Quote Of The Day On Inflation, Deflation, Stagflation

The follwing quote from Kevin Depew ( taken from Five Things You Need to Know: Not Your Father's Stagflation ) sums it up. Mish has another good take on this topic M3 Contraction - The Future Is Now

Die nachfolgende Aussage von Kevin Depew aus Five Things You Need to Know: Not Your Father's Stagflation trifft den Nagel auf den Kopf. Wie üblich hat auch Mish etwas zu diesem Thema beizutragen M3 Contraction - The Future Is Now . Wie bereits mehrmals betont stimme ich mit Mish überein das bei richtiger Definitionsauslegung ( siehe Inflation: What the heck is it? ) zukünftig zumindest in einigen westlichen Ländern wohl eher eine Deflationsdebatte zu führen ist.

"Stagflation is simply the transition from credit expansion to credit contraction, leading inevitably to deflation."

Needless to say that the Fed & Co have always the agenda to reverse this trend William Poole : "The Fed Wants To Create Inflation" . All the latest efforts ( lending facilities, low interest rates in the face of sky high consumer prices, rebate checks, etc ) & baliouts we have seen recently are clearly a sign of desperation and fear that they will lose the battle this time ...... Next step probably over the weekend the nationalisation of Phony Mae & Fraudie Mac

Überfllüssig zu erwähnen das die Fed & Co grundsätzlich die Agenda haben ( schließe da ausdrücklich die EZB mit ein ) Inflation extrem zu begünstigen William Poole : "The Fed Wants To Create Inflation" . Die letzten Aktionen ( diverse neue Programme zur Kreditversorgung von Banken und Investmentbanken, niedrige Leitzinsen im Angesicht explodierender Konsumentenpreise, usw. ) sowie diverse Baliouts zeigen immer verzweifelter werdende Versuche den deflationären Trend umzukehren..... Nächste Aktion dürfte die Verstaatlichung von Phony Mae & Fraudie Mac. Würde mich nicht wundern wenn es hier bereits am Montag Neuigkeiten gibt......

Hussman On Phony Mae "This makes Long Term Capital Management Look Like A Conservative Strategy"

If you can stand it i suggest to click through the Fannie Mae Q2 Confernce Call Presentation. Sobering stuff with a management that is still highlighting useless stuff like this one.....

Wenn Ihr die Nerven habt empfehle ich einen Blick durch die Slides der Fannie Mae Q2 Telefonkonferenz Präsentation zu werfen. Ein paar ganz üble Charts sowie ein Management das immer noch auf zu vollkommen nutzlosen Aussagen wie den folgenden beharrt.....

Core capital of $47.0 billion at end of 2008 Q2 is above both our statutory minimum capital requirement, a surplus of $14.3 billion, and the OFHEO-directed minimum capital requirement, a surplus of $9.4 billion.

Compare this one with the reality aka Hussman or Kevin Depew

Vergleicht diese Aussage mit der von Hussman oder Kevin Depew

This is another misleading statement. Technically, based on the Office of Federal Housing Enterprise Oversight (OFHEO) requirements, both companies have dequate capital cushions. But that's like jumping out of an airplane without a parachute and arguing on the way down over whether your shoes have the right government mandated soles. Yes, according to OFHEO guidelines, Fannie and Freddie have the right soles. But put in context, those shoes aren't going to be of much use when their feet hit the ground without a parachute

Hussman With regard to Fannie Mae's report, the most interesting figure wasn't the reported $2.3 billion loss, but rather the much larger deterioration in the reported fair value of Fannie's balance sheet. We can observe what's going on by comparing Table 32 of Fannie Mae's Q2 2008 10Q filing with the same table in Fannie Mae's Q1 2008 10Q filing.

As of June 30, 2008, the fair value of Fannie Mae's common equity (that is, the book value available to common shareholders) was -$5.39 billion, compared with a March 31 fair value of -$2.07 billion. What's notable here is that this deterioration (-$3.32 billion) was even larger than the -$2.30 billion loss that Fannie reported to investors, which was itself about four times higher than the loss analysts had estimated.

Note that balance sheet losses are excluded from earnings. Financial stocks tend to be reasonably valued when they trade at tangible book value, but simply put, Fannie Mae has no tangible book value. The common stock is now a call option.

Even if we include the fair value of preferred equity, we find that on a fair value basis, Fannie Mae is operating at a gross leverage multiple of 72.7 (total assets comprised primarily of mortgage loans, divided by shareholder equity). In other words, a slight 1.4% deterioration in the value of Fannie's book of assets will wipe out all of the remaining shareholder equity. This makes Long Term Capital Management look like a conservative strategy.

Fannie Bid to Preserve Capital Is Temporary WSJ
Postponing a problem is very different from solving one. Yet Fannie Mae is going to extraordinary lengths to preserve capital -- even trying to forestall big losses by giving essentially free money to delinquent borrowers.

This is a temporary fix that could leave investors with a bad surprise down the road.

