Peter Eavis has an interesting piece on Fannie Mae and the way it changed how it discloses its bad loans. Fannie’s loss ratio appears to be escalating while Fannie’s management is spraying Chanel No. 5 on a rotted carcass. Fannie, with $40 billion of capital, is exposed to $74 billion on subprime loans and $196 billion in Alt-A loans.
See more on Fannie Mae here.
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Good thing they’re a “private” company, huh? Wouldn’t want taxpayers to be on the hook or anything…
I get a kick out of the money this enterprise takes in being called profit. Their profit is just the premium from taking absurdly high risks. It isn’t profit at all. This enterprise is guaranteed by the Federal Government so Uncle Sam will print as much money as necessary to keep this not so funny joke, or better yet legal theft mechanism alive.
When you can’t fail then you are able to gamble (NOT INVEST) other peoples money (some investors but mostly tax payers) on extremely risky schemes.
Think Orange County Pensions, Freddie Mac, Savings and Loans, etc.
flabbergasted Pelatiah Webster, in his history of “Continental Money,” tells us that when the subject of increased taxation for the support of the war was under consideration by the Continental Congress, a member arose and indignantly asked “if he was expected to help tax people, when they could go to the printing-office and get money by the cart load.”
This paper money provoked all manner of economic chaos and dislocation. According to John Witherspoon, the New Jersey clergyman who signed the Declaration of Independence, “For two or three years we constantly saw and were informed of creditors running away from their debtors, and the debtors pursuing them in triumph, and paying them without mercy.”
In Rhode Island, sources tell us of creditors “leaping from rear windows of their houses or hiding themselves in their attics” in order to avoid debtors. The most vulnerable in society also felt its effects, with widows and orphans finding the guardians of their trust funds paying them in currency that was worth but a fraction of its face value.
Isnt all this stock on the stock market really just a lot of paper. Things are getting tough out here.
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