Homestead mailing list

[Don Bowen <don.bowen AT earthlink.net>]

At 9/2/2004, you wrote:

> There is some scuttlebutt about what could happen to Fannie Mae and 
> Freddie Mac, both of them being goverment sponsored organizations or 
> entities, as the overnight lending rate is gradually raised by the Federal 
> Reserve Board.  Fannie and Freddie have been in the news recently with 
> various problems.  The speculation is as rates rise and consumers can't 
> afford to pay their increased payment on their adjustable rate loans 
> (which have become more popular in the last few years), they will begin to 
> default.

Rates will have to go up, Greenspan needs to attract people willing to lend 
the US more and more money.  The ever increasing deficient is worrying many 
people, not the least of which are those who carry the debt and Greenspan 
himself.  He sees the bushies stealing the Social Security Trust fund and 
sees the only way out is to renege on a promise he helped craft.

>   If you throw in a housing bubble that could soften or burst in various 
> sections of the country (which would make houses worth less than current 
> values), that could only make the matter worse.

The bubble may already be softening.  The housing inventory jumped to a 6 
year high this summer.  The San Diego economy appears to be growing great 
guns until you look at the types of new jobs produced.  They are in the 
service sector, the average new San Diego job pays about $14,000 less than 
the average job lost.

Don Bowen
Awl Knotted Up Woodworking
Valley Center, CA             http://www.braingarage.com