Slope initially began as a blog, so this is where most of the website’s content resides. Here we have tens of thousands of posts dating back over a decade. These are listed in reverse chronological order. Click on any category icon below to see posts tagged with that particular subject, or click on a word in the category cloud on the right side of the screen for more specific choices.
The looniness keeps out-loonying itself with every passing day. The $900 billion “stimulus” bill, the latest battleship full of free money, breezed through Congress and landed on the President’s desk. To everyone’s surprise, he didn’t sign it, but instead said that the life-changing $600 stipend that each citizen was going to get, he said it should be over three times that much. The market sold off quickly (red arrow). As you can see, the selling didn’t last.
You have a next-door neighbor. His name is Sam. He seems like a decent guy and seems to do all right for himself. And, for the purposes of this allegory, you happen to know a lot about Sam’s financial situation.
First off, he makes a good living. He pulls down $200,000 a year. Impressive! So he is able to sell whatever goods and services he has available and is willing to provide for that sum each year. Well done, Sam. It’s a good income.
Oh, he’s also $250,000 in debt. But big deal, right? After all, plenty of people have debt. Mortgages, for one thing. Debt is part of life. he’s on time with his payments. So lay off. His “debt to annual production” is 125%.
(more…)Fannie Mae and Freddie Mac have seen their valuations climb in the days since the Federal Housing Finance Agency finalized the capital rule for them. Common shares of both government-sponsored enterprises climbed more than 30%, while their preferred shares increased by more than 10%.
Analyst Dick Bove of Odeon Capital said he would’ve expected that the preferred shares of Fannie and Freddie would increase more than the common shares, although that’s not what happened. He also continues to assume that a few significant steps would be taken that would impact the valuation of Fannie Mae and Freddie Mac preferred shares.
Bove continues to assume that the so-called “net worth sweep,” which sweeps all of the GSEs’ earnings into the Treasury, would be retired and considered repaid. He also expects that by the end of the year, Fannie and Freddie would owe no additional dividends to the government.
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