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Bill Gross Urges Full Nationalization Of GSEs
During the live hearing, Bill Gross stated the obvious: private players in the MBS space will never participate as long as long as the government accepts zero down payments. Of course, he is absolutely correct - the only entity stupid enough to gamble with its seemingly endless resources in such a manner is the US government. And in doing so, it continues to widen the schism between public and private interests, and makes the return of private businesses in this most important segment of US credit markets an impossibility. In fact, Gross urged a move one step further, with the full nationalization of the GSEs - as the GSEs are nationalized now in all but writing, this would be logical. Alas, the fact that US Debt to GDP would jump from 90% to 140% may make this proposal a little difficult to implement.
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Bill having trouble making payments on one of his yatchs?
Oh c'mon now, he's doing it for "the people".
never
LOL
Sadly Bill is simply articulating what's already a reality. We're already in the throes of full frontal fascism. It's slowly being spoon fed to the public to help the bad tasting Castor Oil (or is that GOM) medicine go down a little easier. The Bond King is simply the West Coast spokesman for the reality parade we shall all be increasingly seeing and hearing over the next 2 years, just in time for the 2012 elections to apply the (manipulated and corrupt) good housekeeping stamp of approval.
Bill is simply our west coast comic relief from the steady drum beat of NY/DC fascism.
Bill and Bernanke are reading from the same playbook...
Barn. Burned to the ground. Doors. Burned with the barn.
Cows? Long freaking gone.
Denninger does a fantastic job articulating a solution. The hearing today would do well to focus on what he says.
http://market-ticker.org/archives/2580-Reforming-Housing-GSEs-A-National...
well then, you can be certain they will pay it no attention whatsoever and do exactly the opposite.
as an aside, Barney Frank represents Newton, MA one of the wealthier and certainly most highly educated of the Boston suburbs. Why would intelligent, educated professionals in a town such as Newton, MA continue to reelect the corrupt and ignorant purveyor of Keynesian socialist fraud? Is it that they are ignorant, despite the evidence and their ability to analyze said evidence?
Barney is the Queen of Pork...and he also has the bankers back (insert pun here)
Curse you, Buckaroo! Where is that overthruster? Oh... Barney is the overthruster? That's quite a funny notion.
laugh while you can monkey boy...
Character is how your bot trades in the dark!
It's BigboTAY!
Newton is a neighborhood filled with drunk Boston College students. Many of them aren't half as smart as they think they are sober.
Don't know Newton Ma but it's clear that house districts are carefully drawn to enable incumbents to remain incumbents. Interestingly, the recently completed census will weight heavily after the November elections. This is why the Democrats are desperate to maintain a majority in the house, which is less certain than the Senate. With a majority they can more heavily influence the redrawing of districts in their favor, which always comes after each census.
Let the games (soon after Nov) begin.
Couple of years ago Newton OK'd raising taxes - mostly their own - to build a $250,000,000 high school in their city.
That's right. A quarter BILLION dollar high freaking school.
Newton, like all the small cities around Boston, is full-to-bursting with the Democrat Party rainbow coalition of rich white liberals (the ultimate moonbats) who fled decades ago when it looked like their little angels were going to get shipped across the city (by federal court order) to go to the crappy schools in Roxbury, college students (the females are moonbats, the guys just act like it so they can get a cheap lay), lots of urban layabouts (what is this 'job' thing you keep talking about) and hacks - lots and lots of city and state employees.
Plus Bawney's district is gerrymandered (which was, of course, invented in MA) to include the dirt poor cities of Fall River and New Bedford (yeah, Netwon has lots in common with those places, youbetcha). I know, you're shocked right? Welcome to the People's Republic of Massachusetts, folks.
Misses the point though and just more band-aid.
The american dream of home-ownership is un-sustainable and a lie sold to get people into debt-bondage. On property, if the Maritime Law tin-foil theory is true as I believe it is), it is even more devious and meaningless.
A healthy ratio of owners and renters is the healthy way, not everyone can hold a home.
It's not about nationalising the GSE's or keeping them inwhatever semi-public-private mode they operate in.
It's time to operate on and excise the American nightmare (dream).
ORI
http://aadivaahan.wordpress.com
Full LIQUIDATION of the Gses is more like it, along with elimination of the FHA etc. When does Washington or Gross understand that we don't have the money for all this subsidized housing?
Because Gross and PIMPco make big bucks off of the fraud...
And Gross' big bucks make him more equal than you and I...
The liquidation of nonperforming assets is a certainty. It doesn't matter whether they're on the GSE's books or the FED's... they will be liquidated.
The concept of liquidation is not what we should concern ourselves with... it's who gets to purchase the liquidated assets and at what price. Don't watch the hot assistant's gigantic tits... watch the magician's hands.
