“A government takeover of one or both companies is among several options that have been considered by White House officials, Joshua Rosner, an analyst at Graham Fisher & Co., said after meetings with administration officials. The U.S. is reluctant to step in before Fannie Mae and Freddie Mac, which own or guarantee about half the $12 trillion in home loans outstanding, exhaust their options for raising capital, according to Rosner and U.S. Representative Spencer Bachus of Alabama.”
“Rice tied the first round of the Iranian missile tests to U.S. plans for a future missile shield, which would theoretically protect Eastern Europe from missiles launched from Iran. The system would place radar interceptors in the Czech Republic, a former Soviet satellite, and missiles in Poland. That has drawn protests from Russia, who says that’s uncomfortably close. Such a missile defense system “will make it more difficult for Iran to threaten and be bellicose and say terrible things, because their missiles won’t work,” Rice said.”
“The major issue is that these are very leveraged financial institutions, leveraged much more than any other bank, and they have lots of mortgage assets. As real estate values decline every day, the value of [the mortgages that it bundles, guarantees, and sells] are called into question,” says Dalton Investments co-founder Steve Persky, who has been focused on distressed mortgage assets. The possibility of government aid looms because it’s hard to see how the private market can help the companies. Their stock market values have dropped so low that it would be difficult for them to raise money. For example, Egan estimates that Freddie alone will need to raise $7 billion over the next two quarters due to writedowns and losses. But the company’s market capitalization - the number of outstanding shares times the share price stands at $8.7 billion. “An investment banker would be hard pressed to raise an amount of money nearly equal to the value of the entire company,” Egan says.”
“The foreclosure problem is getting worse and will stay with us well into the next decade,” Mark Zandi, chief economist for Moody’s Economy.com in West Chester, Pennsylvania, said in an interview. “The job market is eroding and homeowners have less equity. Lenders are much less willing to work with you if you’ve got negative equity, and you’re more likely to give up your house if you’re deeply underwater.”
“The mission concurred with the authorities on the need to tighten monetary policy in order to stop and, then, reverse the increase in underlying inflation. It welcomed the central bank’s recent decisions to increase its policy rate, but stressed the need to raise interest rates further in the period ahead. It also welcomed the submission to congress of a bill to recapitalize the central bank. A prompt and substantial recapitalization of the central bank would increase the effectiveness of monetary policy.”
“The plan, approved by a vote of 69 to 28, marked one of Mr. Bush’s most hard-won legislative victories in a Democratic-led Congress where he has had little success of late. Both houses, controlled by Democrats, approved what amounted to the biggest restructuring of federal surveillance law in 30 years, giving the government more latitude to eavesdrop on targets abroad and at home who are suspected of links to terrorism.”
“What is sure is that the consequences for the real (economy) sector of the financial crisis are still in front of us,” Strauss-Kahn, the International Monetary Fund’s managing director, said in an interview.”
“China’s economy will overtake that of the United States by 2035 and be twice its size by midcentury, a study released Tuesday by a US research organization concluded.”
“The Federal Reserve reported Tuesday that consumer credit increased at an annual rate of 3.6 percent in May, roughly the same pace as logged in the prior month. Use of revolving credit, which is primarily credit cards, rose at a 7.1 percent pace in May. That compared with a cutback in such credit of 0.5 percent in April. The pickup pushed total consumer debt up by $7.8 billion to $2.57 trillion. That was a bit more brisk than the $7 billion over-the-month increase economists were expecting.”
“After the dot-com crash investors began looking everywhere for uncorrelated asset classes — stuff that didn’t go down when everything else went down — and they didn’t have to go much further than Yale’s David Swensen and his standout performance embracing commodities, hedge funds, real estate, etc.”
“Freddie Mac fell 18 percent and Fannie Mae dropped 16 percent after Lehman Brothers Holdings Inc. analysts said in a report today that an accounting change may force them to raise a combined $75 billion.”
“This is an example, not a prediction: Suppose we have a further upward spike in energy prices and one of the top U.S. airlines says it has to discontinue operations. If this happens when Congress is out of session, the only possibility is Federal Reserve resources. What argument is the Fed going to make when politicians come and say, “Look, you bailed out Bear Stearns.” The airline has more employees than Bear Stearns and the collateral damage would be greater. Would the Federal Reserve say no under those circumstances? No one knows.”
“Our economy is not growing as robustly as we’d like,” Bush told reporters at a news conference after meeting Japanese Prime Minister Yasuo Fukuda ahead of the G8 leaders summit. “In terms of the dollar, the United States believes in a strong dollar policy and believes the strength of our economy will be reflected in the dollar. “I just said, the relative strength of our economy will be reflected in currencies.”
“Ballou, 56, was a U.S. Army colonel at Walter Reed Army Institute of Research in Washington in 1996 when the vaccine, called Mosquirix, was tested in seven volunteers who were bitten by malaria-infected mosquitoes. The shot protected six of them. “That was really a major `Aha’ moment for us,” said Ballou, who was collaborating with a company that later merged with Glaxo. “That made up for 10 years of failure.”
“Beyond the obvious, that drugs and alcohol sucked his vitality and damaged his health, those substances also pickled him in a set of ideas and attitudes that he’d developed as a young man. What comes through between the lines of “Gonzo” is that Thompson didn’t grow as a thinker or as a writer. His preoccupation with the “death of the American dream,” which was at the heart of his important work, became the reflexive prism through which he interpreted everything.”
