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Foreign Bondholders – and not the U.S. Mortgage Market – Drove the Fannie/Freddie Bailout
For anyone who still doubted the growing global influence of such emerging powerhouses as China, consider this: The U.S. government’s decision to take control of foundering mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) was driven not by worries about the fading U.S. housing market, but by concerns that foreign central banks in China, Japan, Europe, the Middle East and Russia might stop buying our bonds.
As the bailout announced Sunday is currently structured, more than $1.3 trillion worth of Fannie Mae and Freddie Mac debt currently held by the central banks and other investors in those regions will be…
11Sep2008 | Money Morning | Comments Off | ContinuedSCORCHED EARTH ECONOMY
Here at Casey Research we have been on the record as bearish on the outlook for the economy for some years now. Lest you think that is loose boasting, I can offer proof in Doug Casey’s August 2005 article, the dramatically titled “Profiting from the End of Western Civilization”.
In that article, he looked ahead and saw the inflation that the government’s loose money policies made inevitable. A quote…
“Of particular importance is that the U.S. dollar has been used as a gold substitute for decades by other countries. This has been very convenient for the U.S. – we can create almost…
11Jul2008 | Daily Reckoning | Comments Off | ContinuedA New Wave of Congressionally Mandated Energy Profits Is Just Around the Corner
Congress is talking about going after oil speculators in an effort to lower prices by limiting the amount of money flowing into oil contracts.
We realize that they’re upset, but they’re going about this the wrong way. What’s more, they’re demonstrating a near complete ignorance as to how financial markets actually work.
It doesn’t help that they’ve got energy analysts from some of the top firms telling them the price of oil could drop as low as $65 to $75 per barrel, bringing gas down to around $2 per gallon within 30 days of legislation that puts limits on speculation.
While we normally…
24Jun2008 | Money Morning | Comments Off | ContinuedThe Socialization of the Mortgage Business
“Housing, Inflation both getting worse,” says a headline at MarketWatch.
The price of oil held steady yesterday – in the face of Saudi plans to pump another 200,000 barrels a day. The dollar held steady too. And the yield on the 10-year note rose to 4.24%. Gold jumped $13.
Unless you own an oil well or a goldmine, it has been a bad year. Out of the world’s 52 leading stock markets, 49 are down for the year. Ireland, for example, has lost 15% of its equity market value. Vietnam has been crushed…everyday is a down day in Hanoi.
In the United States,…
18Jun2008 | Daily Reckoning | Comments Off | ContinuedIndia and Japan May Be the Next to Join Global Cash Barons in Search of Higher Yielding Investments
Dubai, Saudi Arabia and China are among the nations that have employed the use of sovereign wealth funds (SWFs) to turn their massive cash surpluses into major league investments. Now India and Japan appear poised to take up the aggressive pursuit for high returns with SWFs of their own.
India is considering a fund that would seek a higher return on $300 billion in foreign reserves that is currently tied up in U.S. Treasuries and government bonds, the Financial Times reported.
“It may be possible to argue that a part of the reserves, which may be considered in excess of usual…
23Apr2008 | Money Morning | Comments Off | Continued
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