De-securitization is going to be the key. But our financial system is so f'd up, it will not matter what they do now. They have to nationalize or liquidate, the only choices left.
Nationalisation is the gateway to allow the TBTF's to F.
[removed]
At this juncture, it's every bit as likely to be the gateway to allow the principal actors from the TBTF's to purchase our homes at pennies on the dollar.
In USSR most residential RE was owned by the State.
In USSA (Utd. Socialist States of America) most residential RE will soon be owned by the State (owned orporations.)
The State DOES own residential real estate. It's just leased to you. Try not paying property taxes and you'll find out who the real owner happens to be.
Right on. Very few individuals in the entire world actually own property. But many confuse property taxes as a necessity to keep the localities functioning. If that's true, why not pay taxes on every single piece of property you own be it furniture or underwear. Not the case therefore property taxes are a form of rent that warrants eviction upon default.
The reason other items are not taxed is because they're mobile and concealable... which is why you have to register motor vehicles... and not blenders. Simply put, impossible to enforce. Land is easy to locate and tax... just a question of convenience.
Eminent domain is another issue altogether... but after a jury trial, I'd say most people end up being pleasantly surprised by the government's "generosity".
It's all guaranteed now by the US taxpayer and we're at the 140% Debt to GDP level anyway. If all we get out of this conference is a confirmation that the US taxpayer really is on the hook for all this debt then we just have further confirmation that the retards are in control.
What a huge waste of time. Do something real and substantial or just keep the ponzi game going until the hyperinflation levels us all. I'm getting nauseous just thinking about this crap.
I agree... we are effectively at full nationalization and 140% Debt to GDP anyway.
Of course the cowards who run our government are loathe to not guarantee this ill-conceived debt; yet they are also loathe to fully recognize the guarantee for the sake of the fiscal deficit. And again, the US government is sticking is nose in and providing a safety net for bondholders that should have known the risks to begin with. But when you control and front run the Agency market (Pimco), or you purchase toxic mortgage derivative en-masse (the Fed)... you know there MUST be an explicit guarantee somewhere. Nope, we can't have the Pimco out of the market, nor the Fed realizing losses on its bloated balance sheet.
At this point, there shouldn't even be discussion about extending FNM/FRE as tools for meeting the mandate of affordable housing. FNM/FRE should be wound down and buried 6 feet under, without condition. I'm tempted to say the same thing with FHA. These are finanical black holes that are being targeted straight to taxpayers pockets.
Yeah, it makes me nauseous, too...
"Because they know all they sold ya was a guaranteed piece of sh-t. That's all it is, isn't it? Hey, if you want me to take a dump in a box and mark it guaranteed, I will. I got spare time."
140, 141, whatever it takes.
Abandon 'affordable housing' mandates and although it'll take a few years to shake out the weak hands, the housing industry will be better off for it.
Decades of subsidized housing... a seriously sly form of slavery
http://20smoney.com
Home prices need to drop another 25%. Require at least 20% down and let interest rates rise. There will be plenty of lenders who would do loans in that environment. Gov't policies have only inflated housing prices and transfered money from our pockets to the accounts of financial institutions. Families don't have 2 nickels to rub together after they pay the mortgage/insurance/local taxes every month. No wonder nobody saves anything and relies on the govn't for everything.
House prices have a fundamental and technical formula they follow and yes, they are overpriced.
http://www.marketoracle.co.uk/Article21902.html
I then suggest that he move to Venezuela, where everything is nationalized.
(duplicate post)
remember: The American public believes in home ownership, but they don't want property. Property is the place where you put the house. Location Location, is true enough, while the corporate makeover of America guarantees that living in Beverly Hills isn't much different than living anywhere else. Land ownership is secondary to the need to be close to your job, which in the jobless society is itself secondary to the process. The American economy is based on the mobility of the workforce. The destruction of almost all government jobs means the legacy employee, someone who is settled with one job for life, is obsolete.
The Bob Prechter Jaguar story is interesting as it is wrong. Prechters story goes like this; what happens when everyone has two jaguars? Jaguars being a symbol of something needed and desired. Corporate America knows how to sell you three or more Jaguars. One for the garage in your main home, another to rent when the lease miles get too high, one in every airport in the country, to help you drive around after your plane lands. Now apply that principle to housing, and you have a nation of timeshare-croppers, who chase temporary jobs, the weather and vacation destinations, if they're retired. How many houses is too many, ten?
the most important GSE hasn't been created yet, the Consumer Loan GSE. Regulation of consumer loans is the next big thing, since its impossible to refi a timeshare.
