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Jim Rogers not happy

Posted: Mon Jul 14, 2008 11:37 am
by OptionAl
(Note he is short on Fannie)
Just passing it along for comment:

Fannie Plan a `Disaster' to Rogers; Goldman Says Sell (Update3)

By Carol Massar and Eric Martin

July 14 (Bloomberg) -- The U.S. Treasury Department's plan to shore up Fannie Mae and Freddie Mac is an ``unmitigated disaster'' and the largest U.S. mortgage lenders are ``basically insolvent,'' according to investor Jim Rogers.

Taxpayers will be saddled with debt if Congress approves U.S. Treasury Secretary Henry Paulson's request for the authority to buy unlimited stakes in and lend to Fannie Mae and Freddie Mac, Rogers said in a Bloomberg Television interview. Rogers is betting that Fannie Mae shares will keep tumbling.

BALANCE OF ARTICLE REMOVED BY MOD MEL AS A COPYRIGHT VIOLATION. POST A LINK AFTER A SHORT INTRODUCTION, RATHER THAN POSTING THE ENTIRE ARTICLE.

Jim Rogers is right on

Posted: Mon Jul 14, 2008 12:19 pm
by marathonwmn
``They're ruining what has been one of the greatest economies in the world,'' Rogers said. Bernanke and Paulson ``are bailing out their friends on Wall Street but there are 300 million Americans that are going to have to pay for this.''
I couldn't agree more! It seems like regulators have been asleep at the wheel; haven't they heard of a "dead man's switch"?

Posted: Mon Jul 14, 2008 12:36 pm
by Opponent Process
Although I'm qualified, I do wonder whether I'll be able to get my own mortgage when I need one in the near future, while at the same time I'm now forced (as a taxpayer) to bail out past unqualified mortgages that were made to others without my consent or approval?

What do us responsible people (who were holding out) get out of this? Boy, do we look stupid. What is the lesson learned here? I know societies need to reward risk-taking, but do they really need to punish fiscal conservatism?

Re: Jim Rogers is right on

Posted: Mon Jul 14, 2008 1:01 pm
by daryll40
marathonwmn wrote:
``They're ruining what has been one of the greatest economies in the world,'' Rogers said. Bernanke and Paulson ``are bailing out their friends on Wall Street but there are 300 million Americans that are going to have to pay for this.''
I couldn't agree more! It seems like regulators have been asleep at the wheel; haven't they heard of a "dead man's switch"?
I don't like it either, but rather my beef is with the federal guarantee IN THE FIRST PLACE. The horse have been out of the barn FOR YEARS. So now, I really don't see what choice the Feds had. It's all about lesser evils....bail FreddieFannie out at a "X" cost to the taxpayer and hopefully things will stabilize...or let them fail and see the costs be many times X. I can see the value in FDIC for $100,000 for the little guy's bank account. Beyond that it makes no sense to me to have Uncle Sam insuring mortgages. If the local lenders don't have a risk stake in my house, they won't be diligent in lending me the money to buy it in the first place.

Posted: Mon Jul 14, 2008 1:12 pm
by OptionAl
The idea that we're not entitled to health care or a college education but everyone is entitled to own a house is ridiculous. And the bigger the house the better. Add to that the myth that a home is an "investment". There's nothing wrong with renting - for many people, it makes a lot of sense.
While we're at it, the mortgage deduction is also a ripoff. Why should renters subsidize owners? And without it, the prices of houses would be lower.
No politician would ever say this - it's sacrilege.

Posted: Mon Jul 14, 2008 1:13 pm
by Ruprecht
as someone who has been financially cautious my entire life, never living above my means, careful to rent until I know I'm able to buy, etc., it definitely p***es me off to know that I will be forced to bail out those who have been living above their means for years.

This means I get to pay for other people's McMansions, while I live in a tiny rental. And ultimately my taxes will go up, making it more difficult for me to eventually get a decent-sized house of my own.

Where's the fairness in that?

Posted: Mon Jul 14, 2008 1:23 pm
by daryll40
Ruprecht wrote:as someone who has been financially cautious my entire life, never living above my means, careful to rent until I know I'm able to buy, etc., it definitely p***es me off to know that I will be forced to bail out those who have been living above their means for years.

This means I get to pay for other people's McMansions, while I live in a tiny rental. And ultimately my taxes will go up, making it more difficult for me to eventually get a decent-sized house of my own.

