John Quiggin

With the news that Freddie and Fannie have been placed in ‘conservatorship’ by the US Fed, can you believe that the ASX has supposedly risen 3% on the news? I would have thought any fool investor could see receivership by any other name.

On the contrary, Observa. The news isn’t that F&F are in trouble. That was known weeks ago. The news is that they are not going to be allowed to fall over. If this stabilises the credit crunch, then it’s good for investors. It’s especially good for investors in banks, which is why banks are leading the rally.

How does shifting the patently obvious losses from F&F to the US taxpayer possibly thwart a global recession in the medium term? What will that inevitably mean for these sudden ASX investor enthusiasts? With F&F investors having lost 90% of their equity to date, it’s true there is their remaining 10% to be immediately gleaned from this move, but that is dwarfed by by the liability for US taxpayers now. Hobsons or Paulsons choice I guess.

“How does shifting the patently obvious losses from F&F to the US taxpayer possibly thwart a global recession in the medium term?”

The US taxpayers have very deep pockets. They’ve already sunk $1 trillion in Iraq, and counting, and barely batted an eyelid. Keeping F&F afloat is chicken feed by comparison.

“The US taxpayers have very deep pockets” – but not limitless ones.

The prospect of additional on-budget liabilities of this scale should already make people chary of buying US Treasury bonds. It can’t be good for the USD.

Mind you if McCain gets up then his unfunded tax cuts and the prospect of more wars of choice oughtta end the role of the USD as the world’s reserve currency. If I was a commodity exporter I reckon I’d already be asking for payment in Euros.

not just commodities – Chinese manufacture exporters are being squeezed by the falling dollar and are taking yen and euro wherever they can.

Looks to me like, George Bush, America, has gone for the protect ‘The Pyramid Building Society option’, in the supposed, ‘lame duck’ period.

‘With the news that Freddie and Fannie have been placed in ‘conservatorship’ by the US Fed, can you believe that the ASX has supposedly risen 3% on the news? I would have thought any fool investor could see receivership by any other name.”

Maybe the markets know something you don’t.

How about that Western Australian state election?

It’s not certain yet but it looks like the Liberals might have managed to extend their losing streak yet again.

“Maybe the markets know something you don’t.”
They’re just a bit slow on the uptake Ian-
http://www.news.com.au/business/story/0,27753,24325762-31037,00.html

obby, no one ever clicks on the links you post, and you know you’re not allowed to post the whole thing.

Has it ever occurred to you that it’s possible to quote a sentence or two, or to give a one paragraph summary of what you think the story says?

At the moment, all you’re doing here is wasting your time.

Fair enough SJ. It’s yesterday’s news anyway, just like Freddie and Fannie. Ask the Lehman Bros now.