Thursday, March 08, 2007

Bridge For Sale


“The Debt Securities, together with interest thereon,
are not guaranteed by the United States and do not
constitute a debt or obligation of the United States
or of any agency or instrumentality thereof other
than Fannie Mae.”

Fannie Mae, “Universal Debt Facility Offering Circular,” January 22, 2002.
www.fanniemae.com/markets/debt/pdf/udf_012202.pdf?p=Debt+Securities.

13 comments:

Benoit said...

First? :-)

Benoit said...

[15 minutes later]

... and last, apparently... heh.

Rob Dawg said...

Why stretch your brain discussing the nuance and consequence of implied vs disavowed govt backing when it is so much easier to joke about Nigel's foamy goodness? Oh wait, isn't that what Casey does? Take the easy way out?

AMIGA USER said...

It may say that the US goverment does not back these Fanny may bonds, but their is just no way that the US goverment will just standby and watch the housing industry collapse.
This is why they can issue bonds at such a low interest rate.
Housing bubble bears may hope to see the house prices begin to collapse, but from a political point of view, it is a none starter.

Anonymous said...

LOL @ Benoit.

Rob Dawg said...

I had a 1000 and 2000 Amiga.

The Feds may be faced with either housing or the dollar and general economy. No contest they'll throw housing out the door. They say time and again they are not in the businees of rescuing asset classes even those they inflated themselves.

king friday the 13th said...

the ditry little secret is that this implicit gov't backing of the fannie and freddie enabled the disintermediation of risk that fueled the subprime market.

Fannie used the "implicit" backing to wrap a bunch of sub-prime mortgages together into a MBS. That MBS would normally have a credit rating of near "junk", but they were able to slap a AAA rating (or really high rating) on the MBS paper because of the implicit gov't backing.

Now, this is where it gets intetesting. The higher than natural credit rating assigned these MBSs allowed them to be purchased by money market accts, mutual funds (401k's) and pension funds. (Hint: read the prospectus of even the "stable value" money market acct of your 401k).

So, if housing implodes, it will take down most of the non-social security retirement infrastructure.

rot26 said...

@Rob

agree that it will come down to the dollar or housing

respectfully disagree on the outcome, Bernanke has already said he will use helicopters to dump money if needed

Rob Dawg said...

The helicopter comment was widely misinterpreted.

“Peace in our time.” - Chamberlin

“Hey, what’s this button for?” - McCauliffe

“Here, hold my beer and watch this.”

‘We are immune to the up and down treads that plague many real estate markets,’ he says. ‘Our real estate market is essentially quite ‘bullet proof!’” - Jackson Hole, Broker Ryan Olsen

“KLATUU…BARADA…NIKTO”

“All your equity are belong to us.”

“permanent high plateau” - David Lereah

Quick Boy Wonder! To the archives! Posterity shall not be denied!

thatotherguy said...

"This permanent high plateau is very nice," thought David Lemming, just before he plunged off the edge of the Kondratieff wave.

rot26 said...

@Rob

the quote can be viewed either way,
but the weak dollar will prevail as it keeps the people happy and exports up

and if I may add more quotes:

"We had to destroy the village in order to save it" - unattributed, Vietnam era

"I am not a crook" - RMN

"Seven years of college down the drain" - Bluto Blutarsky

"This isn't Nam, Smokey, there are rules" - Walter Sobchak

Rob Dawg said...

That's Senator John Blutarsky.

Anonymous said...

Quick someone call KC about this sweet deal