Fanny and Freddie hit the skids

[GliderGuider]

From my favourite financial blog, The Automatic Earth, comes this gem about Fannie Mae and Freddie Mac:

Tested for Leaks

Shares in both companies have fallen 15% so far this morning. Their combined market cap is now approaching a mere $10 billion, and that is supposed to support $5.3 trillion in debts and obligations.

The shares will keep falling, they’re beyond redemption; Barron’s includes the statement -which I’ve made here for ages- that common shareholders will be ceremoniously sacrificed. So will management. But they get to keep their pirated casino bonuses.

Since Barron’s estimates that Fannie and Freddie’s real value is negative $50 billion -each-, look for the Treasury and the Fed to figure out a way to pump $100 billion past the receding event horizon that envelops these companies.

And that will by no means be the last we hear of this. After all, $100 billion is still a far cry away from $5.3 trillion. If -make that when- US housing continues to falter, a lot more money will be needed. Long before Christmas.

The upcoming resets in Alt-A mortgages over the next few years provide an ironclad guarantee that US real estate, and hence Fan and Fred, will be hit hard. And the resets are but one in a long range of factors.

That makes all this not a financial, but a political issue. Whatever money will be used to buy out the two, will come from public coffers. And people will increasingly demand to know why the money should be used the way it is, especially as the whole economy starts contracting painfully later this year.

But it will be too late by then: the debts of the gambling community on Wall Street will have been transferred to your pockets, and you’ll be powerless to do anything about it. Fannie and Freddie will be nationalized in one form or another, so they will belong to you soon, debts included.

Both parties in Washington strongly support the biggest financial crime in world history, and there’s nobody else you can vote for. Really, it’s a closed system, it’s been thoroughly tested for leaks.

Much more support for their point of view at the link. Read it and weep.

[pscot]

1. The looting of the U.S.Treasury

goes on.

[onethatcares]

2. and these "leaders" are supposed to be the best and brightest?

gauddammit, they're so fucking greedy they should be in the stocks. The united states of america has died, it's become a nation of serfs, paying off the leaders debts and maintaining their lifestyle, one that the serfs will never attain.

[lonestarnot]

3. Fucking A.

[GliderGuider]

4. Fuckin' Alt-A, you mean...

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