Fannie Mae and Freddie Mac Bailout

“Take a load off Fanny, take a load for free;
Take a load off Fanny, and - and - and.....You put the load right on me.”
– The Band, “The Weight,” 1968

Here once again is the usual solution of the fiat money bubble - as soon as one bursts, we blow another, bigger one to cover it up and keep the party going a little longer. We print print print!! those ol' greenback dollars and we toss 'em out of helicopters hovering over the latest smelly pile of financial caca in hopes that the fresh ink will cover up the smell of dyspeptic bullpucky.


Who owns securities in Freddie and Fannie which the US Treasury/US taxpayer is backing up---China! Can we connect the dots and make a picture here?


The whole mortgage mess reminds me of Matthew Arnold's verse

And we are here as on a darkling plain
Swept with confused alarms of struggle and flight
Where ignorant armies clash by night

The truth is, nobody knows exactly what is going on. We all have opinions, but it is like the mating rituals of sharks, where the real boffing, kicking and fighting takes place below the water, out of sight of those on land.


From The Oil Drum: Europe

QUOTE The bailout of Freddie and Fannie has just been announced by Hank Paulson, with supporting words from Bernanke. What's interesting in what's proposed, as usual, is what's unsaid. This would seem to be an incredibly ambitious gambit: a nationalisation, an attempted bailout of ALL the banks, and an open-ended commitment of taxpayer money to save the financial world..... As expected, as the government takes over, the normal shareholders are wiped out, something that will allow the Bush administration to claim that they are being tough and not bailing out investors, but we'll see that this claim is fundamentally false.
This whole side of the package will allow the government to claim that the bailout has a minimal cost: $1 billion only for now, a highly disingenuous claim (the warrants will most likely need to be exercised - but only next year, and there is the rest...)
The plan, outlined jointly by the Treasury Department and Federal Housing Finance Agency, also includes a plan for the Treasury to purchase mortgage-backed securities from the firms in the open market, and a lending facility through the Treasury from its general fund held at the Federal Reserve Bank of New York.
This is huge. This is the federal government taking over the "toxic waste" in a way that will have an impact not just on Freddie and Fannie, but on the whole market. UNQUOTE

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