Waiting for the other shoe to drop

All I have to say about the financial situation of Fannie Mae is: Holy Crap!

Fannie is one regional housing bubble away from catastrophic failure (and, by extension, Freddie Mac as well), which of course will take a lot of us down with it (S&L crisis anyone? Ok, turn that up to 11.)

A 43:1 debt to equity ratio?? :shock:

(via Mises.org)

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For the pop-culturally

For the pop-culturally challenged:

Nigel Tufnel: The numbers all go to eleven. Look, right across the board, eleven, eleven, eleven and...

Marty DiBergi: Oh, I see. And most amps go up to ten?

Nigel Tufnel: Exactly.

Marty DiBergi: Does that mean it's louder? Is it any louder?

Nigel Tufnel: Well, it's one louder, isn't it? It's not ten. You see, most blokes, you know, will be playing at ten. You're on ten here, all the way up, all the way up, all the way up, you're on ten on your guitar. Where can you go from there? Where?

Marty DiBergi: I don't know.

Nigel Tufnel: Nowhere. Exactly. What we do is, if we need that extra push over the cliff, you know what we do?

Marty DiBergi: Put it up to eleven.

Nigel Tufnel: Eleven. Exactly. One louder.

Marty DiBergi: Why don't you just make ten louder and make ten be the top number and make that a little louder?

Nigel Tufnel: [pause] These go to eleven.

If the government were

If the government were responsible to even pre-Enron corporate accounting standards....

This just goes to reinforce the idea that any crime the government accuses its citizens of, it has committed ten-fold. Or in this case, a million-fold.

That kind of leverage is

That kind of leverage is common place in hedge funds which are involved in or working their way into almost every conceivable market. the volatility in some small markets i play everyday has become insane since it has become known that 2 or 3 particular funds began dabbling in them. thier use of naked shorts is just coming to light, especially in the gold equities market, and is almost certain to bring somebody big down in the next few years, with the resultant' how could this have happened' post mortem on CNBC.

Qwest- While that kind of

Qwest-

While that kind of leverage may be commonplace, is it a good thing?

for me it is, if i'm nimble

for me it is, if i'm nimble enough to get out of the way when their blackbox fires off a sell signal, haha. they're VERY pattern/price oriented so if you can not get too much of your financial ass on the line, and leave soon enough its good, as they drive these illiquid markets very high very fast, and they come down twice as fast. the problem with FNM is they are playing incredibly fast and loose with the biggest bubble of them all, housing, a market that no exit will be big enough for anyone if they go tits up. they're risking it all on 'black' basically. its a one way bet and that kind of leverage is probably illegal but its tacit approval by the money drunk Greenspan posse means no one is going to be the one to take the punch bowl away. i love it, as it puts buyers into my markets that would never normally be there, but i'm under no illusions. one wrong move and a lot of things are over, although there is talk of huge positions taken last week in FNM were chinese and japanese. man,what idiots. when will they stop?:lol:

kinda off topic, but if you

kinda off topic, but if you think housing is the only thing affected by the cancer do gooder liberals check this out;

"Wayne Kelley, who claims a stint as a petroleum engineer in Alaska on behalf of Halliburton, opines: "The enthusiasm of government officials about ANWR exceeds that of industry because oil companies are driven by market forces, investing resources in direct proportion to the economic potential, and the evidence so far about ANWR is not promising."

its EXACTLY the same as FNM giving loans to poor people, it completely distorts the market and makes them and us poorer in the long run.

in fact, probably he ONLY

in fact, probably he ONLY reason to allow drilling in the ANWR is the political expedient of having the CNBC skmbgs give thier glib-eral comments on how that will reduce the price of oil,with the footage running in the background, and they can titter on about it for a few weeks to get the mileage out of it for their 'client'.

Well, the very much supposed

Well, the very much supposed government backing makes a failure unlikely in the eyes of the market. Here is moral hazzard at its finest.