Fannie, Freddie ‘Insolvent’
July 10th, 2008Via: Bloomberg:
Mortgage lenders Fannie Mae and Freddie Mac are “insolvent” and may need a U.S. government bailout, former St. Louis Federal Reserve President William Poole was quoted as saying in an interview with Bloomberg.
“Congress ought to recognize that these firms are insolvent, that it is allowing these firms to continue to exist as bastions of privilege, financed by the taxpayer,” Poole was quoted as saying in an interview held on Wednesday.
Chances are increasing that the government may need to bail out the two mortgage companies, Poole was quoted as saying.
Shares of the two companies have taken a beating recently on worries about whether they can withstand more losses and support housing as well as concerns that they may need to raise massive amounts of new capital.
Freddie Mac shares tumbled 23.8 percent to $10.26 on the New York Stock Exchange on Wednesday, while Fannie Mae shares sank 13.1 percent to $15.31.
“Bastions of privelege, financed by the taxpayer.” Well my freaking g-d. Can someone name something “federal” that ISN’T financed by the taxpayer and continues to exist as bastions of privelege? And won’t be insolvent in the next few years?
My income included.
Pity really.
I’ve seen what happens when the “bubbles” burst. Dot coms, mortgages, derivatives (coming soon), stock markets, etc.
But I can tell you, the U.S. Government is going to be the next bubble to burst. Yup.
I have been thinking about this a lot. I don’t know what it will mean. But if the BEAST that is the federal government is not fed, it will die. And die it will. Maybe on life support in 2009, certainly, for all intents and purposes dead, in 2010.
Think on all those “bastions of privelege” the U.S. taxpayer supports- it is mind boggling. Absolutely. The consulate in Belgium fer christs sake.
I dunno. I think we live in interesting times. I for one am glad my mother is in her 90’s and got back what she paid into the system in health care through Medicaire. Yes, I think American’s will be kissing more than the promise of Social Security goodbye. This is going to be all bankrupt.
But oh, Freddie Mac and Fannie Mae shares tumbling aren’t even the icing on the cake.
Making wars around the world, offering blood money to Israel, Pakistan, you name it. The whole world will be affected when the spigot is turned off.
And you know what? I’m not being an alarmist. I think it will be a good thing. But I am certain.
The U.S. government can only cook their books for so long. The books of the U.S. government are already burned toast.
We can only bear witness now and Prepare.