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US House passes FNM/FRE bailout bill
Former Member
Posts: 1,876,323 The Mix Honorary Guru
Story.
I know the media doesn't cover what's going on over there much but it actually affects us all a lot more than you might think, so.....who are Fannie Mae and Freddie Mac?
Basically huge mortgage lenders that guarantee 50% of loans in the US housing market, that's around $5 trillion....naturally with the market in freefall these lenders' balance sheets were taking a big hit and they didn't have enough capital to stay alive much longer, so today the US house passed a bill to bailout Fannie and Freddie at the taxpayer's expense. Bush has already done a 180 and said he will sign the bill if it gets through the Senate so it's effectively a done deal.
It's a bit like the NR fiasco but on a much larger scale, what they are effectively doing is postponing the inevitable correction which is only going to make it worse, and the bill is being framed as an aid package for homeowners when in fact it's just a bailout package for the Wall Street pigmen who have made a fortune and are now turning to the taxpayer for a handout.
This video explains it quite well in layman's terms and is well worth a watch, because we are heading for exactly the same situation and when house prices really start falling the banks will be looking to us for a handout to backstop the worthless paper they're holding, and darling/brown/the media will frame it in the same way as helping out struggling homeowners. In fact it will do nothing but drive up mortgage and borrowing rates, kill the pound, and put a debt over our children's heads for years to come.
We are at an inflexion point in the global economy where we cannot produce enough goods to service the interest on the global debt, this is why the credit markets are freezing up and oil is going to $150+ and banks are falling over, and we are heading for a very bad recession. There is no easy way out and putting the bill on the taxpayer doesn't fix anything, so remember that when you see the smug politicians on TV lying to your face, and don't believe everything you read in the paper eh.
So much for a free efficient market and you thought PFI was bad, when people finally wake up and start protesting on the street it will be too late, so I'm just giving you a heads up....
I know the media doesn't cover what's going on over there much but it actually affects us all a lot more than you might think, so.....who are Fannie Mae and Freddie Mac?
Basically huge mortgage lenders that guarantee 50% of loans in the US housing market, that's around $5 trillion....naturally with the market in freefall these lenders' balance sheets were taking a big hit and they didn't have enough capital to stay alive much longer, so today the US house passed a bill to bailout Fannie and Freddie at the taxpayer's expense. Bush has already done a 180 and said he will sign the bill if it gets through the Senate so it's effectively a done deal.
It's a bit like the NR fiasco but on a much larger scale, what they are effectively doing is postponing the inevitable correction which is only going to make it worse, and the bill is being framed as an aid package for homeowners when in fact it's just a bailout package for the Wall Street pigmen who have made a fortune and are now turning to the taxpayer for a handout.
This video explains it quite well in layman's terms and is well worth a watch, because we are heading for exactly the same situation and when house prices really start falling the banks will be looking to us for a handout to backstop the worthless paper they're holding, and darling/brown/the media will frame it in the same way as helping out struggling homeowners. In fact it will do nothing but drive up mortgage and borrowing rates, kill the pound, and put a debt over our children's heads for years to come.
We are at an inflexion point in the global economy where we cannot produce enough goods to service the interest on the global debt, this is why the credit markets are freezing up and oil is going to $150+ and banks are falling over, and we are heading for a very bad recession. There is no easy way out and putting the bill on the taxpayer doesn't fix anything, so remember that when you see the smug politicians on TV lying to your face, and don't believe everything you read in the paper eh.
So much for a free efficient market and you thought PFI was bad, when people finally wake up and start protesting on the street it will be too late, so I'm just giving you a heads up....
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Comments
It is a little disingenuous to refer to a free efficient market, unless it was sarcasm. The way Fannie and Freddie were created in the first place shows that. Unfortunately, the crowds loved them and wanted more. I guess you reap what you sow.
Furthermore, as you mention, it is coming to a town near you sooner or later. My guess is that you aint seen nothing yet. That is assuming you get to see it. The FSA want to bypass an EU market abuse directive so that all the real bad news will be censored.
(All the good news reporters have been made redundant by the way ! !).
Plus of course, what alternative does the US government really have, let the two companies who own 50% of the mortgages go bust?
a bond market crash is a very real scenario as a result of this bill, and with the USD as the world's reserve currency that's gonna be a real bitch for all of us. you can't just absorb all that bad debt and bail out the banks and ask the rest of the world to keep buying shit sandwiches, foreign treasury sales have already started declining and sooner or later they will say no mas and dump their reserves, don't think it can't happen.
I think you are right, and therein lies the problem (for them). Those very morons will lap up the sales pitch of the latest bunch of double glazing salesmen offering universal healthcare and the like.
No-one likes to hear that the party is over, especially when they are drunk. They want more of the same.
this bill is not about helping homeowners out it's about preventing a mark to market event that would take out the weak banks, FDIC guarantees deposits up to $100k anyways so most people would be covered. of course the media has framed it in such a way to fool j6p into thinking it will stop them being foreclosed, when actually it just puts more debt from the banks and lenders onto them.
the people that have worked this out have been protesting like crazy to stop the bill, and 700 odd pages of 'amendments' were added to the bill the night before the vote so how was anyone supposed to actually know what's in it, this is typical american democracy by stealth.
That may not be the case.
http://www.rttnews.com/ArticleView.aspx?Id=658688&pageNum=2062_3100_1