In Friday's second-quarter results, Fannie said it made $127 million in loans that allow delinquent borrowers to get current on their mortgages. That prevents Fannie having to repurchase the loans from mortgage trusts at face value and take an immediate charge based on market prices.

In the second quarter, the average markdown for such repurchased loans was 47% and resulted in an overall charge of $380 million. Without the special loans to delinquent borrowers, Fannie might have been forced to buy back 17,901 loans. That could have meant an additional charge of as much as $1.5 billion, based on the losses Fannie took on the mortgages it did repurchase.

Superficially, that isn't a bad trade. Fannie avoids a big extra charge by issuing just $127 million of new loans. The trouble? The special loans have their own cost. Fannie is already carrying the $127 million on its books at just $4 million, meaning it wrote the loans down to about three cents on the dollar.

In its second-quarter filing, Fannie said it expects such special loans "to continue to reduce the number of delinquent loans that we otherwise would have purchased" throughout 2008.

That may preserve capital. But it is really just postponing a problem festering out of investors' sight.

> More comedy from Hank.....Paulson Interview: No Plans to Insert Money in Fannie and Freddie . I´ll bet that during the coming 6-8 weeks the Taxpayerwill be the only one buying the new equity....

> Hier gibt es weitere Aussagen die in 6-8 Wochen vollkommen von der Wirklichkeit eingeholt werden sein dürften......Paulson Interview: No Plans to Insert Money in Fannie and Freddie .

Joke Of The Day...."Fannie Mae and Freddie Mac Are Adequately Capitalized"

Kevin Depew has a good edition on Fraudie Mac & Phony Mae in his Five Things You Need to Know that is worth reading in total. Keep his following comment in mind when you hear the following quote"Fannie Mae and Freddie Mac are adequately capitalized."...... Unfortunatley almost everybody has used this phrase and it is a clear sign that Bernanke, Paulson & Co don´t care about their credibility and their institutions. Nothing really new. On the other hand they have probably no other choice than consistanly lying almost every time they open their mouth... One of my all time favourites is their "strong $ policy" It is working just fine for a long time goldbug :-) Others ( Wall Street Finest, Politicians ) that use this nonsense maybe really believe what they say. I don´t know what is worse....

Kevin Depew hat erneut eine gute Fraudie Mac und Phony Mae Edition in seinen Five Things You Need to Know zusammengestellt ( kompletter Link empfehlenswert ). Sein Kommentar zum folgenden Zitat "Fannie Mae and Freddie Mac are adequately capitalized." trifft den Nagel auf den Kopf. Dieser Satz ist in den letzten Tagen befehlsartig von jedem wiederholt worden der sich zu diesem Thema von offizieller Seite geäußert hat. Wenig verwunderlich auch das Bernanke und Paulson mehrmals diesen Schwachsinn wie in Trance heruntergebetet haben. Dies zeigt einmal mehr das denen die Glaubwürdigkeit Ihrer Personen und vor allem deren Institutionen nicht das schwarze unter dem Fingernagel wert zu sein scheint. Keine wirklich neue Erkenntnis.... Zu deren Verteidigung sei angefügt das die Welt und besonders die US Bürger die ungeschminkte Wahrheit wohl kaum ertragen könnten. Aber das jetzt fast jedes Mal wenn einer der Beiden den Mund aufmacht nur noch Peinlichkieten herauskommen ist schon krass..... Ich als Goldbug amüsiere und bedanke mich beinahe täglich zudem über die inwzischen legändere"strong $ policy" der Beiden...... Politiker die diesen Satz ebenfall in den Mund nehmen glauben evtl. tatsächlich daran. Ich weiß nicht was schlimmer ist......

"Fannie Mae and Freddie Mac are adequately capitalized."

This is another misleading statement. Technically, based on the Office of Federal Housing Enterprise Oversight (OFHEO) requirements, both companies have adequate capital cushions. But that's like jumping out of an airplane without a parachute and arguing on the way down over whether your shoes have the right government mandated soles. Yes, according to OFHEO guidelines, Fannie and Freddie have the right soles. But put in context, those shoes aren't going to be of much use when their feet hit the ground without a parachute

minyanville / The Depew Research Center: What American Need :-)

depew and minyanville really are one of my favorites. make sure you click on the headline to read

klickt bitte auf die überschrift um mehr von depew und minyanville zu lesen

"Five Things You Need to Know: The Damage Isn't Spreading, The Damage Isn't Spreading If You Ignore the Damage; Getting Carried Away; Why Do the Super Rich Need So Much Money?; Things We Can't Live Without"

Minyanville / depew " five things you need to know..."

this piece from kevin depew is just excellent and also funny! click on the headline to read the

das teil ist wirklich klasse. bitte auf die überschrift klicken

Five Things You Need to Know: 26-Year Low for Junk Defaults!; What Does FDIC Stand For?; Let's Review; Dreaming of Enron; Permanent Moon Base Really Happening!