2008/7/21 22：22
"Fannie Mae" & "Freddie Mac" 分類なし
Ｔhe U.S. financial giant Merrill Lynch & Co., Inc. released on July 17th that it booked loss of $4.65 billion in the April-June quarter.
The loss related house mortgage is $9.7 billion, that is around two times larger than the market forecast, and it booked loss for four consecutive quarters.
Consolidated loss mortgage related loss since last summer surpassed $40 billion that is the largest among the U.S. major brokerages.
On the same day, Merrill released that it sold Bloomberg-share to Bloomberg and raised $4.4 billion.
On July 16th, Citi Group released the quarterly financial report for April-June period -- final loss is $2.50 billion. It booked deficit for three consecutive quarters.
But loss for the latest quarter is declined from January-March quarter of $5.1 billion. Its loss per share is 54 cent that is better than analysts' averaged estimation of 61 cent.
Generally, the U.S. financial giants are still forced to book vast amount of mortgage related losses as prices of real estates are still declining from coast to coast, for your ref.>"American housing, The wrecking-ball response"
But it is also true that amount of loss is decling.
So can we say that the U.S. subprime fiasco has already passes the peak? No, we can't. Recently, another bomb has emerged -- "Fannie Mae" & "Freddie Mac."
Fannie Mae was established after the Great Depression for the sake of revitalization of economy, and privatized in 1968. Freddie Mac was established in 1970.
Both are quasi-governmental institutions and have their hand in housing finance operation.
Due to their character as semi-governmental institutions, their bonds are considered to be as much safety as treasury bonds. In other words, the market recognized that "they are secured by the U.S. government."
Indeed, Secretary of the Treasury Henry Merritt Paulson showed intention to inject public money to them if necessary, because they are "too big to fail."
As they account for 42% in the U.S. housing financing, if they fall into dysfunctional conditions, many Americans could not be able to secure necessary financing to purchase house.
Their balance sheets has been deteriorating since last summer as housing bubble collapsed.
They books deficit consecutively and outstanding losses are reckoned by Goldman Sachs $32 billion at Fannie Mae and $21 billion at Freddie Mac.
They are core of the counter-measures for subprime mortgage fiasco. Washington made them to purchase housing loans to reduce burden of struggling private financial institution.
That is the reason why the government is considering to rescue them by public money. It is not a written but a tacit consensus in the market.
Bonds issued by them are held by both offical and private institutions around the world.
So if they fail, not only an exit of the subprime fiasco disappear but also loss will emerge around the world and the U.S. will be criticized because it delivered poison-tainted securities around the wordl.
Good or worse, there is no way but to rescue them by public money for the U.S., for your ref.>"Fannie Mae & Freddie Mac, End of illusions"
But unfortunately, injection of public money into them doesn't mean the end of the subprime fiasco, for your ref.>"Let's hope it's over soon"
In Japan, although the general public also criticized to help "Jusen Housing Lenders" with tax money, but the government was finally forced to do so.
But that rescue operation wasn't the final answer to the housing bubble collapse. It is very likely that the same can be said about the current subprime fiasco.
As prices of real estates continue to decline, now losses continue to emerge one after another -- this is also a lesson of the "Lost Decade" in Japan.
Injection of public money is nothing more than a symptomatic therapy. It could be effective temporarily but can't settle root causes.
Or rather, deterioration of real economy due to spilloever effect from financial sector could emerge from now on. for your ref.>"America's economy, Boxed-in Ben"
Anyway, it is necessary to help Fannie Mae & Freddie Mac with public money even though the general public criticize that. In addition, it should be done ASAP to reduce burden on taxpayers.
Bush administration will be able to make decision? I doubt that.
Especially, this is a year of the U.S. presidential election so it is difficult for the authority to execute unpopular measures. Ironically, as Japan's experience teaches, delay means more burden on taxpayers after all.
For your ref.>Still under declining phase
>The spectre of stagflation, Things can only get worse
>Australian finance, Down under
>America's housing bill, Help is at hand
>Merrill Lynch, Hope amid the gloom
>Short-selling, Naked fear
>America's economy, Still on the right road
>Bank losses, Hall of shame
>The credit crunch one year on, Mission creep at the Fed
>Cities & housing, The end of the dream?
>American finance, Still bleeding
>Jackson Hole, The credit crisis
>Britain's economy, How bad is it?
>American jobs, Postpone the optimism
>America's mortgage giants, Suffering a seizure
>Takeover to stem the tide?