Jobs will be like vacations, two weeks here, two weeks there. Keep them moving around the country. A nation of nomadic wanderers. The poor will wander for no good reason other than it is the thing to do. Nomadic existence virtually assures radical and usually right wing politics, if you take by example Arizona, where only half the population lives there all year. The point of nationalizing all this is to maintain corporate control over America, and provide a uniform experience from state to state and city to city, while they keep you in the dark politically, and they extract the various fees you have to pay moving from one place to another.
the point of nationalization of the housing industry, is not to further the goal of home ownership, which is antithetical, but to boost the industry, and the needs of the poltiical machine to keep you on the run and broke.
Interesting, thoughtful assessment... we're all wanderers in some sense... searchers for truth when lies are the only concept that sells... GSE's were done long ago... the next wave is consumer driven best-ex... with which timeshares would track... the patterns are there...
“It’s intellectually pretty difficult,” Mr. Frank said.
http://www.nytimes.com/2010/08/17/business/17sorkin.html?_r=1
Government accounting is done on a cash basis. Wouldn't subsidizing GSE's come right out of the general funds of the Treasury, and be reflected in our deficit?
Or, were these "loans," which appear as an asset to the GSE and a liability to the Treasury (like loans from the Social Sexcurity and Medicare trust funds), which come out in budget reconciliation as a "wash."
Don Levit
'affordable housing' ... for which segment of the economic spectrum?
Let housing prices collapse to their affordable level.
40 million people are living below the poverty line.
61% of the population is living from paycheck to paycheck.
Lenders will not support any attempt that would wipe out their savings.
Politicians will not jump into the frying pan without being greased properly.
jal
Of course, PIMCO is drunk with inflows. Yeehhaah. And then they will start the pendulum the other way. I can just see Gross in 3 months telling people to get out of bonds when he is 9/10 out... the old casino hand knows how the house wins..
"GSE's" nationalized ? Talk about kabuki. They are already nationalized. Demographics and the madness of Washington means that housing will be a 10 year recovery if ever. The real estate industry, just like healthcare and War (calling it Defense these days is the epidomy of kabuki), is another destructive force in the beltway.
Only way out of this folks is real term limits. That way only those with the best 6-year plans get to Washington. The re-election whore-circus is destroying us.
Raimes got $90 million by using accounting gimmicks and drove Fannie Mae to near destruction.
Term limits? How do you place term limits on the banksters who hold power? All you're doing is trying to limit the power of individual puppets. Which, you may notice have yet to fail to meet demand with an overwhelming supply.
There is no fix to this problem other than a long-term education in the school of hard knocks, with how long-term being the relevant question.
The banksters cannot ever win (in totality) but they can drag humanity by the feet for a long, long time before they realize the need to stand. As many have said before, it is ideas, not force, that rules mankind. Today's ideas are irrational and comforting. Tomorrow's will be neither, as the discomfort fails to sustain irrationality. The choice will be to dissect this cognitive dissonance, or self-destruct from it.
All will be nationalized, then the "nation" destroyed, then those who control the real wealth will reveal themselves and their global schemes to "save" us.
Oh, and the first irrational idea that has to go? Voting, a.k.a. delegating personal responsibility for your own life to the very criminals who will gladly take it from you.
why doesn't Bill just ask for a trillion dollar check made out to PIMPCO ?
Dude, he already cashed that check.
+1000
In fact, Gross urged a move one step further, with the full nationalization of the GSEs - as the GSEs are nationalized now in all but writing, this would be logical.
The mortgage GSEs are indeed already fully nationalized (if not officially)and there is no way they ever become divested. That iceberg hole is beyond repair.
HA! You beat me to is Mercury!
+1000
But even more so, anything of value, i think, will soon be 'nationalized'. Watch the insurance industry, pharmaceuticals, etc, etc...
So... it looks like Bill Gross also supports the concept of privitizing gains and socializing losses... just like the rest of the banking industry.
Who would have thunk it?
Its over with. Not just the Keynesian experiment, but the capitalist system also.
The government is not only ignoring fraud, but is actively participating in it, and Bill Gross knows this. Like with AIG, he knew it was a good bet the the Fed would bail them out, then force AIG to hide what it did with the bailout money. The GSE's will be nationalized.
But lets step back a bit and think. What is 'Nationalization'?
General Motors wasn't nationalized in word, but certainly in deed it has been. It is now controlled by the government. AIG as well. I guess you can say that a 'stealth nationalization' of American industries is taking shape.
The government is not only ignoring fraud, but is actively participating in it
nicely put
current policy direction leads inevitably to dissolution of our entire system of finance and government
this is too obvious to be accidental
Fannie and Freddie should be merged with HUD and consolidated, then downsized. They should all be GS government hacks, eating from the same trough. No bonuses, big pay cuts for all, down to the normal bloated federal pay scale. Put the whole stinking mess on the federal budget. The other option is shutting them down completely. Government doesn't need to encourage home ownership - it's an idea whose time has come and gone. The only buys are deep discount, cash. Here come the foreigners. Swap that debt for some equity.
