From unnamed sources:
In the event of nationalization:
* The GSE will have to book pretax loss of $70-100B.
* Charge the losses through the capital structure.
* Then the government will guarantee the obligation.
* The government will run the portfolio in a runoff mode.
* Mortgage rate will be very high and lending term will be very restricted going forward.
* this will take the final leg of denial in house prices around the USA. Drop of 40-60% from HERE.
* lead to no money printing at all.
* final admission that in the next few years the best USA can do, is to "manage" the deflationary process so that it can be as orderly as possible. (Which should have been the case upfront since 2 years ago, I regret to say).
The right enemy
5 years ago