Fannie Mae records huge loss of $14.8 billion

[alex revision]

Fannie Mae records huge loss of $14.8 billion

Fri, 07 Aug 2009 09:06:17 GMT

http://www.presstv.com/detail.aspx?id=102758&sectionid=3510213

US mortgage insurer Fannie Mae has reported a loss of $14.8 billion in the second quarter of 2009 saying that has pushed the firm to ask the US Treasury for more aid.

The troubled mortgage-finance company, which lost $23.2 billion in the first quarter of 2009, Thursday requested $10.7 billion from a $200 billion US government lifeline.

The new report brings the total of the institution's losses over the last two years to $101.6 billion and will bring its total draw on the Treasury since April 2009 to $44.9 billion.

"Due to current trends in the housing and financial markets, we expect to have a net-worth deficit in future periods, and therefore will be required to obtain additional funding from Treasury pursuant to the senior preferred stock purchase agreement," Fannie Mae said. "As a result, we are dependent on the continued support of Treasury in order to continue operating our business."

Washington-based Fannie Mae has asked for the receipt of the additional money on or before Septemebr 30.

Fannie Mae, along with its sister institution Freddie Mac, have become more crucial in the US housing system since 2007 as the financial downturn sealed off other sources of mortgage funding.

[Zenos]

Fanny and Freddie still showing losses, and now it's reported that the fed is buying it's own bonds, yet the stock market is in a rally.

Something isn't right.

[George Witzgall]

Fanny and Freddie still showing losses, and now it's reported that the fed is buying it's own bonds, yet the stock market is in a rally.

Something isn't right.

oh zenos, I'm so damn sorry.

[cillian]

Fanny and Freddie still showing losses, and now it's reported that the fed is buying it's own bonds, yet the stock market is in a rally.

Something isn't right.

The government 'revised' the unemployment numbers for the past few months and show that less jobs were lost than previously thought, also this was the lowest month of losses in a while with only 247,000 or so jobs being cut.


WASHINGTON – President Barack Obama on Friday welcomed a dip in unemployment as evidence "the worst may be behind us" with the recession well into its second year. Earlier, however, the White House said that the president still expects unemployment to hit 10 percent sometime later this year.

White House press secretary Robert Gibbs said the two positions don't contradict each other.

"I would describe the report that came out today as the least bad report that we've had in a year," Gibbs said. "But we still have a long way to go."

The new Labor Department numbers show that employers cut 247,000 jobs in July, another job loss but also the smallest reduction of any month this year. The unemployment rate dropped marginally from 9.5 percent to 9.4 percent, although one of the reasons for that change is that hundreds of thousands of people left the labor force.

"Today, we're pointed in the right direction," Obama said in brief remarks in the Rose Garden hours after the report was released. "While we've rescued our economy from catastrophe, we've also begun to build a new foundation for growth."

Even so, Obama said: "We have a lot further to go. As far as I'm concerned, we will not have a true recovery until we stop losing jobs." He also said he won't rest until "every American that is looking for a job can find one."

The president used the new jobs figures not only to pitch the benefits of the already passed stimulus package but also to press for policy changes on health care, education and energy that he seeks.

"We can't afford to return an economy based on inflated returns and maxed-out credit cards," he added. "It won't be easy. ... We have a steep mountain to climb and we started in a very deep valley." But he added that he was confident the country could pull itself out of the slump.

The initial White House reaction to the new employment numbers was mostly guarded.

"None of us loses sight of the fact that last month a quarter million people lost their jobs," Gibbs said. "The long-term unemployment rate is increasing. People are going to begin exhausting their even extended unemployment benefits soon."

"I think it's going to be quite some time before we start seeing genuine, sustained, positive job growth," the spokesman said.

Obama has urged Americans to be patient and give time for his $787 billion stimulus package of tax cuts and increased government spending to take hold. Gibbs contended there could be no doubt the stimulus plan has contributed to the slowing rate of job losses.

http://news.yahoo.com/s/ap/us_economy_obama

Just more suckers buyin' hope.

[General_Lee]

And it's not just FNMA (Fannie Mae) -- it's SLM (Sallie Mae), FRMC (Freddy Mac) and SBA. [SBA is the only broke, government-operated lending corporation that they haven't given a Southern-sounding name to yet].

I filed a bankruptcy today for a white man who had the misfortune of going into the chicken raising business with the help of the SBA. With loan guarantees from the SBA, he had built 4 huge chicken houses on his 40 acres of land that had been in his family for generations. Next to the chicken houses he had built a nice but modest 3 bedroom house for his wife and kids, and there they had lived for the past 10 years.

He contracted with a major, nationwide chicken producer and was making 5 batches of fryers per year. He, his wife and kids provided all the labor. Dumbass -- he thought if he worked hard and actually produced something of value, that he would have a profit at the end of the year. Well, he did: Fifty thousand chickens sold in 2007, he made $18 after expenses. An equal number of chickens in 2008, he made $23.

We listed his debts to local banks backed by the SBA at over a million dollars. He's in his late 30s and he and his wife and kids are moving into a used trailer they put out in back of his parents' house. The banks will send the losses to the SBA. The farm will be auctioned and the bank will buy it for pennies on the dollar and sell it to the next sucker.

