Skip to comments.Paulson: Russia Tried to Get China to Blow Up Fannie and Freddie
Posted on 01/31/2010 7:41:28 AM PST by FromLori
Russia urged China to dump its Fannie Mae and Freddie Mac bonds in 2008 in a bid to force a bailout of the largest U.S. mortgage-finance companies, according to former-Treasury Secretary Henry Paulson, in his new book, On the Brink.
Paulson learned of the disruptive scheme while attending the Beijing Summer Olympics. In his memoir, Paulson writes, according to Bloomberg which was able to obtain a copy of the book before its official publication date of February 1, that the Russians made a top-level approach to the Chinese that together they might sell big chunks of their GSE holdings to force the U.S. to use its emergency authorities to prop up these companies.
This is indicative of how dangerous the Chinese holdings of U.S. debt are. It is a huge financial weapon that the Chinese can use anytime they choose for any purpose they choose. But by selling only selective debt, rather then selling various random chunks of their U.S. debt, the Russians have brought to the attention of the Chinese, if they hadn't thought of it already themselves, how to launch a limited financial nuclear attack by getting them to focus on a particular type of debt, such as Fannie Mae or Freddie Mac. Such a surgical strike would do much to protect the overall investment the Chinese have in U.S. debt, but at the same time cause a severe headache for the U.S.
Why should Russia try this? They have Barney Frank to do the job for them.
It was around the time Russia went to war maybe they thought fwank wasn’t doing it fast enough.
Maybe they're afraid Frank and Dodd will get themselves removed before they complete their task of destroying the American economy.
Of course, the Russians were very prophetic, with the formal GSE conservatorship announcement following a few short days later on September 6, 2008. They also knew how to put their money where their mouth was:
Russia sold all of its Fannie and Freddie debt in 2008, after holding $65.6 billion of the notes at the start of that year, according to central bank data. Fannie and Freddie were seized by regulators on Sept. 6, 2008, amid the worst U.S. housing slump since the Great Depression.
so why isn’t this an act of war? why didn’t we retaliate?
Actually it was probably smart on their part lol given fannie/freddie
Because we forced them into bankruptcy. I’d imagine Putin wuld enjoy watching us take that medicine.
I don’t know but they did sell theirs I guess why was it ok for our banks to poison the world with bad fannie and freddie loans?
Do the Russians think the Chinese are stupid?
If true, ya think the Russians and ChiComs real target was the US elections?
No doubt. And may seem to forget that Putin was KGB. He's not just your normal Russian...he's a solid ideologue.
You know I hadn’t thought of that good question. According to the Bloomberg article I put in Paulson said it so either he is just a filthy liar or maybe that was part of the reason.
China Construction Bank Cuts Fannie, Freddie Bond, MBS Hldgs
China Dumps US Dollar Denominated Debt: Bank of China flees Fannie-Freddie
Wow very interesting another fly in the ointment. Again can’t say as I blame them it’s nothing but toxic garbage the banks sold to the entire world.
More light shed on the way we are economically manipulated!
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I am sure they did and we would do the same to them.
“If true, ya think the Russians and ChiComs real target was the US elections?”
Entirely possible. And why wouldn’t they? Is Russia are friend? Do they still have more nukes pointed at us than we do on them? And Obama will of course enable them in their attempts to dismantle us.
well,I guess ,if they knew they wouldn’t get their money,but that wasn’t the case,was it? governments should and can work out things like that with each other,their aim was to cripple us economically/banks were forced to poison the world by congress,the same congress that is fixing the mess now,with more poison.