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View Diary: Federal Home Loan & Mortgage Corp is BANKRUPT(updated) (43 comments)

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  •  Freddie Mac (1+ / 0-)
    Recommended by:
    Stranded Wind

    Federal Home Loan and Mortgage Corporation is commonly known as Freddie Mac. They are a major player in the liquidity of the Real Estate Market. Given the mortgage lending problems, it is expected that Freddie Mac would suffer as a result.

    But do not confuse the value of the company and it's stock with the value of the bonds it issues. The company guarantees the bonds, and so problems in that area can cause the stock to drop, but it is a long ways from saying the bonds are worthless. They might not be worth par, so it is possible to take a loss on them, but a 5% to 10% drop would be huge on the bonds. For the stock, well, it's not one I would want to own right now.

    Remember, THEY hate us for our Freedom! The freedom for the President to do as he damn well pleases.

    by Tuba Les on Thu Jul 10, 2008 at 10:11:58 AM PDT

    •  bonds are screwed, too (0+ / 0-)

      Bonds without the backing of monoline insurers don't have a AAA rating and the monolines are toast.  Bonds based on the willingness of people to continue to pay on assets that are dramatically under water at a time when a global depression is upon us are of sketchy value at best.

       So you're correct that stock != bonds issued, but all of it is a disaster.

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