TALF – Term Asset Back Loan Facility

Image via WikipediaHenry “Hank” Paulson announced today they are using Tarp money to target consumer loans (credit cards, car loans, Home Loans) immediately.

The Name of the entity “TALF” – Term Asset Back Loan Facility. Six Hundred Billion will be allocated to Fannie Mae, Freddie Mac, and Ginnie Mae. The auto, student, and small business loan markets will receive $200 Billion to help thaw the markets. This announcement and injection gave the FNMA 30-YR 6% a HUGE boost this morning pushing it up over 115pb.

Mortgage Securities appreciated the injection and in return we saw rates drop across the board. This could be the first leg in the credit thaw. The TALF announcement overshadowed the negative GDP decline of -.5%, which is result of constriction in consumer spending (the largest in 28 years). The drop in rates is a positive, this should be first step in credit availability and hopefully will eventually lead to easing guidelines which will make it easier for homeowners to purchase and refinance. The credit may be in the market, guidelines are still tight.

What a Week!

What a week this has been! Fannie Mae and Freddie Mac went into receivership, hurricane Ike slammed Texas, and Lehman Brothers looks like it will be the next investment bank to require a bailout.

While the American taxpayers are now guaranteeing 5 trillion in loans, the fact is that the default rate only about 1.96% (Freddie at .81% and Fannie at 1.15%), adding about 98 billion to the national debt. Hurricane Ike is expected to cost taxpayers about 25 billion. A Lehman Brothers bailout is expected to also run about 25 billion.

This takes our national debt from about 9.682 trillion to 9.830 trillion, or from 68% of our GDP to 69% of our GDP in just one week. The national debt to GDP graph http://zfacts.com/p/318.html shows that at 69% we are close, if not hitting a higher national debt to GDP ratio than we have had since about 1952 when we were paying off World War II.

Most don’t think the US is headed for a depression or worse, bankruptcy. Some think that bankruptcy would be the vehicle to replace the dollar with the Amero to give birth to the North American Union. Fiction or not, many of the predictions are just a little too accurate to not be just a tad scary.

I think we as Americans need to take back our country. We need to get a back bone and stop tolerating corrosive immorality and lawlessness in our government, in business, and in the media. We need to remember the values of our Founding Fathers. We need to take responsibility for ourselves, our communities, and our destinies.

In God We Trust.