A summary of Bill Gross' testimony...
"Destroy the republic, but save me."
This man has no shame... where's the tar... and find some feathers.
They are so damn stupid in Washington and will
likely follow P.Orszag's recommendation to include
the GSEs' debt , which would lead to a near-immediate
downgrade, well-needed, following the IMF's
view: BUST ! ( along with Jamaica, UK trailing )
Until the collapse is allowed to occur, this charade will go on for many years. The downside of the collapse will be the transfer of 99% of the countries wealth to the top 1% of the population. All those who think they will survive the collapse unscathed are truly clueless. All those who think this is Barney and Nancy's fault are beyond stupid.
The US has been burning up a disproportionate percent of the world resources for the last 50 years. The free ride was never going to end well. Look in the mirror if you want to see who caused this problem.
In September 2008, by holding large positions in agency backed mortgage bonds of Fannie Mae and Freddie Mac, Gross netted U.S. $1.7 billion after the Federal takeover of Fannie Mae and Freddie Mac[4] for which he had lobbied[citation
http://en.wikipedia.org/wiki/William_H._Gross
Today: from Denninger: Bill Gross: "Private Market Can't Work"Right now, from the housing hearing....
"Private market is unrealistic; government guarantees necessary."
Oh really Bill?
What's the real problem Bill?
The real problem is that you have "invested" on a broken mantra. That house prices never go down. That down payments are unnecessary - that is, that leverage should be sky-high (infinite in the case of 100% financing.) Where government is required to guarantee the payment of principal and interest - for a private good, consumed by private people.
Sounds like socialist, even Marxist claptrap, doesn't it?
That's because it is!
The underlying problem is that when you allow people to take leverage risk goes up. Leverage goes parabolic as down payments approach zero.
20% down payments have a market-proven ability to mitigate risk. They make risk manageable even if people default.
Gross is also talking about "counter-cyclical" rules. Yeah, right. Never happen Bill, and you know it. The idea that we should have lower down payments when there's a bust going on (that is, more leverage during downturns) is idiotic. That we should try to manage this is idiotic, in fact.
How does a boom like this get going in the first place?
Simple: You start allowing lower and lower down payments, and therefore leverage rises. This in turn promotes higher prices (since the amount of money necessary to originate is lower) and that in turn promotes more and more price increases.
Price increases also provide incentives for things like liar loans, since the collateral becomes the entirety of the underwriting decision.
This, of course, is a dangerous lie, in that the perception that prices will continue to rise (forever) is mathematically bereft of truth.
In point of fact the government should encourage prices to contract to affordable and stable levels, from which they should not vary materially on a forward basis. This then turns homes into a place to live, instead of a speculative asset class.
Bill Gross says that the "cost" of a private system could be 300 basis points over Treasuries. So what?
He says this makes housing "unaffordable." My retort is at what price?
Notice what's not being talked about here: actually deflating the bubble, and returning homes to a price where Americans can actually afford them.
Gee, I wonder why?
Want a solution? There's one right here.
http://market-ticker.org/archives/2586-Bill-Gross-Private-Market-Cant-Wo...
JR
These guy don't want the carousal to stop. If real market driven interest rates were to prevail (ie. the Fed was dead and the criminal banking cartel in jail with Bernie) then savings would flourish, and house prices would be affordable.
How can savers compete with printers ??
Thanks for the thoughts.
Should we also nationalize PIMCO?
Sure - because Crony Capitalism always works for the Cronies, right?
Discloure: Long torches, pitchforks - as well as lead and assorted lead delivery systems.
New Bill Gross motto, "ask not what your country can do for you, but your country can do for me and my elite cronies."
Wait a minute, folks.
This could look even worse.
If we count Fannie Mae and Freddie Mac as part of our debt, we would be reclassifying them as "Liabilities, Level 1," explicit liabilities is the actual term. This would be counted alongside Publicly held debt, Military and civilan pension and post-retirement health, Veterans benefits payable, Environmental and disposal liabilities, and Loan guarantees.
Right now, Fannie and Freddie are Level 4, the lowest level, "obligations," actually termed as "Exposures implied by current policies or the public's expectations about the role of government."
What else is in the lowest level of obligation - Future Social Security and Medicare benefit payments, Debt held by Government accounts, Life cycle cost , including deferred and future maintenance and operating costs.
This can be found on Page 66 of a paper entitled "Federal Debt, Answers to Frequently Asked Questions, an Update" published by the GAO.
Go to: http://www.gao.gov/new.items/d04485sp.pdf.
Don Levit
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