Where's the fairness in that?
You are absolutely right and so is the post before yours. Most of the homeowners won't get bailed out, however, but we taxpayers will still be left holding the bag because we now own the mortgages (directly or indirectly) that are owed more than will ever be repaid. Yes, it burns my tailpipe too. It does seem that those of us who are frugal and prudent are paying while those who "lived for today while we can" are getting the last laugh.

Sort of reminds me of the conversation I started a week or so ago "Will the Whizzers win" ("whizzers" meaning those who "whizzed" away their money)?

Posted: Mon Jul 14, 2008 1:34 pm
by plake15
I think the mortgage market for housing is essentially tightening to the point of almost cessing to exist,the fed has outlined strict new lending rules to go in place beginning in October-on top of the Fannie and Freddie mess,I think if you want to buy a home,at this point the way things are going,you might need cash in hand ready to buy fully outright or a very large downpayment at the very least.

The fed move with the strict new rules for lending is right thing to do-kudos to them,but in the short term it tightens up the lending for the housing market-when it's already flooded with way too much inventory-tighter rules=less buyers=more inventory=more price drops in the for immediate future.

The fed has righted the ship in terms of the lending standards that got the whole credit/housing market into this mess-but it a tough love kind of thing for the immediate housing market.

Posted: Mon Jul 14, 2008 1:46 pm
by plake15
Opponent Process wrote:Although I'm qualified, I do wonder whether I'll be able to get my own mortgage when I need one in the near future, while at the same time I'm now forced (as a taxpayer) to bail out past unqualified mortgages that were made to others without my consent or approval?

What do us responsible people (who were holding out) get out of this? Boy, do we look stupid. What is the lesson learned here? I know societies need to reward risk-taking, but do they really need to punish fiscal conservatism?
most likely your not gonna be paying for these bail outs of unqualified mortgages,most likely it will be your kids and grandkids with much higher taxes/rates.

I now honestly believe that those who were fiscally conservative and have a nice amount of cash saved on hand are gonna be best suited to grab the housing markets picked clean bones when all is said and done. I think cash is king is ringing more true every day with this mortgage mess.

Posted: Mon Jul 14, 2008 2:08 pm
by Rick Ferri
Jim still manages money, and based on his comments I am going to guess he is short FNM and FRE.

:wink:

Posted: Mon Jul 14, 2008 2:11 pm
by OptionAl
Rick, I think you cracked the code.

Posted: Mon Jul 14, 2008 2:43 pm
by Opponent Process
Rick Ferri wrote:Jim still manages money, and based on his comments I am going to guess he is short FNM and FRE.

:wink:
if I'm not mistaken, he was shorting them many years ago. this scenario was not exactly unexpected. I think he might even talk about them in his travel books (which are nice reads IMO).

people used to debate all the time about FNM/FRE either being the perfect investment or the worst idea imaginable.

Posted: Mon Jul 14, 2008 2:44 pm
by bzboy
Jim, I recall, is bearish on US Dollar and loves to hawk inflation and is invested in commodities to his teeth. His comments are to be expected.

bz

Posted: Mon Jul 14, 2008 2:53 pm
by plake15
Well he has done well with his bullish stance on commodites,but his steadfast bullish stance on China which I read last Septemeber him saying,has been a diseater-China's stock market the bottom has just completely fallen out..down something like -60% from last October-that is just an outlandish bear market collapse.Some you get right-some you get wrong.

Posted: Thu Jul 17, 2008 12:28 am
by craigr
Jim Rogers on Fannie Mae/Mac:

http://www.youtube.com/watch?v=rcIBFLSmVGA

It doesn't matter that he's shorting the stock when he's right on principle. The govt. shouldn't be in the mortgage business.

Gov't should not be halfway in the mortgage business

Posted: Thu Jul 17, 2008 7:01 am
by brswif00
The govt. shouldn't be in the mortgage business.
I happen to agree with this, let banks do the lending.

But if the government wanted to get involved in mortgages, it should have been honest and directly made loans, or given tax credits for downpayments.

The problem is the government wanted to pretend that it wasn't interfering in the market, and that the GSEs were normal private companies. So we ended up with no control but all the liability, and now the bill is due. It would have been cheaper, more effective, and less-market-distorting to help low income borrowers by just giving them money. At least then we would have known what the bill was up front, and all the money would have gone to accomplish the stated public purpose, without hundreds of millions getting siphoned off into executive salaries and lobbying expenses.

Posted: Thu Jul 17, 2008 7:40 am
by xenogear3
Jim made lots of money (33 times) from 1970 to 1980 by buying commodities.

I suspected that he didn't make any money from 1980 to 2000 because he hates stock market.

