U.S. Weighs Takeover of Two Mortgage Giants
July 11th, 2008Yep, it’s one big cascading charlie foxtrot out there this morning…
Gold gap.
Dollar crap.
A new record high on oil.
Now, let’s talk trillions.
Via: New York Times / Yahoo:
Alarmed by the growing financial stress at the nation’s two largest mortgage finance companies, senior Bush administration officials are considering a plan to have the government take over one or both of the companies and place them in a conservatorship if their problems worsen, people briefed about the plan said on Thursday.
The companies, Fannie Mae and Freddie Mac, have been hit hard by the mortgage foreclosure crisis. Their shares are plummeting and their borrowing costs are rising as investors worry that the companies will suffer losses far larger than the $11 billion they have already lost in recent months. Now, as housing prices decline further and foreclosures grow, the markets are worried that Fannie and Freddie themselves may default on their debt.
Under a conservatorship, the shares of Fannie and Freddie would be worth little or nothing, and any losses on mortgages they own or guarantee — which could be staggering — would be paid by taxpayers.
The government officials said that the administration had also considered calling for legislation that would offer an explicit government guarantee on the $5 trillion of debt owned or guaranteed by the companies. But that is a far less attractive option, they said, because it would effectively double the size of the public debt.
The officials also said that such a step would be ineffective because the markets already widely accept that the government stands behind the companies.
The officials involved in the discussions stressed that no action by the administration was imminent, and that Fannie and Freddie are not considered to be in a crisis situation. But in recent days, enough concern has built among senior government officials over the health of the giant mortgage finance companies for them to hold a series of meetings and conference calls to discuss contingency plans.
A conservatorship or other rescue operation would be the second time in four months that the Bush administration has stepped in to engineer a rescue to prevent the financial system from collapsing. Last March, it forced the sale of Bear Stearns to JPMorgan Chase to avert a bankruptcy of that venerable investment house.
Officials have also been concerned that the difficulties of the two companies, if not fixed, could damage economies worldwide. The securities of Fannie and Freddie are held by numerous overseas financial institutions, central banks and investors.
This article proposes that the Wall street/London financial debt empire essentially collapsed July 2007 and is now on life support, with bankers fighting amongst themselves for position in the future, depopulated world.
If the government takes over Freddie and Fannie, they can more quickly discard them or carve them up to the new winners. Like Russia did.
http://www.larouchepub.com/other/2008/3527bis_says_crash.html
“As we indicated before, the financial system is dramatically and inexorably shrinking, and the issue of which institutions will survive and which won’t, and what form the survivors will take, is the subject of open, if somewhat discreet, warfare among competing factions. The dynamic among the factions is much like that of a herd of hyenas, which grew large during a period when food was plentiful, then fell upon hard times and began to fight among themselves over the shrinking food supply.
Comparing international bankers to hyenas may be a bit unfair to the hyenas, but it does make a valid point about the nature of the international financier oligarchy, in terms of both method and cultural development. They are a nasty and brutish bunch, who consider themselves the Kings of Beasts, and view the rest of humanity as cattle to be herded. These beasts have now decided that the human herd has grown too large and must be culled, from the current level of more than 6 billion people down to 1 or 2 billion.
Such a world will have no need for the big investment banks of today, with their football-field-sized trading floors and row upon row of securities and derivatives speculators. What the oligarchs have in mind is a world dominated by a handful of giant global banks, working in concert with a handful of global cartels, to rule the world as a one-world empire, free of nation-states and nationalist interests, ruled from a collection of feudal city-states, with Venice, at the height of its power, as a model.”
I can remember when Lyndon LaRouche (Lyndon the Red, they called him) was considered the kookiest fellow in all of Third Party politics; although the establishment was worried by him enough to toss him in the Federal pen for a few years.
But nowadays, old Lyndon is one of the most perceptive political commentators around.