Fannie Mae-No Politics (FNMA)

[Cash47873]

Hugely profitable. They set it up by design. The whole thing is a rouse.

Private sellers can not provide enough inventory to satisfy demand.
This begets a steady rise in home values and interest rates. This has also spurred new home starts which is good for headlines and a general perception of a growing economy.

At the same time the big banks are still sitting on top of a ton of REO property. These guys have been given very favorable terms by the gov to mitigate the carry cost on all that REO. This is why they have remained complicit in the rouse. If not for the favorable terms provided those banks would have been looking to liquidate that REO starting way back in 2008.

Now with a perception of a housing shortage and the economic indicators running on all 8 cylinders consumer confidence is rising. But here is the rub. Here is where they will bank huge. Soon all of that REO will make its way back into the market. They will release it more and more as interest rates rise commensurately with the movement towards the top of the current RE cycle, or bubble.

The same homes they foreclosed on a few years ago will be sold at higher prices and at higher interest rates which will look great on paper to a lot of people for a little while. Perhaps 1-2 years. Then expect another crash of the latest house of cards. The banks can rinse and repeat as long as they have a complicit partner in the federal gov.

That is best case scenario. The worst scenario will be an expected complete and utter lack of trust in the government which will lead to far more combative forms of social protest much like we are witnessing around the world as they are not the US and are not provided the same uneven playing field that we have here. This will be much more painful and pronounced than what happened in 2008.

For the reasons above I will be parlaying everything I own into F and F until it hits true value. Then I will sell and be buying all the gold I can.

$FNMA