Fannie and Freddie are gigantic leveraged hedge funds which were used to enrich management and its investors. These firms were instumental in creating the housing bubble which drove home prices to more than 5x income, far above the 2.5 to 3x long term historical average. This happened because these private firms used their government chartered statuses to borrow cheaply and buy over $5T of mortgages, including $1T exotic subprime and Liar Loan mortgages, creating a price bubble which is devastating the US economy.
No debt obligation of Fannie and Fredddie is guaranteed, backstopped, backed, or implied to be any of the above by the US Govenment, as per the CAPITALIZED, BLACK LETTER DISCLAIMERS ON THE FRONT OF EVERY FANNIE AND FREDDIE OFFERING DOCUMENT:
http://market-ticker.denninger.net/...
The bailout of the investors in Fannie and Freddie by YOU, which are FOREIGN CENTRAL BANKS, HIGH NET WORTH INVESTORS, BANKS, INSURANCE COMPANIES, and OFFSHORE HEDGE FUNDS will be paid for by YOU, and will cause INTEREST RATES TO RISE, FURTHER INDEBTING YOU WITH HIGHER INTEREST PAYMENTS on top of the ADDITIONAL CAPITAL DEBT INCURRED.
THIS WILL COME AT THE EXPENSE OF EDUCATION, HEALTH CARE, DEFENSE, and OTHER NECESSARY SPENDING. THIS SPENDING WILL BE REPLACED BY BAILOUTS OF PRIVATE INVESTORS BY YOU THE AMERICAN TAXPAYER, PAID FOR BY MORE DEBT INCURRING MORE INTEREST!More details here:
http://market-ticker.denninger.net/...
http://market-ticker.denninger.net/...
http://market-ticker.denninger.net/...