Paul Krugman Does Not Think the Financial Crisis Is Over

Paul Krugman writes:

Another false non-alarm? March 19: The story of this financial crisis has been one of false non-alarms. Again and again, the Fed has taken action; markets seem to sound the all-clear; everyone breathes a sigh of relief — and then, in short order, panic returns.

Here we go again....

There’s some slightly good news out there. Fannie Mae coupons are down; I suspect that’s not because investors think mortgages are any less risky, but because they’re more confident than before that the feds will, in the end, bail out Fannie Mae if necessary. (I agree.) How much this will help the real economy isn’t clear.

But overall, this really has to be disappointing to the Fed.

Comments

[me]

I agree with Paul but man were the bulls writing in Barron's today.

[christofay]

Check Robert Reich for that sappy personal responsibility story.

Fannie Mae must be a government run organization as it is crappy. In the 90s it had a highly paid CEO but was also racking up billions in losses that it couldn't find. It took until the new decade to find that is was losing billions. How can you lose billions during boom years?

While it took years to perform an accounting review of itself, it did not file the necessary financial reports to remain trading on the NYSE. It was not delisted.

I think it lost billions as it entered into financial derivative contracts with Wall St innovative finance houses, lost money, and rather than take the first hit, paid the vig, and rolled over the money losing derivative where Fannie Mae could lose again.

I think Fannie Mae rather than be de-listed and shrunk has been kept around so it could be used one day to be stuffed with junk paper in a bail-out.

[Ken Houghton]

Fannie Mae, of course, is NOT a government-run organization. (It ran better when it was.)

Wikipedia (of all places) Explains It All for You:

"As a GSE, it is a privately-owned corporation authorized to make loans and loan guarantees. It is not backed or funded by the U.S. government, nor do the securities it issues benefit from any explicit government guarantee or protection."

Anyone who believes that the NYSE would delist a stock that is profitable to it hasn't been paying attention (op cit. Dell).

When you've started from those two premises, the phrase "I think" translates to "starting from bogus premises, I can create a fairy princess..."