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Politics of Foreign Debt - Part I: Why the government had to bail out the GSEs

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  • #16
    Re: Politics of Foreign Debt - Part I: Why the government had to bail out the GSEs

    George Orwell as Ghost Writer for Henry Paulson

    Last edited by FRED; 07-29-08, 08:29 PM. Reason: Posted the video

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    • #17
      Re: Politics of Foreign Debt - Part I: Why the government had to bail out the GSEs

      argentina... here we come.

      isn't this exactly what the warning was? America in 24 month's time? government gets in over its head in debt... becomes dependent on rents and taxes on rents to fund government, then the fire economy blows up, leaving the debt but no way to pay it, so they privatize everything? folks, no shit. it's happening!!! :eek::eek::eek:

      CRISIS PUTS NY IN 'SELL' HELL

      GOV EYES BRIDGE, ROAD PRIVATIZING
      By BRENDAN SCOTT and FREDRIC U. DICKER Post Correspondents
      July 30, 2008

      ALBANY - Warning of an approaching economic calamity, Gov. Paterson yesterday called an emergency session of the state Legislature - and raised the specter that New York may have to sell off roads, bridges and tunnels to close a massive budget deficit.

      In a rare televised address, the Democratic governor cited "private-public partnerships" involving the sale of state assets - widely condemned by critics as fiscal gimmickry - as one way to stem a tide of red ink brought on by the sagging economy and woes on Wall Street.

      "We can't wait and hope that this problem will resolve itself," Paterson said. "These times call for action, and today I promise you there will be action."

      Profit-tax collections from the state's 16 biggest banks, which were at $173 million in June 2007, fell to $5 million last month, Paterson noted. That's a shocking 97 percent plunge.

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      • #18
        Re: Politics of Foreign Debt - Part I: Why the government had to bail out the GSEs

        Originally posted by jk View Post
        i'll accept the argument that the foreign cb's had to be appeased by guaranteeing the bonds. that still doesn't explain why the shareholders should retain any equity.
        Could it be a bit early to tell if the shareholders will retain any equity? Today's news on Fannie may be an indicator that the brief rebound in Fannie and Freddie's stock price on the bail-out announcement was another example of denial springs eternal?

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        • #19
          Re: Politics of Foreign Debt - Part I: Why the government had to bail out the GSEs

          Originally posted by metalman View Post
          argentina... here we come.

          isn't this exactly what the warning was? America in 24 month's time? government gets in over its head in debt... becomes dependent on rents and taxes on rents to fund government, then the fire economy blows up, leaving the debt but no way to pay it, so they privatize everything? folks, no shit. it's happening!!! :eek::eek::eek:

          I've been arguing that the outcome won't be as extreme as in te case of Argentina, mostly I do think it can be more similar to the outcome of Mexico in the 70's to 90's. Our economy was not destroyed, since we became an important exporting country in the term. Our currency was dismantled due to the bad decissions of out government back then, but not fully destroyed. Our external debt has been a burden hanging over all the population, but now it is at a manageable level.

          At the actual point, comparing the three main Latin American cases, Argentina, Brazil and Mexico, we see in the case of Brazil that the national economy is recovering on a base of industrialization and exploit of natural resources, on the case of Argentina, we see populist government after populist government, with some exceptions, and not much of a rebuilding of the internal wealth generation base, which still has an inflationary result. Mexico is somewhere at the middle between both cases, but tending more to the method used by Brazil.
          sigpic
          Attention: Electronics Engineer Learning Economics.

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          • #20
            Re: Politics of Foreign Debt - Part I: Why the government had to bail out the GSEs

            Confirmation of theory of the Martin Mayer GSE bailout?
            Freddie, Fannie Failure Could Be World `Catastrophe,' Yu Says
            By Kevin Hamlin

            Aug. 22 (Bloomberg) -- A failure of U.S. mortgage finance companies Fannie Mae and Freddie Mac could be a catastrophe for the global financial system, said Yu Yongding, a former adviser to China's central bank.

