In the Fannie/Freddie bailout, as in life, there is no such thing as a free lunch.
Someone's going to pay. The only question is, "Who?"
Right off the bat, we know that the U.S. government's seizure of Fannie and Freddie is already costing their stockholders a fortune. Tens of billions of dollars were wiped out in the blink of an eye this morning.
Plus, by seizing the two mortgage giants, Treasury secretary Hank Paulson has effectively elevated their bonds to the status of U.S. treasuries - backed by the full faith and credit of the U.S. government.
It's almost as if Washington suddenly dumped $5 trillion in new treasuries on the global debt market in a single day.
This exemplifies the downfall of privitization. When it is profitable the money is given to the shareholders...
...until there is nothing left, the program is broken, and the loses are socialized to be paid by you, me and our childrens children.
Full Version: Freddie and Fannie
Like Randi says
Privatize the profits, socialize the losses. We are doomed, I hate to say it. We may be fucked before Jan. even if Obama wins.
Privatize the profits, socialize the losses. We are doomed, I hate to say it. We may be fucked before Jan. even if Obama wins.
Yup, that's the plan. Privatize the profits, socialize the (risk and) losses. What's more, with deregulation, privatized industry begins competitive (so has some of the benefits of privatization), but through industry consolidation, trends toward monopoly. In the case of monopoly, the enterprise cannot be allowed to fail. It can, of course, be nationalized, and that is what should have happened here.
Broadband internet is next.
Broadband internet is next.
Socialization of large private enterprises is the FIRST admission of an economy in depression. Franklin Roosevelt SOCIALIZED public institutions and implemented many new social programs during the depression of '28 - '42.
If there were no depression, and the economy was sound, there would be no socialization of financial institutions.
Logic. The tool of the Antichrist.
If there were no depression, and the economy was sound, there would be no socialization of financial institutions.
Logic. The tool of the Antichrist.
And they say they're tied in the race, bullshit, the MSM is making this shit up to sell more ads. Wake up America, before you no longer exist.
They should have let these two archaic institutions fail and let the stockholders pay for the mistake of their lack of oversight.
According to Phil Gramm and John McCain, the economy is fine. It's just a mental recession and we are a country full of whiners.
TomTom--Oh no, they couldn't let investors lose their money, that would mean that the stock market has a risk, they don't want risks, they want to win all the time. Try that in a casino.
Says a lot doesn't it.
QUOTE (TapDuncan @ Sep 8 2008, 04:08 PM) 
TomTom--Oh no, they couldn't let investors lose their money, that would mean that the stock market has a risk, they don't want risks, they want to win all the time. Try that in a casino.
Fannie's stock price went from $70 to $7 before the bailout. After the bailout, it's below $1. Same for Freddie. Investors have lost plenty of money in these two stocks.
QUOTE (ABQ @ Sep 8 2008, 12:39 PM)
In the Fannie/Freddie bailout, as in life, there is no such thing as a free lunch.
Someone's going to pay. The only question is, "Who?"
Right off the bat, we know that the U.S. government's seizure of Fannie and Freddie is already costing their stockholders a fortune. Tens of billions of dollars were wiped out in the blink of an eye this morning.
Plus, by seizing the two mortgage giants, Treasury secretary Hank Paulson has effectively elevated their bonds to the status of U.S. treasuries - backed by the full faith and credit of the U.S. government.
It's almost as if Washington suddenly dumped $5 trillion in new treasuries on the global debt market in a single day.
This exemplifies the downfall of privitization. When it is profitable the money is given to the shareholders...
...until there is nothing left, the program is broken, and the loses are socialized to be paid by you, me and our childrens children.
Someone's going to pay. The only question is, "Who?"
Right off the bat, we know that the U.S. government's seizure of Fannie and Freddie is already costing their stockholders a fortune. Tens of billions of dollars were wiped out in the blink of an eye this morning.
Plus, by seizing the two mortgage giants, Treasury secretary Hank Paulson has effectively elevated their bonds to the status of U.S. treasuries - backed by the full faith and credit of the U.S. government.
It's almost as if Washington suddenly dumped $5 trillion in new treasuries on the global debt market in a single day.
This exemplifies the downfall of privitization. When it is profitable the money is given to the shareholders...
...until there is nothing left, the program is broken, and the loses are socialized to be paid by you, me and our childrens children.
Not only did the Bush administration fail to meet its regulatory responsibilities, the stockholders didn't give due diligence to what their companies' management teams were doing. There should be a substantial price for them to pay for that.
Just heard on the radio that the executives that are stepping down after this failure are only going to get $25 million in severance pay.
What the fuck is wrong with this picture?
What the fuck is wrong with this picture?
Thanks to the repugs, our great institutions are becoming penny stocks. Bring the men home, rebuild our infrastructure. Admit that raygun was an asshat! George Bushit is the worst thing that happened to this world!
Doodle---Yes, I know that, bu tthe guys at the top do not want to be held accountable for their screw ups, that's my point.
And guess who has their tentacles wrapped all around this problem?
