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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Claude Cormier who wrote (50454)	1/20/2006 2:25:39 PM
From: shades	Respond to of 110194

DJ CORRECT(1/19): Sen Hagel Said GSEs Strayed From Mission . Sen. Chuck Hagel, R-Neb., in a statement distributed by the office of Sen. John Sununu, R-N.H., said that Fannie and Freddie "have strayed from their housing mission. "Chairman Greenspan has repeatedly warned that Fannie Mae and Freddie Mac have used their quasi-government status to profit from their large portfolios of mortgage backed securities. This is a risk to the long-term stability of the housing finance market and an issue that affects all American taxpayers," Hagel said. (The item "Greenspan Condemns House GSE Bill -3-" published at 6:07 p.m. EST Thursday, updated at 7:57 p.m. EST Thursday and repeated at 7:30 a.m. EST Friday, incorrectly attributed the quotes to Sununu.)

To: Claude Cormier who wrote (50454)	1/20/2006 2:45:53 PM
From: mishedlo	Read Replies (1) \| Respond to of 110194

But was it logical for Greenspan to collapse the rates structure to the extent he did and create that debt bubble. In a sense, yes. I have explained this many times before too. Credit was extended with massive leverage to a bunch of tech companies that were about ready to go under. If they did go under, banks would have been left holding the bag on trillions in defaults. Slashing rates to 1% allowed many of the near dead to survive, banks got repaid and Greenspn was happy. Interest rates were lowered to 1% to bail out banks and corporations that owed lots of money to banks. They will be very reluctant to bail out consumers at the expense of banks. The Bankruptcy bill that passed Congress shows how Corporations and banks even tried to stack the deck against consumers. I may not be right but I believe I have an explanation that is logically consistent across, taking as much into consideration as I can rather than looking at vulnerabilities of the US$ totally in isolation. I have seen no such encompassing viewpoint in regards to inflation. Mish