Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports just in...

[Listener]

Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports

1 hour ago - 8/19/2008 16:00 Hour EST

MOSCOW (AFP) — Investments in the bonds of struggling US home-loan financers Fannie Mae and Freddie Mac have earned Russia more than a billion dollars in the past six months, press reports said Tuesday.

"The bonds in which we have invested have not incurred losses but instead have made us more than a billion dollars in the last six months," Russian Finance Minister Alexei Kudrin was quoted as saying by Ria Novosti news agency.

The report gave no further details nor an explanation of how the investment had been able to produce a return worth some 670 million euros at a time when Fannie Mae and Freddie Mac shares have tumbled on concerns they will have to be bailed out by the US government as a result of the US subprime home-loan collapse.

Subprime home loans, often offered at initially low rates of interest which later rose sharply, began to go sour in the middle of last year, leading to billions of dollars of losses for banks and other investment groups which had bought them.

[makkie]

Re: Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports just in...

this statement is a not so hidden gun on Americas head:
"be nice or we pull out of FM & FM !"

the same statement could be pronounced by the Chinese, although there is no hot confrontation with the US there.

funny times

PS.:
Does anyone has numbers regards Russia involvement at FM & FM ?

[Supercilious]

Re: Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports just in...

PS.:
Does anyone has numbers regards Russia involvement at FM & FM ?

Brad Setser has some numbers on this subject:
http://blogs.cfr.org/setser/2008/07/...ssian-to-fail/




And also here:

http://blogs.cfr.org/setser/2008/07/...central-banks/

n June 2007, the US data indicates that Russia had $38.6b of short-term Agency debt, $75.3b of long-term Agency debt, and $0.001 billion of Agency MBS. Here I want to note that my initial $155 billion estimate for Russia’s current Agency holdings is significantly higher than the $100 billion the Russian central bank claims to hold. That may reflect a reduction in the central banks’ holdings since April (the last data point), or the limits of methodology. My estimate makes two key assumptions: first, Russia’s central bank accounts for almost all of Russia’s total holdings of Agencies (i.e. private holdings are minimal) and second, almost of all of Russia’s holdings of short-term negotiable securities, CDs and other custodial liabilities are short-term Agencies. That was true in June, 2005, in June 2006 and in June, 2007 (the survey showed $38.6b of Agencies, v $42.1b in short-term custodial holdings). But it is possible that things have changed since then. I assumed that all of Russia’s 66.6b in short-term custodial holdings are in Agencies, which is a big assumption.

[phirang]

Re: Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports just in...

Brad Setser has some numbers on this subject:
http://blogs.cfr.org/setser/2008/07/...ssian-to-fail/




And also here:

http://blogs.cfr.org/setser/2008/07/...central-banks/

Interesting to notice the difference between the politically weak GCC and Saudi vs. Russia and China...

[c1ue]

Re: Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports just in...

And more interesting: note who is missing:

UK
Europe
Japan

The UK and Japan are major Treasury holders, so not having this other debt does seem rather anomalous.

[phirang]

Re: Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports just in...

And more interesting: note who is missing:

UK
Europe
Japan

The UK and Japan are major Treasury holders, so not having this other debt does seem rather anomalous.

This debt is clearly held for political purposes, especially in the case of Russia, who doesn't have meaningful trade with the US in comparison with China or Japan.

[Supercilious]

Re: Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports just in...

And more interesting: note who is missing:

UK
Europe
Japan

The UK and Japan are major Treasury holders, so not having this other debt does seem rather anomalous.

Here is Japan which according to the same source:




I don't think that ECB or the Bank of England have a significant Agency holdings.

[marvenger]

Re: Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports just in...

maybe the Russians are deliberately trying to engage in higher stakes game of bluff than continuing to recycle their dollars into treasuries. There is an implicit guarantee in these mortgages designed to keep the bubble going and Russia's going to test it out. they know they're not going to be repaid the treasuries so they reckon, lets avoid the long drawn out death and see what we can squeeze out of these agencies and get to work diminishing the US' political power a little quicker.

[metalman]

Re: Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports just in...

maybe the Russians are deliberately trying to engage in higher stakes game of bluff than continuing to recycle their dollars into treasuries. There is an implicit guarantee in these mortgages designed to keep the bubble going and Russia's going to test it out. they know they're not going to be repaid the treasuries so they reckon, lets avoid the long drawn out death and see what we can squeeze out of these agencies and get to work diminishing the US' political power a little quicker.

that's a fair guess. since they defaulted on their creditors not that long ago maybe they're least likely to sit back and let another country do it to them.

[marvenger]

Re: Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports just in...

so the BOE and ECB are fully behind or don't have the political strength to show some opposition the ponzi scheme by investing in agency debt, unlike the russians and chinese. I think the russians and chinese know they're not going to get back their treasury investments and investing in the agency bonds is a way to recoup a little more and testing the waters at bringing an end to the recycling of dollars to the treasury and the monetisation of debt. Of course the US is now just going to monetise the agency debt, but i think these are signs of change and that there is at least some opposition to the theft. Maybe I'm getting too optimistic and a stronger russia and china isn't a good thing. The US needs to change internally rather than have change forced on it by some other fascist regime. Hmmm the ramblings of a pretty confused mind.

