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

To: XoFruitCake who wrote (76322)	4/19/2007 9:34:35 AM
From: ChanceIs	Respond to of 306849

>>>I think it is just one of those political move and by the time that they get this in motion, it will be pretty clear that no one can do anything because the problem is getting too big.<<< Intuitively I think that you are correct. To quote that most vile of Washington "political consultants," Dick Morris, "In politics the perception is the reality." So the government is busy creating the appearance of having done something. I don't think that this remedy will get too far. This takes creative energy, and Fannie and Freddie don't appear to have done anything wrong. To that extent they have bargaining power with the government. contrast this with the Enron meltdown when the government (state and Federal) made a big stink and had a whipping boy - Enron. Enron and the rest of the merchant generators had some value, especially the merchants going forward - namely market share. There was a lot of competition for that market share and the local interests were enjoying bashing them both for political cover/appearance, and the upside of taking market share. It may be useful from an appearance viewpoint to bash the subprimes. But they really have no assets. Furthermore, their market share is likely already seized by someone else. It is probably the greater case that that market share will completely evaporate. The point of all this is that it is much harder for the government to create something new - through Freddie/Fannie - than to take someone else's assets. I don't see the "bailout" as having much real effect - largely symbolic.