'Fannie and Freddie Were Lenders': U.S. Real Estate Bubble Nears Its End

Executive Intelligence Review. ^ | 6/21/02 | Richard Freeman

[B. A. Conservative]

Two years from now banks will be almost giving them away. Three years from now, they may pay you to take them. I saw it happen in Ft. Worth during the 70's.

[spokanite]

Good read, especially about the quality of construction these days. Homes built 100 years ago were built much better than the ones of today. Middle class families were able to afford those homes on one salary, but if you were to build a home today using those same materials of yesteryear, middle class folk couldn't touch it even with two incomes.

[dalereed]

Three years ago is when I make my last good deal.

I bought the condo i'm living in now for $34k cash and it's current market value is $175k.

It will take at least 2 years before you can really steal property at 50% or less than market but there will be lots of property that you will be able to turn a quick $25% on (owning them for 4-5 months at most) within 6 months of a crash.

At least it isn't like the stock market, when I go into a property I know exactly what it will cost, time and money, to have it ready to market and what it will sell for.

When it happens, cash will be king.

[Joe Hadenuf]

Three years from now, they may pay you to take them. I saw it happen in Ft. Worth during the 70's.

Ft. Worth? LOL! Tell you what, if that happens here, I will be first in line.

[oc-flyfish]

Heck no, I am totally climatized to California. Everything else to too cold or too dry! :-)

[Joe Hadenuf]

At least it isn't like the stock market, when I go into a property I know exactly what it will cost, time and money, to have it ready to market and what it will sell for.

When it happens, cash will be king.

In my opinion, cash and property, (in the right location) has always been king. We got out of the stock market before it started doing the chicken. I was never much of a gambler. And your right, investing in land, housing, property, is a whole lot safer. Here in Cal, if prices eventually do level out, or adjust downward, it's still a great investment. Just wait a couple of years, and they will be right up, worth more than ever.

[arm958]

And in Fairfield County, CT

Or Short Hills, New Jersey. My Great Aunt just sold a very modest, but nice, 3 bedroom ranch that she had been living in since the 1950's. If the house were located in most of the country it would have gone for $120,000. It sold for $1,375,000. It has a view of a pond; the new owners will probably demolish it rebuild.

[Phantom Lord]

Ive been climatized to enjoy freedom, lower taxes, and the 2nd amendment.

[AdamSelene235]

No matter what he does or says, he's still a dedicated communist and socialist.

Perhaps, but why is he attacking the left's favorite institutions?

After all, Fannie is there to help the poor, right? If they weren't they would have to comply with SEC standards for transparency and the multiplier restrictions imposed on the banks.

But if its for the poor, we can close our eyes and ignore basic economics, what's a trillion in debt hedged with derivatives between friends?

[Poohbah]

Perhaps, but why is he attacking the left's favorite institutions?

Because they aren't HIS institutions. His goal is simple: he wants to be in charge of EVERYTHING.

[AdamSelene235]

And your right, investing in land, housing, property, is a whole lot safer. Here in Cal, if prices eventually do level out, or adjust downward, it's still a great investment. Just wait a couple of years, and they will be right up, worth more than ever.

This would be true in a free market. But right now the majority of liquidity for the housing market is provided by a Socialist Frankenstein with a capitalist's toolbox.

Why won't they let the shareholders see their books?

[Tom Jefferson]

"It is under the control of Fed Chairman Greenspan, acting on behalf of the Wall Street-City of London oligarchical financiers."

A writer who thinks as above is a leftist anti-capitalist who thinks that there are people like Greenspan who control the economy on behalf of a select group (oligarchy) of manipulative capitalists who are running everything. He lost credibility with me when I read that sentence.

There are some valid points in the article, but there are also several fallacies. I would take it with the proverbial grain of salt.

[AdamSelene235]

Because they aren't HIS institutions. His goal is simple: he wants to be in charge of EVERYTHING.

I agree. The GSE disaster will prompt calls for more government control.

We must be ready to outmaneuver these people. We don't a New Deal II.

[dalereed]

The fear that I have in the back of my mind is that when it collapses the government will take the forclosures and not reselling them but rent them out for "low cost housing" making the poor even more dependant on government and good little democrap serfs.

4 years ago HUD already started doing this. Before that you could make some good deals picking up depressed housing from them, refurbishing and reselling but they quit letting the public have access to them and only sold to non profit groups that would rent to low cost or section 8 renters.

If this turns out to be the case the entire program over the last few years is being engineered the same way the depression was engineered through the stock market with the purpose then to steal the industrial capacity of the country and this time the real estate. That would explain La Rouche backing it.

[Iron Eagle]

I was skimming it with some interest until he quoted Lyndon LaRouche as an authority. Life is too short to wade through any more ....

My exact sentiment

[Petronski]

Given the GSE's debt to equity ratio of 40 to 1

Do you mean to say they have guaranteed 40 times the value of their collateral? I find that hard to believe.

[Petronski]

By the way, you wouldn't happen to work in the precious metals industry, would you?

[AdamSelene235]

A writer who thinks as above is a leftist anti-capitalist who thinks that there are people like Greenspan who control the economy on behalf of a select group (oligarchy) of manipulative capitalists who are running everything. He lost credibility with me when I read that sentence.

Remember, he's evil not stupid. Politicians thrive on disaster they need to make sure the IQ-100's interpret disasters "correctly". Done properly this can result in political power. For instance, FDR.

[IYAS9YAS]

Exactly what I was thinking. My sister-in-law is just about to close on a little house in major fixer-upper condition (new roof, insect damage, pet damage and the like. She lives in the Napa Valley area. She's going to wind up shelling out over $250,000 for this 900 sq. foot home on a lot that is about 70 by 100. I live on a lot that is 70 x 95 with an 82 year old fixer-upper (600 upstairs and an unfinished part basement at about 250 sq ft) in southwestern Idaho and mine only cost me $36,000. The only drawback to mine is that is is one bedroom and in a not-so-great neighborhood. She lives in wine country.

[AdamSelene235]

Do you mean to say they have guaranteed 40 times the value of their collateral? I find that hard to believe.

Yes. The WSJ reported it as 60 to 1. God knows what it really is, they are exempt from SEC regulations, you know.

Yahoo currently shows it as 37 to 1.

http://biz.yahoo.com/p/f/fnm.html

Check em out vs the NASDAQ bubble...Stock wise (not business model wise) they are much worse....Guees what's in your 401 K.

http://finance.yahoo.com/q?d=c&c=&t=my&s=fnm&l=on&z=m&q=l&x=on&y=on&w=on

But that's just the tip of the iceberg. Fact is, the bond market couldn't handle a default of this size. Neither could the derivatives market. Neither could the real estate market. Or the post-Bretton Woods international fiat system.