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

To: regli who wrote (61370)	5/18/2006 11:48:01 AM
From: Jim McMannis	Read Replies (1) \| Respond to of 110194

RE:"If they allow the GSEs to default despite the implicit guarantee." Haven't the GSEs bundled the mortgages and sold them off as securities (to whom?). What risk are they carrying?

To: regli who wrote (61370)	5/18/2006 12:45:58 PM
From: bond_bubble	Read Replies (1) \| Respond to of 110194

Every country has something equivalent of GSE. And they have been the primary reason for global RE bubble. So, if every country is defaulting - shouldnt other currencies devalue as well? What is going to happen is currencies are going to wildly fluctuate. Suppose USD falls 20% one day and then Euro falls 15% another day - this is going to wreck businesses!! That is why the globe will need to find an alternative currency to act as an anchor (as in 1930s). The "beggar thy neighbor" policy will be reversed and countries will work hard to maintain the currencies - including helicopter Ben. After all US was not stupid to maintain pseudo gold standard in 1930s right? There was a benefit to the pain of gold standard and the benefit outweighed the pain right? So, what were the benefits? low interest rates (i.e capability to print) was certainly the most beneficial outcome compared to UK's increasing interest rate after the UK's default!!