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Uncle Sam Can Bail Out Fannie, But Who'll Bail Out Uncle Sam?
IBD Editorials ^ | July 18, 2008 | Nicole Gelinas

Posted on 07/18/2008 5:37:41 PM PDT by Kaslin

The taxpayers' predicament when it comes to Fannie Mae and Freddie Mac, the precariously capitalized "government sponsored" mortgage investors and insurers that own or guarantee $5.4 trillion worth of mortgages, or half the nation's total, is grave enough.

Graver still is that the rest of the world of supposedly high finance is becoming more like Fannie and Freddie, with potentially disastrous consequences for the American economy and taxpayer.

Everyone has long thought that Fannie and Freddie are too big to fail. The feds would never let them fall into bankruptcy because they're crucial to the nation's mortgage markets and broader financial markets. The two have used their government coddling to wrap themselves in a web of guarantees, insurance contracts and derivatives that makes Bear Stearns' business look as straightforward as a lemonade stand.

The mortgage disaster such a bankruptcy would create would mean near-certain depression. The Bush administration's move last week to ask Congress to let the federal government step in and buy shares of the two companies as well as lend up to $300 billion to them, along with the Fed's decision to let them borrow directly from the central bank, bears out this stark reality.

How did we get into this situation? It's useful to follow the reasoning behind the New Dealers who created Fannie's predecessor, the Federal Home Loan Mortgage Association, to see how the best of government intentions can be perverted by voracious market appetites and vice versa when government and business grow too cozy in pursuit of a reasonable-seeming goal — ending cyclicality in the mortgage markets.

(Excerpt) Read more at ibdeditorials.com ...


TOPICS: Business/Economy; Editorial
KEYWORDS: fanniemae; freddiemac; govwatch

1 posted on 07/18/2008 5:37:42 PM PDT by Kaslin
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To: Kaslin

Our Commie politicians are intentionally bankrupting our country.


2 posted on 07/18/2008 5:40:30 PM PDT by proudofthesouth (Homosexuality IS a choice! There isn't any biological reason for it. They CHOOSE to be that way!)
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To: Kaslin

who would buy shares,

as announced in this morning news?


3 posted on 07/18/2008 5:41:35 PM PDT by ken21 (people die and you never hear from them again.)
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To: Kaslin
The two have used their government coddling to wrap themselves in a web of guarantees, insurance contracts and derivatives that makes Bear Stearns' business look as straightforward as a lemonade stand Exactly! I said this many times though out the years.... One could write a doctors thesis on Fannie and Freddie and still not understand the inner workings.
4 posted on 07/18/2008 5:48:44 PM PDT by Orange1998
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To: Kaslin
The Federal Government is only good at destroying things.

Which is perfect in the form of the military...but not so helpful anywhere else.

5 posted on 07/18/2008 5:49:18 PM PDT by Psycho_Bunny (Islam: Imagine a clown car.........with guns.)
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To: Kaslin

All youa stuff are berong to us! Get out of our houses, pay wiff gord at Warmalt. We own youa asses.


6 posted on 07/18/2008 5:52:08 PM PDT by stboz
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To: Kaslin

Obama thinks it will be just the top 1% of the income distribution.


7 posted on 07/18/2008 5:54:16 PM PDT by Paleo Conservative (Drill Here. Drill Now. Pay Less.)
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To: Kaslin

... but Who’ll Bail Out Uncle Sam?

Arabs?

China?

Russia?

Europe?

Anybody?

NO ONE WILL BAIL US OUT!!!!!


8 posted on 07/18/2008 5:55:59 PM PDT by TruthConquers (Delendae sunt publici scholae)
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To: TruthConquers
but Who’ll Bail Out Uncle Sam? Arabs? China? Russia? Europe? Anybody? NO ONE WILL BAIL US OUT!!!!!

Don't be silly and quit your worrying. Obama will just tax the rich for the bail out.

9 posted on 07/18/2008 6:03:41 PM PDT by Hattie
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To: Kaslin
The worst case scenario is that Uncle Sam, aided by the Federal Reserve, will exercise what I term "the Zimbabwe option." Anyone who has been paying even the slightest attention to Zimbabwe in recent months will readily get what this option implies.

Of course, this will happen only after the powers that be have the opportunity to convert their assets into something not denominated in a fiat currency.

10 posted on 07/18/2008 6:06:20 PM PDT by rabscuttle385 ("When you can't make them see the light, make them feel the heat." Ronald Reagan)
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To: Kaslin
Uncle Sam Can Bail Out Fannie, But Who'll Bail Out Uncle Sam?

we will.

11 posted on 07/18/2008 6:07:49 PM PDT by the invisib1e hand (bweed'n dee boo bow shaaaboood'n dee feee-oooo!)
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To: rabscuttle385

get a clue.


