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To: orkrious who wrote (96065)8/8/2008 7:54:32 AM
From: Crimson Ghost
1 Recommendation   of 110046
 
A weak buck is one thing, the threat of a dollar collapse is something else entirely.

A dollar collapse into the 60s would have seriously threatened the international financial system with unpredictable consequences. If the buck had not rallied strongly the Dow probably would be at least a thousand points lower right now IMHO.

The buck looks overbought and gold oversold at this point. But I suspect the final highs for the buck and the final lows for gold are still head of us.

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From: Paul Kern8/8/2008 8:04:11 AM
   of 110046
 
Fannie Mae Posts Fourth Straight Loss, Cuts Dividend (Correct)

By Dawn Kopecki


Aug. 8 (Bloomberg) -- Fannie Mae, the largest U.S. mortgage- finance company, sliced its dividend after posting its fourth straight quarterly loss and cut its dividend as record delinquencies pushed up credit costs.

The second-quarter net loss was $2.3 billion, or $2.54 a share. Before a one-time gain, the loss was $2.51 a share, compared with the 72-cent average estimate of 10 analysts in a Bloomberg survey. The common-stock dividend will be cut to 5 cents from 25 cents a share, Washington-based Fannie said today in a regulatory filing.

Fannie's results come two days after Freddie surprised investors with a loss that was three times wider than analysts anticipated and said the worst housing slump since the Great Depression is deepening. Fannie and Freddie plunged more than 80 percent in New York trading this year on concern they may not have enough capital to withstand record foreclosures on the $5.2 trillion of mortgages they own and guarantee. Freddie's loss increased speculation that U.S. Treasury Secretary Henry Paulson may use his new powers to pump capital into one or both companies.

``Neither of these companies have properly provisioned for what we're heading into,'' said Paul Miller, an analyst at Friedman, Billings, Ramsey & Co. in Arlington, Virginia, who has an ``underperform'' rating on both companies. ``This thing is going to get worse and last longer and deeper than they originally thought.''

Both companies will need to raise as much as $15 billion, Miller said.

Fannie reported net income of $1.95 billion, or $1.88 a share, in the same quarter a year ago.

Fannie's Advantage

Fannie Chief Executive Officer Daniel Mudd, 49, has raised $14.4 billion since late last year, though still failed to quell concerns that the company is short of capital. As worries escalated, he dispatched executives to Asia to calm investors.

Fannie, down 27 percent since Freddie's earnings release on Aug. 6, declined $1.65 to $9.95 in New York Stock Exchange composite trading yesterday. McLean, Virginia-based Freddie fell 27 percent in two days and declined 60 cents to $5.89 yesterday.

Freddie CEO Richard Syron, 64, this week said the company is waiting for a more ``propitious time'' to sell the $5.5 billion in stock it had agreed to offer in May. Freddie said it will cut its dividend at least 80 percent and may slow purchases of mortgages to shore up capital.

Fannie halved its dividend in two cuts since December, reducing it to 25 cents from 50 cents.

``The one advantage that Fannie has it that it did raise capital when the window was open to them,'' Joshua Rosner, an analyst at Graham Fisher & Co. in New York, said in an interview with Bloomberg Television.

`Marginally Profitable'

Fannie and Freddie, government-chartered enterprises created to boost mortgage financing, own or guarantee 42 percent of the $12 trillion U.S. home loans outstanding. They make money by holding mortgage assets that yield more than their debt costs, and by guaranteeing bonds they create out of loans.

``Fannie Mae will be marginally profitable in the back half of this year and in 2009,'' said Credit Suisse Group's Moshe Orenbuch, the top-ranked analyst covering the company. Orenbuch, based in New York, has an ``underperform'' rating on Fannie and Freddie.

The companies are stumbling just as the government is leaning on them to revive the housing market and keep the economy out of recession.

Paulson last month received authority for his plan to buy unlimited equity stakes in the companies and extend them financing if needed to help bolster confidence in the companies.

Forecasts Lowered

Bill Gross, manager of the world's biggest bond fund and Pacific Investment Management Co., said the Treasury will probably be forced to buy as much as $30 billion of preferred shares in both Fannie Mae and Freddie Mac.

Almost one in every 10 mortgages in the U.S. was in trouble during the first quarter, the highest in records dating to 1979, according to the Mortgage Bankers Association in Washington. Delinquencies, or home loans with payments 30 days or more overdue, rose to 6.35 percent of outstanding mortgages and the share of homes in foreclosure rose to 2.47 percent.

Freddie revised its forecast for housing price declines to a drop of as much as 20 percent from a previous estimate of 15 percent and said the number of properties it has in foreclosure rose to 22,000, the most since it was created in 1970 during the Vietnam War.

Freddie has about $25 billion and Fannie has about half that in potential losses from those securities that the companies say are ``temporary'' because they assume they will recoup the investment once it matures, Orenbuch estimates. Many of those losses may never be recovered, he said.

To contact the reporter on this story: Dawn Kopecki in Washington at dkopecki@bloomberg.net
Last Updated: August 8, 2008 07:56 EDT

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To: Paul Kern who wrote (96067)8/8/2008 10:35:24 AM
From: Keith Feral
   of 110046
 
Did you see the earnings from MBIA?

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From: carranza28/8/2008 11:01:46 AM
   of 110046
 
Can anyone make sense out of this rally?

The news today indicates that BAC and Citi will use up a good chunk of their newly-raised capital buying back the auction rate scam they ran. Fannie posts larger than expected losses as did Freddie a couple of days ago. Productivity up but only because workers are working fewer hours.

Dollar is up relative to the Euro, but the printing press is open, the federal debt is growing, public debt ditto, all of which suggest a lower dollar. Plus a stronger dollar is not that good for exports.

So the market goes up 200 plus.

Will someone explain this to me in a way that makes sense because it doesn't make any to me.

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To: carranza2 who wrote (96069)8/8/2008 11:07:48 AM
From: ggersh
   of 110046
 
Right there with you C......one take could be massive de-leveraging out of Commodities. Had a chat yesterday with a trader in Chitown and he told me that banks aren't giving any money to futures traders, as a favor for the Fed "loaning" them Billions....

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To: ggersh who wrote (96070)8/8/2008 11:11:26 AM
From: carranza2
   of 110046
 
There is no doubt that a stronger dollar leads to lower commodities prices and a better looking balance sheet for the foreign CBs holding our markers.

The question is whether this stronger dollar can be sustained given our massive internal problems. My guess is 'no' but today I am dead wrong. In the long term, who knows.



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To: carranza2 who wrote (96071)8/8/2008 11:25:45 AM
From: clochard
2 Recommendations   of 110046
 
Its another government sponsored sucker's rally IMHO.

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To: Keith Feral who wrote (96068)8/8/2008 11:34:32 AM
From: Paul Kern
1 Recommendation   of 110046
 
Did you see the earnings from MBIA?

F me. I don't get it. Accounting changes? Lies? Damned lies?

“There’s something going on here, and you don’t know what it is, do you, Mr. Jones?”

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To: carranza2 who wrote (96069)8/8/2008 11:39:19 AM
From: bart13
   of 110046
 
Here's one take, based on 1974 history rhyming.


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To: carranza2 who wrote (96071)8/8/2008 11:52:32 AM
From: ggersh
   of 110046
 
I'm not so sure about strong dollar leading to lower commodity prices, being an absolute. But long term like you said who knows, but the educated guess would be that the Dollar should go lower....JMHO

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