He is back now and telling everyone about inflation and commodities.

I will not listen to everything he says. He is very biased against stock market, and loves gold and hard assets.

Another thing, I hate Alan Greenspan. He keeps saying "People are more stable when they own a house" or something like that. Then he lowers the interest rate to 1% and tells everyone to get an ARM loan.

Posted: Thu Jul 17, 2008 8:34 am
by rich
In the youtube video Rogers very clearly admits he is short banks, specifically Fannie and Freddie.

I have to credit him for providing disclosure.

Re: Gov't should not be halfway in the mortgage business

Posted: Thu Jul 17, 2008 12:22 pm
by Grt2bOutdoors
brswif00 wrote:
The govt. shouldn't be in the mortgage business.
I happen to agree with this, let banks do the lending.

But if the government wanted to get involved in mortgages, it should have been honest and directly made loans, or given tax credits for downpayments.

The problem is the government wanted to pretend that it wasn't interfering in the market, and that the GSEs were normal private companies. So we ended up with no control but all the liability, and now the bill is due. It would have been cheaper, more effective, and less-market-distorting to help low income borrowers by just giving them money. At least then we would have known what the bill was up front, and all the money would have gone to accomplish the stated public purpose, without hundreds of millions getting siphoned off into executive salaries and lobbying expenses.

The banks? Hmm, are they the same ones who are not scraping around for capital since they threw all conservatism out the window while lending to construction projects out in the desert? Following the "build it and they will come" mantra from Field of Dreams, well, I'm not James E Jones, but they most certainly will not come with the price of gas being what it is.

So who will pay for these lending mistakes? All of us, in the form of higher rates for everything, including our taxes. It makes no difference who is sitting in the Oval Office come January, we will pay, while those who scoffed at fiscal management have absconded with our money.

Posted: Fri Jul 25, 2008 8:24 am
by Cosmo
plake15 wrote:Well he has done well with his bullish stance on commodites,but his steadfast bullish stance on China which I read last Septemeber him saying,has been a diseater-China's stock market the bottom has just completely fallen out..down something like -60% from last October-that is just an outlandish bear market collapse.Some you get right-some you get wrong.
Maybe so but he was bullish on commodities and gold way back in the mid 90s when he was on CNBC. i.e. he had to wait a looong time before he made any money on commodities.

Posted: Fri Jul 25, 2008 9:07 am
by Ted Valentine
Opponent Process wrote:What do us responsible people (who were holding out) get out of this? Boy, do we look stupid. What is the lesson learned here? I know societies need to reward risk-taking, but do they really need to punish fiscal conservatism?
Better yet, what I want to know is why are the executives in jail? Why hasn't anyone prosecuted them for gross negligence and a return of all of their assets gained from this sham employment? They $800 million dollars in compensation last year to screw the tax payers like this. There has to be some accountability for executives if there is going to be public bailouts coupled with compensation like this.

Added: http://online.wsj.com/article/SB121677050160675397.html

Posted: Fri Jul 25, 2008 9:24 am
by Drain
Rick Ferri wrote:Jim still manages money, and based on his comments I am going to guess he is short FNM and FRE.

:wink:
Is this supposed to be a criticism? Do you think he should be long those two stocks when he's bearish on them? He's an active manager.

Posted: Fri Jul 25, 2008 5:15 pm
by baw703916
Drain wrote:
Rick Ferri wrote:Jim still manages money, and based on his comments I am going to guess he is short FNM and FRE.

:wink:
Is this supposed to be a criticism? Do you think he should be long those two stocks when he's bearish on them? He's an active manager.
Well, let's see, as the saying goes they have privatized gains and socialized losses. Either they make money or the government bails them out. Heads I win, tails you lose. :-P

I can't think of any rationale for shorting them under those circumstances. Probably, neither can Mr. Rogers, and having already established his short position, that's why he's complaining so bitterly about the bailout, because now there's no way he can win. :twisted:

"Political risk" doesn't only exist in emerging markets.

Best wishes,
Brad

Posted: Sat Jul 26, 2008 2:52 am
by wlpotts
I can't think of any rationale ...having already established his short position, that's why he's complaining so bitterly about the bailout, because now there's no way he can win.

Best wishes,
Brad
Brad, I believe he has already made his money and probably has won too.

Could it be that his assertions of the Gov't psuedo-bailout of Fannie and Freddie were well founded and that it is not all about HIS money?

Disclosure: I am of the opinion that a fair portion of what he purports in media releases is founded upon basic economics and not necessarily in self gain or self serving interests.

Respectfully,

Warren P.