12 posted on 07/18/2008 6:08:36 PM PDT by the invisib1e hand (bweed'n dee boo bow shaaaboood'n dee feee-oooo!)
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To: Hattie

LOL!!


13 posted on 07/18/2008 6:10:53 PM PDT by TruthConquers (Delendae sunt publici scholae)
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To: Kaslin

BOHICA, taxpayers.

Provide your own lube.


14 posted on 07/18/2008 6:12:22 PM PDT by HankArcher ("When freedom expands to mean freedom of instinct and social destruction, then freedom is dead")
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To: Kaslin

Charles DeGaulle could answer the question in the headline.
Anyone remember his comment when Nixon took the country off the gold standard?


15 posted on 07/18/2008 6:16:34 PM PDT by count-your-change (you don't have to be brilliant, not being stupid is enough.)
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To: TruthConquers
"NO ONE WILL BAIL US OUT!!!!!"

You didn't receive your bucket?

16 posted on 07/18/2008 6:25:32 PM PDT by HangThemHigh (Entropy's not what it used to be.)
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To: HangThemHigh

A bucket? A bucket? Oh, THAT bucket.

But there’s a hole in the bucket!!!


17 posted on 07/18/2008 6:29:27 PM PDT by TruthConquers (Delendae sunt publici scholae)
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To: rabscuttle385

I don’t doubt that for one minute. They know what they are doing. Can you say INFLATION??

The elites look out for each other, from politicians to the well funded and connected rich.


18 posted on 07/18/2008 6:34:02 PM PDT by TruthConquers (Delendae sunt publici scholae)
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To: HangThemHigh
You didn't receive your bucket?

Are you guys getting buckets? Heck, I haven't gotten my "stimulus check" yet. Some people have all the luck.............

19 posted on 07/18/2008 7:22:15 PM PDT by varon (Allegiance to the constitution, always. Allegiance to a political party, never.)
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To: varon

Stimulus check?

Damn. It will only buy you earrings.


20 posted on 07/18/2008 7:23:46 PM PDT by ladyjane
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To: proudofthesouth
Our Commie politicians are intentionally bankrupting our country.

Looking forward to them raiding private retirement accounts.

"We must. There is no other choice."

21 posted on 07/18/2008 7:31:55 PM PDT by FlyVet (Reid makes us sick. Pelosi makes us sick.)
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To: FlyVet
Looking forward to them raiding private retirement accounts.

They already did, or is your private retirement account doing better than the 15% rate of real inflation?

Amazing how they did it, and didn't get any on themselves...

22 posted on 07/18/2008 8:08:06 PM PDT by an amused spectator (corruptissima republica, plurimae leges)
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To: an amused spectator
People with families, who have to drive a lot, I don't doubt they have 15% real inflation. But, it's not the same for all of us.

I'm retired, so I don't have to drive much, and have no desire to drive a lot. The more they raise gas prices, the less I drive. The more they raise food prices, the more bargains I look for. That's how the market corrects.

I'm not happy about this idiocy that's going on, because it's nothing but short-sighted stupidity by politicians, but I must say it hasn't affected me that much. And there are plenty of others besides me, in the same boat.

23 posted on 07/18/2008 8:28:36 PM PDT by FlyVet (Reid makes us sick. Pelosi makes us sick.)
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To: Kaslin

Uncle Mao.


24 posted on 07/18/2008 8:29:43 PM PDT by July 4th
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To: Kaslin

We’ll know they are serious when they find the courage to give Franklin Raines the Jeffrey Skilling treatment. ;)


25 posted on 07/18/2008 8:33:02 PM PDT by Mr. Jeeves ("One man's 'magic' is another man's engineering. 'Supernatural' is a null word." -- Robert Heinlein)
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To: FlyVet

“We must. There is no other choice.”

While I agree with you I just don’t see it happening.

I honestly don’t believe that the majority of Americans have the guts or care to have it happen.

Also, I just don’t see how it would be possible to keep this plan secret.


26 posted on 07/19/2008 3:32:40 AM PDT by proudofthesouth (Homosexuality IS a choice! There isn't any biological reason for it. They CHOOSE to be that way!)
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To: FlyVet

If they raid our retirement accounts they will also raid our bank accounts.

I keep a bit of cash around the house. Not much, just enough in case I have a family emergency during the night and need money for gas or for the oh so rare ice storm (haven’t had one here in about 10 years) so I can walk to the local grocery store.

But I’m beginning to wonder if even the cash I have on hand will become worthless. I foresee us being forced to replace our dollars with whatever the currency will be for the North American Union here within a few years.


27 posted on 07/19/2008 5:18:43 AM PDT by proudofthesouth (Homosexuality IS a choice! There isn't any biological reason for it. They CHOOSE to be that way!)
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