Rogue: Bailouts:
You are missing the point. The government MUST bail out Fannie and Freddie and, if necessary, Lehman. There is zero alternative!
But, what is misleading about your righteous indignation is that you are implying the OWNERS of those companies are "bailed out". They are not. The OWNERS are the stockholders. They will get close to nothing just like Bear Stearns. What is "bailed out" is the system. Since Fannie and Freddie are involved in 70% of the mortgages, you can't allow the system to fail - unless you let it fail over many years. If the government doesn't bail out Fannie and Freddie (specifically), there is no more US, no more financial system, no more nothing except massive unrest and anarchy.
There is no question that, when push comes to shove, they will be bailed out - and push WILL come to shove. Everyone has known for years that Fannie and Freddie were on a collision course with catastrophe - even during the boom years. This is old news.
The interesting part of this is that the government - who is insanely in debt - will pile onto their existing debt more trillions of Fannie and Freddie bad paper. Of course, it won't show up as US debt, just like Social Security doesn't show up. It will all be off-balance. But, like every other domino in this house of cards, it will add to the eventual massive devaluation of the dollar as US securities gradually become more and more worthless.
Len
When the TA and the FA don't jibe, believe the TA. -- Dr. Ze'ev Hed
Warren Buffet: 5 minutes and 17 seconds of pure, unadulterated, bulletproof, flawless logic.
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