            ``If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic,'' Yu said in e-mailed answers to questions yesterday. ``If it is not the end of the world, it is the end of the current international financial system.'' more...
            Ed.

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            • #21
              Re: Politics of Foreign Debt - Part I: Why the government had to bail out the GSEs

              Originally posted by FRED View Post
              Confirmation of theory of the Martin Mayer GSE bailout?
              Freddie, Fannie Failure Could Be World `Catastrophe,' Yu Says
              By Kevin Hamlin

              Aug. 22 (Bloomberg) -- A failure of U.S. mortgage finance companies Fannie Mae and Freddie Mac could be a catastrophe for the global financial system, said Yu Yongding, a former adviser to China's central bank.

              ``If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic,'' Yu said in e-mailed answers to questions yesterday. ``If it is not the end of the world, it is the end of the current international financial system.'' more...
              Paulson probably told Youngding on his many trips to China that this was gov't guaranteed paper. Wonder what the int'l law would be if we had defaulted on a third of a trillion $ to China? Is there precedent in them just saying, well we'll take California or Alaska as compensation? Historically it would usually lead to war wouldn't it?

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              • #22
                Re: Politics of Foreign Debt - Part I: Why the government had to bail out the GSEs

                Originally posted by Charles Mackay View Post
                Paulson probably told Youngding on his many trips to China that this was gov't guaranteed paper. Wonder what the int'l law would be if we had defaulted on a third of a trillion $ to China? Is there precedent in them just saying, well we'll take California or Alaska as compensation? Historically it would usually lead to war wouldn't it?
                If the dollar crashes, we either invade someone/something and force them to bail the US out, or it's the end of Pax-ish Americana.

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                • #23
                  Re: Politics of Foreign Debt - Part I: Why the government had to bail out the GSEs

                  Originally posted by phirang View Post
                  If the dollar crashes, we either invade someone/something and force them to bail the US out, or it's the end of Pax-ish Americana.
                  Didn't that already/is happening?

                  I thought there was historical precedent on restitution when soverign debt defaults.

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                  • #24
                    Re: Politics of Foreign Debt - Part I: Why the government had to bail out the GSEs

                    bumpity bump

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                    • #25
                      Re: Politics of Foreign Debt - Part I: Why the government had to bail out the GSEs

                      http://abcnews.go.com/Business/wireStory?id=9027631

                      SHARM EL-SHEIKH, Egypt (Reuters) - China hopes that the United States will keep its deficit to an appropriate size to ensure basic stability in the U.S. dollar exchange rate, Chinese Premier Wen Jiabao said on Sunday.

                      "We have seen some signs of recovery in the U.S. economy ... I hope that as the largest economy in the world and an issuing country of a major reserve currency, the United States will effectively discharge its responsibilities," Wen told a news conference in Egypt.

                      "Most importantly, we hope the United States will keep an appropriate size to its deficit so that there will be basic stability in the exchange rate, and that is conducive to stability and the recovery of the global economy," he added.

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                      • #26
                        Re: Politics of Foreign Debt - Part I: Why the government had to bail out the GSEs

                        Originally posted by babbittd View Post
                        "Most importantly, we hope the United States will keep an appropriate size to its deficit so that there will be basic stability in the exchange rate, and that is conducive to stability and the recovery of the global economy," he added.
                        Bwahahahaha!

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                        • #27
                          Re: Politics of Foreign Debt - Part I: Why the government had to bail out the GSEs

                          Originally posted by Jay View Post
                          Bwahahahaha!
                          Nyuk, nyuk, nyuk!


                          Ed.

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                          • #28
                            Re: Politics of Foreign Debt - Part I: Why the government had to bail out the GSEs

                            Originally posted by FRED View Post
                            Nyuk, nyuk, nyuk!


                            There's a whole lotta room to run with your Three Stooges metaphor, FRED. :p

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