Fannie and Freddie Mac deal --> Treasury printing

Fannie and Freddie deal means that Tressury will take over 100$ billion in debt and will have to provide simmilar ammounts of money to capitalize those GSes.

Obvious thing is, that they dont have that much in cash? so where they will get this?
They will simply start printing and killing the value of dollars.
My advice is to get rid of your dollars in a short term.

Morover this deal acts very simmilar to interest cut....so have fun not owning the greenbuck

you see, i was right

see how the market opened

Gaps usually close... so, we'll see.

But yeah, the way they handled the takeover is sloppy. They should've used a better approach. I wouldn't equate it to treasury printing, and I think the amount of loss was closer to 12 bil than 100 bil, but it's still a short term negative for the dollar. Long term tho it'll help stabilize housing and add liquidity back to the markets... and that will be good for the dollar.

The term "Free Markets" will need to be revised, now it's just the Feds backing all business Airlines, Banking, Automakers, Housing, ect. ect. with tax payers dollars.

This is just a gamble to try and last longer than the inevitable economic slowdown that will be seen worldwide. It's a gigantic house of cards, and the feds are trying to hold the base together, but they are running out of hands.

The move is similar to a rate cut in the fact it creates more USD's but we have to remember UK EU AU NZ are all trying to devalue their ccy's faster than US. Also consider US was printing 30bio per day during the peak of the subprime blowout earlier this year.

I think it's more of an overall move towards the government and their cronies enacting "friendlie-ism" economics upon us than letting things unfold as they should. Overall I mark this as a dark day...well yesterday rather...

Well, it's a GSE... gov't sponsored (supported, whatever) entity. The promise is that the fed gov't will cover some of the risks of the mortgages they underwrite. Been that way since they were created, the intent was to provide a way to help cover private mortgage risk so ppl could invest liquidity capital w/o an undefined risk structure (talk about chaos).

That was a big problem years ago, nobody wanted to invest in mortgages because of the inherent risks in the process, which meant nobody could get a home loan and nobody wanted to build new homes or develop land.

But the fix worked, which ironically is what caused the current problem... too much money chasing too many properties led to massive demand, higher ballooning property values and insufficient risk controls. There should've been better controls on underwriting, but alas... hindsight is always 20/20.

If we didn't bail them out tho it would be breaking the GSE promise and would seriously undermine the faith and credit of the US. It would also totally destroy the home mortgage market in this country, setting us back 100 years of financial evolution overnight and sending us (and large chunks of the world) into a tailspin depression for the next decade. Not really an option, so I get why they couldn't let them fail.

What bugs me is the way they did it. They decided to temporarily take control of the organization and blow out the shareholders in the process. Bad move, totally destroys the current capital structure and federalizes an enormous amount of debt.

A better way would be to simply cover the organizational losses, or transfer out the losing assets to another organization. That way everyone could just continue on and the market could be allowed to reprice those assets over time, saving the taxpayers money w/o all of the interruption and federalization problems. I'm quite sure the problems could've been solved in a more sterilized manner, but this administration has a habit of ignoring critical nuance.

so basically as for usdjpy we can expect 110 levle.
EURUSD 1.46
GBPUSD 1.80+

I guess so, because it may be discounted in the market already, but the capital infusion will start some time late this month, so in a terms of supply and demand usd should be reaching the price levels easilly