Saturday, September 06, 2008

Socializing the Fannie, Freddie Loss

From http://www.infowars.com/?p=4376


Socializing the Fannie, Freddie Loss



Kurt Nimmo
Infowars
September 6, 2008


A massive socialist “reorganization” of the Fannie-Freddie fiasco would not be complete without a bit of spin from the Wall Street Journal:


The Treasury Department is putting the finishing touches to a plan designed to shore up Fannie Mae and Freddie Mac, according to people familiar with the matter, a move that would essentially result in a government takeover of the mortgage giants.


That’s how it works on Wall Street — dying mammoths rife with loan sharks and scam artists are taken over by the government — that is to say you, the American taxpayer, will pay for everything and soften the blow for the criminal financial class. I mean, you shouldn’t expect the rich stockholders to absorb the loss of all those bad loans.


But never mind. It’s all the fault of borrowers with poor credit. If not for them, the loan sharks and scam artists would never have gone down the road to ruin, not that it matters because they will not be held responsible. Add a couple more numbers to the astounding federal deficit.


The plan is expected to involve putting the two companies into the conservatorship of their regulator, the Federal Housing Finance Agency, said several people familiar with the matter. That would mean the government would take the reins of the companies, at least temporarily.


Nice word, “conservatorship,” sounds so loving and paternal. Of course, this fatherly concern will not extend to the little people who were endlessly propagandized on the “American dream” of home ownership over the years. No, they’ll be sent packing with destroyed credit ratings. After all, the nanny state is there to take care of the billionaires who are accustomed to the little people socializing their losses.


It is also expected to involve the government injecting capital into Fannie and Freddie. That could happen gradually on a quarter-by-quarter basis, rather than in a single move, one person familiar with the matter said.


In addition, Treasury’s plan includes a top-level management shakeup at both companies, according to people familiar with the plans. Daniel H. Mudd, chief executive of Fannie Mae, and Richard Syron, his counterpart at Freddie Mac, are expected to step down from their posts eventually.


More fiat money down the rat hole. As for Mr. Mudd — nice name, appropriate — and his fellows, they will “step down” when they should be brought up on criminal charges for squandering billions and wrecking countless lives. In Wall Street parlance, a “shake up” means criminals get to walk free and move on to the next scam.


Any move by Treasury would represent perhaps the most significant intervention by the government in the financial industry since the housing bust touched off turmoil in the credit markets a little more than a year ago. From the $168 billion economic-stimulus package in February through the bailout of investment bank Bear Stearns Cos., the Bush administration and the Federal Reserve have taken an increasingly aggressive stance in responding to what has become one of the worst financial crises in decades.

















Aggressive? No, that means the perps would be arrested and prosecuted. Instead, the Fannie-Freddie contrivance will be showered with funny money, courtesy of the banker’s club, otherwise known as the Fed. As for “intervention by the government in the financial industry,” it should be noted that Fannie and Freddie were created by the government — known as GSEs, or government sponsored enterprises — and Fannie was a scheme dreamed up as part of Franklin Delano Roosevelt’s New Deal. It is a government created virtual monopoly of the secondary mortgage market, but then the government has long specialized in setting up monopolies for its buddies.


Freddie and Fannie own or guarantee more than $5 trillion of mortgages. They have suffered combined losses of about $14 billion over the past four quarters as they make provisions for a wave of defaults. Investors worried that a government bailout would wipe out the value of existing stock, and those fears have sent the shares down about 90% from a year ago. Many U.S. banks as well as foreign governments own stock or debt in the two giants, meaning their financial woes could cause broad problems beyond the housing market… Mr. Paulson’s push to win authority was meant to reassure investors that the government wouldn’t allow Fannie Mae and Freddie Mac to fail.


In short, the government will not allow the shareholders to lose their money on bad investments, as they rightly should if we had a real free market, one that rewards and punishes investors for good or bad decisions.


Mr. Paulson is cautious about any plan that appears to benefit shareholders because he doesn’t want the government to be seen as bailing out investors who for years profited from the companies’ success.


Oh, man, that’s rich, as in rich investors protected by the government. Paulson does not want to be seen protecting the financial class, but that’s exactly what he is doing. And the Wall Street Journal is there to shovel the spin.


Sen. John McCain, the Republican nominee for president, has said his goal is to make the companies “go away” and to push for regulation that “limits their ability to borrow, shrinks their size until they are no longer a threat to our economy and privatizes and eliminates their links to the government.” Sen. McCain supported giving Treasury the authority to backstop the firms but has said any use of taxpayer funds should be combined with an ouster of management and a ban on lobbying by the companies.


He really doesn’t mean it, of course. McCain will do whatever Wall Street tells him to do. But first he has to convince the cattle he’s their man come November. Funny thing is, a lot of people buy into these inane promises, worth their weight in dung.


Sen. Barack Obama, the Democratic nominee, has said the companies are a “weird blend” and that “if these are public entities, then they’ve got to get out of the profit-making business, and if they’re private entities, then we don’t bail them out.”


Does not compute because “private entities” — a nice neutral term, about as amorphous as an amoeba — are habitually bailed out by the government. But then Obama, like his statist twin McCain, are talking out of a certain orifice, one where smoke also on occasion emanates.


No matter, the government will socialize the failure of Fannie-Freddie, the scam gone south. In the meantime, the so-called “subprime crisis” will only intensify and more people will be thrown out on the street. Mudd and the billionaires will be allowed to move on to the next scam and the one after that, further pauperizing the country, as planned.

1 comment:

Jason said...

Bailout this Bailout that...Where does the money come from in the so called global financial crisis. Have you looked into who owns the U.S. debt?

http://nomedals.blogspot.com