tag:blogger.com,1999:blog-6098993761352697681.post2206436415307495581..comments2008-09-09T10:12:53.812-04:00Mukesh Chatterhttp://www.blogger.com/profile/07268919175137250694noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-6098993761352697681.post-52241285657406008012008-09-09T09:50:00.000-04:002008-09-09T09:50:00.000-04:00I think the takeover of Fannie Mae and Freddie Mac is inevitable. The alternative is much worse. I think the immediate fallout of this is that mortgage rates will rise. In the past Freddie and Fannie were able to buy loans from banks and repackage them with a guarantee and resell it at a rate that is probably much lower than the risk associated with the underlying asset. It's an financial illusion (or trickery) which gave us home owners unbelievably low interest rates. The government couldn't fully let that illusion dissipate since it would create a much deeper financial crisis and had to preserve it as much as it could. Now it's time for reality to set in and therefore, mortgage rates to rise.Leverettnoreply@blogger.comtag:blogger.com,1999:blog-6098993761352697681.post-87545414824373990752008-09-08T14:56:47.887-04:002008-09-08T14:56:47.887-04:00Thank you for your comment: I am currently working on a post about CDSs, which will hopefully answer your question!Mukesh Chatterhttp://www.blogger.com/profile/07268919175137250694noreply@blogger.comtag:blogger.com,1999:blog-6098993761352697681.post-65068631231977815722008-09-08T14:52:00.000-04:002008-09-08T14:52:00.000-04:00It maybe problematic for some banks and their capital reserve requirements. What do you think of the CDSs and debt dilemma. Aren't those going to affect the financial markets?Anonymousnoreply@blogger.com