Fannie Mae and Freddie Mac Debacle

I was off a few weeks by statistical data in detailing the collapse of Freddie Mac and Fannie Mae, but nonetheless I was spot on, I even posted a video with articles and links a few weeks ago.

Anyhow, what is occurring is utterly appalling. A Rally?? utter nonsense, my belief is that simply large holders of of debt and other financial instruments of said companies are using their own funds through "third parties" to create a false rally, allowing holders to unload worthless paper to the unassuming and naive firms to be suckered into buying such paper.

Not only are the bond insurance companies going bust, but yet there still is a rally?

For some reason all this reminds me of a scene from a german Movie titled "Der Uttergang(Downfall)", more specifically a scene in which a bunch of (WW2) german officers are being bombed by allied aircraft, all the while they sing and dance like a bunch of drunkards.

Back to the Video: Martin Wolf heads his own consulting company, and he often writes articles for the Financial Times of London,I am surprised they asked him to speak about this government bail-out/joint venture being that Martin Wolf is incredibly blunt, which is a quality rarely encountered with such pundits.
The sheer fact that he mentioned the recovery will not commence for at least close to a decade from now is ditbit of honesty and thoughtful insight that is utterly void in all economical commentaries in popular media.

In any event, what does it all mean? Aline van Duyn of the financial times writes ""One of the largest defaults in the history of the $62,000bn credit derivatives market has been triggered by the US government's seizure of Fannie Mae and Freddie Mac, raising questions about how dealers will unwind billions of dollars worth of contracts"" , you didn't hear that on CNN did you? no surprise, she further writes in the an article ""Although the $1,600bn of debt issued by the troubled mortgage groups is regarded as safe after the US government's move to take control of the companies, their move into "conservatorship" counts as the equivalent of a bankruptcy in the credit derivatives market"".

I keep hearing a fuss about decoupling, in order for a proper decoupling effect to take place, the shift from withdrawal from one marketplace must be replaced with an equal (or potentially greater) or greater market, which is simply not happening anywhere.

Of course all of this should have happened earlier, but the SEC (Securities and Exchange Committee) had actually placed a ban on shorts, specifically Freddie Mac and Fannie Mae. (see link below to see if your financial institution is listed)

I have consistently uttered my worry about Wachovia and Washington mutual going belly up, and it is no surprise that the FDIC is re-hiring retired staff,

It's very odd, but the general public can not imagine the scale of the loss of Freddie Mac and Fannie Mae, but should a large company (perhaps 1/10 the size of Fannie and Freddie) such as Wachovia or Washington Mutual become insolvent, it is then that the great ponderance begins, simply because such companies have a greater physical presence, meaning Wachovia and Washington Mutual are institutions with far greater regional exposure, as appose to Fannie and Freddie who are far more centralized and work through a series of brokers and middle men.




Aline van Duyn "US move triggers CDS default" September 8 2008 Financial TImes of London FT.com
http://www.ft.com/cms/s/0/ed1e14c6-7dd0-11dd-bdbd-000077b07658.html?nclick_ch...

"SEC Extends Naked Short Selling Order On Financial Stocks, Looks For Permanent Solution For Broader Market"
http://www.streetinsider.com/Insiders+Blog/SEC+Extends+Naked+Short+Selling+Or...
http://i267.photobucket.com/albums/ii316/imuman/SECbanonshortselling-1.jpg(SAVE THIS PHOTO FOR FUTURE REFERENCE)

DISCLAIMER: I have no relationship with other alleged "Related videos", I have no control over such videos, but I am largely in a disagreement with a great bulk of many of them, as they lack sources and/or statistical data.

Category:

News & Politics

Tags:

• Commentary
• Analysis
• Freddie
• Mac
• Fannie
• Mae
• Insolvent
• Government
• bail
• Martin
• Wolf

[StandardJohnDoe]

I am going to correct Kate MacKenzie (FT reporter), because this -IS- THE BIGGEST BAIL-OUT EVER.

[MaskedBlazer7]

this is soooo boring

[eksdem]

I like to call this a DEMbacle.

[kinimalia]

BAILOUT BILL: NPR reported 10/4/08 on This American Life that for the taxpayers to purchase this huge, stinking pile of garbage assets and get nothing in return is certainly possible.

However, someone in both Sen and House has added language to the bailout bill to give the Treasury Secretary the OPTION of requiring stock in the failed banks, along with the worthless assets.

Sort of like yes, we'll buy your bad debts, but we own a % of your business.

Q: How do we force them to do this now?

[courtneyblushtg]

I say sink or swim! Let them droned in their own swim hole they have made with their high interest loans lope holes hidden fees that they so love to screw Americans over with! By letting these greedy ass holes eat it this will make room for new or smaller companies to take their place!

[chingon711]

WOW!!! 70% depreciation in Japan!! YIKES!!! If it happens here in the US, we are truly fucked. Store up on food and water. This country will soon be complete chaos.