What a disingenuous prick! He's public enemy #1 in my book.....