He sent me 3 more clients that are friends of his who are also in the chicken business. I'll see them next week. And from the information that I have so far, they are in even deeper than him. By the end of next week, I should have lightned ZOG up by about 5million. And that's one small time lawyer in rural south Mississippi. What is this shit looking like nationally?

[Alex Linder]

And it's not just FNMA (Fannie Mae) -- it's SLM (Sallie Mae), FRMC (Freddy Mac) and SBA. [SBA is the only broke, government-operated lending corporation that they haven't given a Southern-sounding name to yet].

I filed a bankruptcy today for a white man who had the misfortune of going into the chicken raising business with the help of the SBA. With loan guarantees from the SBA, he had built 4 huge chicken houses on his 40 acres of land that had been in his family for generations. Next to the chicken houses he had built a nice but modest 3 bedroom house for his wife and kids, and there they had lived for the past 10 years.

He contracted with a major, nationwide chicken producer and was making 5 batches of fryers per year. He, his wife and kids provided all the labor. Dumbass -- he thought if he worked hard and actually produced something of value, that he would have a profit at the end of the year. Well, he did: Ten thousand chickens sold in 2007, he made $18 after expenses. An equal number of chickens in 2008, he made $23.

We listed his debts to local banks backed by the SBA at over a million dollars. He's in his late 30s and he and his wife and kids are moving into a used trailer they put out in back of his parents house. The banks will send the losses to the SBA. The farm will be auctioned and the bank will buy it for pennies on the dollar and sell it to the next sucker.

He sent me 3 more clients that are friends of his who are also in the chicken business. I'll see them next week. And from the information that I have so far, they are in even deeper than him. By the end of next week, I should have lightned ZOG up by about 5million. And that's one small time lawyer in rural south Mississippi. What is this shit looking like nationally?

Interesting anecdote. Whole chickens at Aldi are .79c/lb here in the 'ville. They were perhaps half that ten years ago. Did the economics of the chicken business change at some point after the fellow got into it?

[General_Lee]

Interesting anecdote. Whole chickens at Aldi are .79c/lb here in the 'ville. They were perhaps half that ten years ago. Did the economics of the chicken business change at some point after the fellow got into it?

He was contracted to produce as many chickens as the producer asked for over a 7 year period up to his full capacity. He started off with 2 houses and every year the company bought all he could produce. So eventually he built 2 more houses to make more money. The American Way, right? According to him, every year a chicken house can produce 5 batches of chickens -- 10 weeks from hatchling to fryer. Four houses with a batch capacity of 2500 times 5 batches per year is 50,000 chickens per year. After he had gone into big time debt for the new houses, the company cut back their orders: From 5 batches per year to 4 and eventually to 3. So his houses were standing idle for 20 weeks per year. No other companies would buy his excess capacity.

He said that most of the chickens they produced were shipped to Russia and China, and that the economic downturn had dried up the markets over there for meat.

His fixed expenses, primarily the mortgage, just ate him alive.

[Matt Ferguson]

Fanny and Freddie still showing losses, and now it's reported that the fed is buying it's own bonds, yet the stock market is in a rally.

Something isn't right.


I'm thinking that whats propping up the market is that the big banks that are sitting on all that cash from TARP and secretive Federal Reserve deals are seeing the opportunity for a short term gain in the market and have started to pump that money in. They sure aren't lending it out so my guess is that it's them who are doing the buying.

[Bassanio]

Fanny and Freddie still showing losses, and now it's reported that the fed is buying it's own bonds, yet the stock market is in a rally.

Something isn't right.

Something hasn't been right since 1929.

[Kievsky]

It's called a "crackup boom."

What is a "Crack-Up Boom?" Von Mises explains (with thanks to Ty Andros for reminding us):

"'This first stage of the inflationary process may last for many years. While it lasts, the prices of many goods and services are not yet adjusted to the altered money relation. There are still people in the country who have not yet become aware of the fact that they are confronted with a price revolution which will finally result in a considerable rise of all prices, although the extent of this rise will not be the same in the various commodities and services. These people still believe that prices one day will drop. Waiting for this day, they restrict their purchases and concomitantly increase their cash holdings. As long as such ideas are still held by public opinion, it is not yet too late for the government to abandon its inflationary policy.'
"But then, finally, the masses wake up. They become suddenly aware of the fact that inflation is a deliberate policy and will go on endlessly. A breakdown occurs. The crack-up boom appears. Everybody is anxious to swap his money against 'real' goods, no matter whether he needs them or not, no matter how much money he has to pay for them. Within a very short time, within a few weeks or even days, the things which were used as money are no longer used as media of exchange. They become scrap paper. Nobody wants to give away anything against them.

"It was this that happened with the Continental currency in America in 1781, with the French mandats territoriaux in 1796, and with the German mark in 1923. It will happen again whenever the same conditions appear. If a thing has to be used as a medium of exchange, public opinion must not believe that the quantity of this thing will increase beyond all bounds. Inflation is a policy that cannot last."

Mises is describing the lunatic phases of a classic inflationary cycle.

At first, no one can tell the difference between a real dollar - one that is earned, saved, invested or spent - and one that just came off the printing presses. They figure that the new dollar is as good as the old one. And then, prices rise...and people don't know what to make of it. Later, they begin to catch on...and all Hell breaks loose.

You see, if you could really get rich by printing more currency, Zimbabweans would all be as rich as Midas, since the Mugabe government runs the presses night and day.