[GRG55]

Re: Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports just in...

Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports

1 hour ago - 8/19/2008 16:00 Hour EST

MOSCOW (AFP) — Investments in the bonds of struggling US home-loan financers Fannie Mae and Freddie Mac have earned Russia more than a billion dollars in the past six months, press reports said Tuesday.

"The bonds in which we have invested have not incurred losses but instead have made us more than a billion dollars in the last six months," Russian Finance Minister Alexei Kudrin was quoted as saying by Ria Novosti news agency.

The report gave no further details nor an explanation of how the investment had been able to produce a return worth some 670 million euros at a time when Fannie Mae and Freddie Mac shares have tumbled on concerns they will have to be bailed out by the US government as a result of the US subprime home-loan collapse.

Subprime home loans, often offered at initially low rates of interest which later rose sharply, began to go sour in the middle of last year, leading to billions of dollars of losses for banks and other investment groups which had bought them.

Maybe like much of the rest of the world, they have suddenly taken an abnormal liking to stuff denominated in US$ now that the "commodity bubble is over" [:rolleyes:] and the Ruble is falling against the Bonar?

[GRG55]

Re: Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports just in...

this statement is a not so hidden gun on Americas head:
"be nice or we pull out of FM & FM !"

the same statement could be pronounced by the Chinese, although there is no hot confrontation with the US there.

funny times

PS.:
Does anyone has numbers regards Russia involvement at FM & FM ?

"...pull out of FM & FM"? How?

Sell the positions? To whom?

Seems to me it's the holders of Fannie and Freddie garbage that should be the one's losing sleep.

[marvenger]

Re: Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports just in...

Cheers metalman. I definitely enjoy a good guess at the workings of the world. The more centralised the power becomes the more the way world works can change on dime though.

[Supercilious]

Re: Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports just in...

maybe the Russians are deliberately trying to engage in higher stakes game of bluff than continuing to recycle their dollars into treasuries.

I don't know... I suspect that's just some cheap BS for internal consumption. The whole thing with Russia making any profit from agency holdings is ridiculous.

They are going back to the soviet times ... look at the antisemite tone state propaganda:
http://www.presstv.ir/detail.aspx?id...onid=351020202

"Israel armed and trained the Georgian army," Russian Deputy Chief of General Staff Gen. Anatoly Nogovitsyn told a press conference in Moscow on Tuesday.

He further noted that Israel provided Tbilisi with "military vehicles, explosives, landmines and special explosives for the clearing minefields."

Georgia's Deputy Defense Minister Batu Kutelia had earlier denied Israelis' involvement in training Georgian forces, saying "Georgian troops train with German officers and the naval force work with French instructors."

The Russia-Georgia conflict erupted after Georgia launched a major offensive against the independence-seeking province of South Ossetia on August 8.

Russia, the main ally of South Ossetia, responded by sending in armed convoys and military combat aircraft to repel Georgian army.

Yeah the jews are to blame ... the jews want to destroy Russia.:rolleyes:

Or look at this:
http://ap.google.com/article/ALeqM5h...vCa2wD92A9D8G0

Still, the celebration of state power has been a major theme in Russian arts and education in recent years. The country's film industry, largely state-subsidized, has produced thrillers showing Russia under siege from the West, protected only by decisive czars, steely Communist Party first secretaries and vigorous modern presidents — essentially, Putin.
New textbooks praise Putin's concentration of power and laud Stalin as a successful if brutal leader. Last year, Putin told history teachers that no one could make Russians feel guilty about Stalin's crimes because "in other countries even worse things happened."
Russian television, which is mostly state-owned or controlled, seems split over how to depict Stalin. Some recent entertainment programs, including a dramatization of Alexander Solzhenitsyn's "First Circle," have been critical of the dictator. But viewers of a miniseries improbably titled "Stalin Lite" say it depicted Stalin as a hero.
In June, former Soviet President Mikhail Gorbachev, another Soviet-era reformer, urged the creation of a memorial to victims of Stalin's gulag, lamenting those who think of him as a "brilliant manager" rather than a murderous dictator.

[makkie]

Re: Russia 'makes 1 bln dlrs' on Fannie Mae, Freddie Mac bonds: reports just in...

Nice informed community here on itulip !

Thanks to $#* for your data.

"...pull out of FM & FM"? How?

Sell the positions? To whom?

Seems to me it's the holders of Fannie and Freddie garbage that should be the one's losing sleep.

It is all about trust! FM & FM are only one kind of share of USA Inc.. Imagine a statement out of Russia: "... is announcing to sell major parts of its holdings in FM & FM and other US assets. Sovereign Wealth Funds watching..."
For that it doesn't matter if they actually loose.