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Old 07-09-2008, 15:11   #1
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The Credit Crunch Thread (7 Oct: RBS Shares Collapse, IceSave withdrawals blocked!)

Well big news in the financial markets, the US Government are taking over control of the two big US mortgage companies (back around 50% of US mortgages!) Fannie Mae and Freddie Mac at a potential cost of $25 billion or more to the US tax payers!

This makes the Northern Rock takeover look miniscule! This actually could kickstart the US mortgage industry again, but will be paid for in taxes.

So in the same these as the NR take over, should this really happen? It does have a potential worldwide effect on the finance/lending industry if the US mortgage availability eases causing the US housing market to firm up.
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Last edited by Harsin; 17-09-2008 at 08:45.
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Old 07-09-2008, 15:23   #2
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The implications of this are too wide ranging for me to comprehend. I thought that the Americans liked the markets to sort themselves out but this is the biggest intervention possible.
It will be very interesting to see how the markets react on Monday.
One potential positive is a devaluing of the dollar allowing me to safely order 3 Threadless t-shirts without being hit for customs charges.
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Old 07-09-2008, 16:05   #3
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Saying costs could be as much as $3 TRILLION!!! According to news if these companies were to go 'bust' it would cause considerable economic damage right across the world, insane!

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Originally Posted by Kryten View Post
Well big news in the financial markets, the US Government are taking over control of the two big US mortgage companies (back around 50% of US mortgages!) Fannie Mae and Freddie Mac at a potential cost of $25 billion or more to the US tax payers!

This makes the Northern Rock takeover look miniscule! This actually could kickstart the US mortgage industry again, but will be paid for in taxes.

So in the same these as the NR take over, should this really happen? It does have a potential worldwide effect on the finance/lending industry if the US mortgage availability eases causing the US housing market to firm up.
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Old 07-09-2008, 16:14   #4
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Originally Posted by Brunodog View Post
The implications of this are too wide ranging for me to comprehend. I thought that the Americans liked the markets to sort themselves out but this is the biggest intervention possible.
It will be very interesting to see how the markets react on Monday.
One potential positive is a devaluing of the dollar allowing me to safely order 3 Threadless t-shirts without being hit for customs charges.
There are several British banks with hundreds of billions of dollars invested in the US subprime market, this is just the beginning, the results are expected to be pretty explosive on both sides.

Last edited by Bender; 07-09-2008 at 16:16.
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Old 07-09-2008, 16:20   #5
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... at a potential cost of $25 billion or more to the US tax payers!

This makes the Northern Rock takeover look miniscule!
Surely $25 billion is miniscule compared to NR?

Didn't NR cost £55 billion? Which would be about USD100 billion at today's prices?

$25bn for Freddie & Fanny seems tiny.
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Old 07-09-2008, 16:20   #6
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It nice to know that corporations are above everyone else in society. If I was to get into finacial difficulty then I would have to sort it out. These corporations get such a free ride in todays world. I'll stop now before I go into rant mode.
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Old 07-09-2008, 16:25   #7
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Surely $25 billion is miniscule compared to NR?

Didn't NR cost £55 billion? Which would be about USD100 billion at today's prices?

$25bn for Freddie & Fanny seems tiny.
No, the £55B is just the initial give away sum to all the big banks not just NR, the actual sums are far far higher, which bank got what will never be revealed to the public.
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Old 07-09-2008, 16:25   #8
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Argh, just as the dollar was starting to go the way I needed it! Monday will indeed be interesting.

It is somewhat ironic that it was government edicts to provide affordable lending that caused this whole thing. Then they subsidised the ongoing journey and now they're going to bail out the titanic. I'm glad it's not my taxes.
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Old 07-09-2008, 16:28   #9
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Well $25 billion will probably be the tip of the iceberg really, this is just the cost ot re-org them I would think (assets and loans are valued higher so its not the true cost to buy them)
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Old 07-09-2008, 16:40   #10
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Surely we've gotta be looking at a massive drop in the value of the dollar starting from tomorrow?!
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Old 07-09-2008, 16:57   #11
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Quote:
Originally Posted by Brunodog View Post
The implications of this are too wide ranging for me to comprehend. I thought that the Americans liked the markets to sort themselves out but this is the biggest intervention possible.
It will be very interesting to see how the markets react on Monday.
One potential positive is a devaluing of the dollar allowing me to safely order 3 Threadless t-shirts without being hit for customs charges.
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Old 07-09-2008, 18:33   #12
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Stupid names for companies anyway, no wonder they were going tits up
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Old 07-09-2008, 18:37   #13
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Stupid names for companies anyway, no wonder they were going tits up
'Fannie Mae and Freddie Mac' does sound like a really bad sit-com.
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Old 07-09-2008, 19:24   #14
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Peanuts compared to what's been spent on wars also.
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Old 07-09-2008, 19:43   #15
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Peanuts compared to what's been spent on wars also.
Reeeally...

Are you going to try and blame this on muslims too?
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Old 07-09-2008, 19:50   #16
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Quote:
Originally Posted by Sammy709Sony930 View Post
Stupid names for companies anyway, no wonder they were going tits up

http://news.bbc.co.uk/1/hi/business/7502310.stm

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Fannie Mae is short for Federal National Mortgage Association, Freddie Mac short for Federal Home Loan Mortgage Corporation.
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Old 07-09-2008, 20:31   #17
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Quote:
Originally Posted by Kryten View Post
This makes the Northern Rock takeover look miniscule! This actually could kickstart the US mortgage industry again, but will be paid for in taxes.

So in the same these as the NR take over, should this really happen? It does have a potential worldwide effect on the finance/lending industry if the US mortgage availability eases causing the US housing market to firm up.
I'd expect it to go the other way. Expect some serious fall out from this. Not looking good.
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Old 07-09-2008, 21:23   #18
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Quote:
Originally Posted by DaveH View Post
Reeeally...

Are you going to try and blame this on muslims too?



I guess i missed something, but this looks like you are trying to prevoke a fight. He is right, $25bn is peanuts for the US govt, like he said, looks what been spent on wars.
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Old 07-09-2008, 21:24   #19
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I'd expect it to go the other way. Expect some serious fall out from this. Not looking good.
Not looking good how? Better saved than belly up - now that would be bad news.
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Old 07-09-2008, 21:36   #20
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$25bn is far from peanuts with the US economy as it is. This is a huge gamble and one that suggests things are far worse than we're being told. Not only are they taking on the liabilities of the 2, they're investing fresh funds to try and kick-start the US housing market (and with it renewed consumer spending).

I read the other day that several UK banks are very close to going under....

It looks like we're talking about $110bn as well:

http://www.bbc.co.uk/blogs/thereport...re_and_de.html

'The scale of the support being provided by the US Government to Fannie Mae and Freddie Mac is quite breathtaking - up to £110bn and the right to own 80 per cent of each of them.'
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Last edited by Radiohead; 07-09-2008 at 21:39.
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