I've been reading The Black Swan, which talks about the impact of highly improbable events and how often they actually happen. Two years ago, if you had asked Wall Street insiders what the probability was of a bankruptcy of Fannie Mae (FNM) and Freddie Mac (FRE), they'd have most certainly said less than 1%. And yet that is basically what we've just witnessed. It's not technically a bankruptcy, but the equity has been wiped out and the company has been taken over by the only entity that can guaranty the debt - the US govt/taxpayers. http://seekingalpha.com/article/94191-bad-news-friday-nights
http://www.nolanchart.com/article4736.html "Will the foreign dollar holders, the ones who hold most of the U.S. debt in the world, also applaud the move?" If they do, the Fed will probably get away with this power grab, at the expense of the taxpayers.
Of course, they won't call it nationalization. They won't even call it a bailout. They'll use high-sounding phrases like the ones that Fox News and the Times are using, because those are the words the banking interests gave to the major news organizations in the first place.
Indeed, the U.S. financial debacle is now so ingrained - and a so-called "Super Crash" so likely - that most Americans alive today won't be around by the time the last of this credit-market mess is finally cleared away - if it ever is, Rogers said.... http://www.moneymorning.com/2008/09/06/jim-rogers-book/
http://money.cnn.com/2008/01/03/news/newsmakers/gross_pimco/?postversion=2008010311Gross avoided exposure to subprime securities and also anticipated the effect that the decline in home prices would have on the broader economy and corporate bonds, Morningstar said.
http://www.howestreet.com/articles/index.php?article_id=7395 The Treasury Department is close to finalizing a plan to help shore up mortgage giants Fannie Mae and Freddie Mac, according to people familiar with the matter. Precise details of Treasury's plan couldn't be learned. The plan is expected to involve a creative use of Treasury's new authority to make a capital injection into the beleaguered giants.
The plan includes changes to senior management at both companies, according to a person familiar with the plans. An announcement could come as early as this weekend.
On Friday, a series of high-level meetings were planned between Federal Reserve Chairman Ben Bernanke, Treasury Secretary Henry Paulson, the chief executives of Fannie Mae and Freddie Mac and the companies' new regulator, the Federal Housing Finance Agency.
Treasury has been working with bankers at Morgan Stanley to use its newfound authority, granted by Congress in July, to devise a way to prop up the mortgage giants, which have been pummeled by investors in recent weeks.