QUOTE
More troubling is the fact that McCain’s campaign manager, Rick Davis, “served as president of an advocacy group led by Fannie Mae and Freddie Mac” that worked to cripple regulatory initiatives in Congress because the two institutions feared that “Congressional meddling would lower their healthy profits.” As the Politico reported in July:
Davis headed the Homeownership Alliance, a lobbying association that included Fannie, Freddie, nonprofit groups, real estate agents, homebuilders and consumer advocates. … [The group] worked to oppose congressional efforts to tighten controls on Fannie and Freddie.
Davis headed the Homeownership Alliance, a lobbying association that included Fannie, Freddie, nonprofit groups, real estate agents, homebuilders and consumer advocates. … [The group] worked to oppose congressional efforts to tighten controls on Fannie and Freddie.
The consequences of the Fannie/Freddie bankrupcy bailout may be worse than it might appear at first glance:
excerpt:
"Indeed, right at this moment, while Wall Street analysts are trying to evaluate the details of a bailout plan that's supposed to save them, regulators and their advisers are poring over the Freddie-Fannie accounting mess they're supposed to inherit. According to Gretchen Morgenson and Charles Duhigg's column in yesterday's New York Times , " Mortgage Giant Overstated the Size of Its Capital Base " ...
Freddie Mac's portfolio contains many securities backed by subprime and Alt-A loans. But the company has not written down the value of many of those loans to reflect current market prices.
For years, both Freddie and Fannie have effectively recognized losses whenever payments on a loan are 90 days past due. But in recent months, the companies saidthey would wait until payments were TWO YEARS late. As a result, tens of thousands of other loans have also not been marked down in value.
Both companies have grossly inflated their capital by relying on accumulated tax credits that can supposedly be used to offset future profits. Fannie says it gets a $36 billion capital boost from tax credits, while Freddie claims a $28 billion benefit. But unless these companies can generate profits, which now seems highly unlikely, all of the tax credits are useless. Not one penny of these so-called "assets" could ever be sold. And every single penny will now vanish as the company goes into receivership.
In short, the federal government is buying a pig in a poke — a bottomless pit that will suck up many times more capital than they're revealing. My forecast:
Just to keep Fannie and Freddie solvent will take so much capital, there will be no funds available to pursue the primary mission of this bailout — to pump money into the mortgage market and save it from collapse. That mission will ultimately end in failure.
The Most Important Lesson of All: As the U.S. Treasury Assumes Responsibility for $5.3 Trillion in Mortgages, It Places Its Own Borrowing Ability at Risk"
link
http://www.marketoracle.co.uk/Article6184.html
excerpt:
"Indeed, right at this moment, while Wall Street analysts are trying to evaluate the details of a bailout plan that's supposed to save them, regulators and their advisers are poring over the Freddie-Fannie accounting mess they're supposed to inherit. According to Gretchen Morgenson and Charles Duhigg's column in yesterday's New York Times , " Mortgage Giant Overstated the Size of Its Capital Base " ...
Freddie Mac's portfolio contains many securities backed by subprime and Alt-A loans. But the company has not written down the value of many of those loans to reflect current market prices.
For years, both Freddie and Fannie have effectively recognized losses whenever payments on a loan are 90 days past due. But in recent months, the companies saidthey would wait until payments were TWO YEARS late. As a result, tens of thousands of other loans have also not been marked down in value.
Both companies have grossly inflated their capital by relying on accumulated tax credits that can supposedly be used to offset future profits. Fannie says it gets a $36 billion capital boost from tax credits, while Freddie claims a $28 billion benefit. But unless these companies can generate profits, which now seems highly unlikely, all of the tax credits are useless. Not one penny of these so-called "assets" could ever be sold. And every single penny will now vanish as the company goes into receivership.
In short, the federal government is buying a pig in a poke — a bottomless pit that will suck up many times more capital than they're revealing. My forecast:
Just to keep Fannie and Freddie solvent will take so much capital, there will be no funds available to pursue the primary mission of this bailout — to pump money into the mortgage market and save it from collapse. That mission will ultimately end in failure.
The Most Important Lesson of All: As the U.S. Treasury Assumes Responsibility for $5.3 Trillion in Mortgages, It Places Its Own Borrowing Ability at Risk"
link
http://www.marketoracle.co.uk/Article6184.html
QUOTE (ABQ @ Sep 8 2008, 12:39 PM)
In the Fannie/Freddie bailout, as in life, there is no such thing as a free lunch.
Someone's going to pay. The only question is, "Who?"
Someone's going to pay. The only question is, "Who?"
More than just a free lunch.. the former CEOs are walking away with $9 million and $14 million.
QUOTE (NoYards @ Sep 9 2008, 11:17 AM)
And guess who has their tentacles wrapped all around this problem?
'More troubling is the fact that McCain’s campaign manager, Rick Davis, “served as president of an advocacy group led by Fannie Mae and Freddie Mac” that worked to cripple regulatory initiatives in Congress because the two institutions feared that “Congressional meddling would lower their healthy profits.” '
I hope voters will remember who's entangled in this scam as the economy spirals downward.'More troubling is the fact that McCain’s campaign manager, Rick Davis, “served as president of an advocacy group led by Fannie Mae and Freddie Mac” that worked to cripple regulatory initiatives in Congress because the two institutions feared that “Congressional meddling would lower their healthy profits.” '
McCain was culpable in the Savings & Loan scandal of the Reagan years, too.
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