>Financial services, Hank to the rescue
>American corporate profits, A turn for the worse
>Bailout raises moral issues
>American finance, Nightmare on Wall Street
The loss related house mortgage is $9.7 billion, that is around two times larger than the market forecast, and it booked loss for four consecutive quarters.
Consolidated loss mortgage related loss since last summer surpassed $40 billion that is the largest among the U.S. major brokerages.
On the same day, Merrill released that it sold Bloomberg-share to Bloomberg and raised $4.4 billion.
On July 16th, Citi Group released the quarterly financial report for April-June period -- final loss is $2.50 billion. It booked deficit for three consecutive quarters.
But loss for the latest quarter is declined from January-March quarter of $5.1 billion. Its loss per share is 54 cent that is better than analysts' averaged estimation of 61 cent.
Generally, the U.S. financial giants are still forced to book vast amount of mortgage related losses as prices of real estates are still declining from coast to coast, for your ref.>"American housing, The wrecking-ball response"
But it is also true that amount of loss is decling.
So can we say that the U.S. subprime fiasco has already passes the peak? No, we can't. Recently, another bomb has emerged -- "Fannie Mae" & "Freddie Mac."
Fannie Mae was established after the Great Depression for the sake of revitalization of economy, and privatized in 1968. Freddie Mac was established in 1970.
Both are quasi-governmental institutions and have their hand in housing finance operation.
Due to their character as semi-governmental institutions, their bonds are considered to be as much safety as treasury bonds. In other words, the market recognized that "they are secured by the U.S. government."
Indeed, Secretary of the Treasury Henry Merritt Paulson showed intention to inject public money to them if necessary, because they are "too big to fail."
As they account for 42% in the U.S. housing financing, if they fall into dysfunctional conditions, many Americans could not be able to secure necessary financing to purchase house.
Their balance sheets has been deteriorating since last summer as housing bubble collapsed.
They books deficit consecutively and outstanding losses are reckoned by Goldman Sachs $32 billion at Fannie Mae and $21 billion at Freddie Mac.
They are core of the counter-measures for subprime mortgage fiasco. Washington made them to purchase housing loans to reduce burden of struggling private financial institution.
That is the reason why the government is considering to rescue them by public money. It is not a written but a tacit consensus in the market.
Bonds issued by them are held by both offical and private institutions around the world.
So if they fail, not only an exit of the subprime fiasco disappear but also loss will emerge around the world and the U.S. will be criticized because it delivered poison-tainted securities around the wordl.
Good or worse, there is no way but to rescue them by public money for the U.S., for your ref.>"Fannie Mae & Freddie Mac, End of illusions"
But unfortunately, injection of public money into them doesn't mean the end of the subprime fiasco, for your ref.>"Let's hope it's over soon"
In Japan, although the general public also criticized to help "Jusen Housing Lenders" with tax money, but the government was finally forced to do so.
But that rescue operation wasn't the final answer to the housing bubble collapse. It is very likely that the same can be said about the current subprime fiasco.
As prices of real estates continue to decline, now losses continue to emerge one after another -- this is also a lesson of the "Lost Decade" in Japan.
Injection of public money is nothing more than a symptomatic therapy. It could be effective temporarily but can't settle root causes.
Or rather, deterioration of real economy due to spilloever effect from financial sector could emerge from now on. for your ref.>"America's economy, Boxed-in Ben"
Anyway, it is necessary to help Fannie Mae & Freddie Mac with public money even though the general public criticize that. In addition, it should be done ASAP to reduce burden on taxpayers.
Bush administration will be able to make decision? I doubt that.
Especially, this is a year of the U.S. presidential election so it is difficult for the authority to execute unpopular measures. Ironically, as Japan's experience teaches, delay means more burden on taxpayers after all.
For your ref.>Still under declining phase
>The spectre of stagflation, Things can only get worse
>Australian finance, Down under
>America's housing bill, Help is at hand
>Merrill Lynch, Hope amid the gloom
>Short-selling, Naked fear
>America's economy, Still on the right road
>Bank losses, Hall of shame
>The credit crunch one year on, Mission creep at the Fed
>Cities & housing, The end of the dream?
>American finance, Still bleeding
>Jackson Hole, The credit crisis
>Britain's economy, How bad is it?
>American jobs, Postpone the optimism
>America's mortgage giants, Suffering a seizure
>Takeover to stem the tide?
>Financial services, Hank to the rescue
>American corporate profits, A turn for the worse
>Bailout raises moral issues
>American finance, Nightmare on Wall Street
