Gov is expected to take over Fannie Mae & Freddie Mac

Why are they being bailed out?

Palin responds -- "The fact is that Fannie Mae and Freddie Mac have gotten too big and too expensive to the taxpayers"

I'd laugh but a chance that she might be President someday should make us all cry.
 
Why are they being bailed out?

Palin responds -- "The fact is that Fannie Mae and Freddie Mac have gotten too big and too expensive to the taxpayers"

I'd laugh but a chance that she might be President someday should make us all cry.
 
ilwrath said:
One little wrinkle in the current proposal is that it will render Fannie and Freddie shares virtually worthless and a little bit of a problem for scores of banks who hold a lot of these devices to satisfy their capital reserve requirements. If those holdings become worthless then banks don't have any reserve to issue loans against which results in banks failing and the average Joe resorting to barter while all the people who own most of the money get to keep the money.
Click to expand...

I've tried to parse this part a few times, and it's where I keep getting confused. So we agree that Fannie/Freddie shares are worthless. Yes, there are some banks and funds holding those shares. They will take a hit.

How does that leave them with money (well, they'll always have golden parachutes, but should have taken some hits) and me bartering (the part that concerns me, and I'm wanting to avoid...)? I don't mean it as a sarcastic question... If it IS the case, I'm trying to understand which direction I'm getting screwed from.
Click to expand...

So, a bank goes under, the guy with a couple of million in an account will get wiped out, but that's not real money. The guy with a few million in the banks shares? Poof. But that's not real money either. Bank deposits are small potatoes. People with real money don't use that sort of marker to store value. They are in the debt money big time. As of July 2006 the Fed had created around $800 and about half of that is now overseas. The debt instruments currently sitting in Fannie and Freddie are over $5 trillion. Federal bonds (which are also debt) are up around $9 trillion. Just in those two places there is over 15 times as much debt money as Fed money, and there's a lot more debt money out there than that.

Now, if banks fail then that simply wipes out bank shares and uninsured deposits but loans can be 9 times as much money as deposits (10% reserve) or more (since I believe the reserve requirement for the first $9 million is 0%.

The debt money survives the take-over as that is now an asset. That can be laundered off to other institutions like Fannie and Freddie and thus be guaranteed ultimately by your taxes. There will be inevitable depreciation in the process but that is the price of laundering your money and with everyone else getting wiped out it still leaves you on top, perhaps in a better position than before.

The multi-trillionaires win again.
 
ilwrath said:
One little wrinkle in the current proposal is that it will render Fannie and Freddie shares virtually worthless and a little bit of a problem for scores of banks who hold a lot of these devices to satisfy their capital reserve requirements. If those holdings become worthless then banks don't have any reserve to issue loans against which results in banks failing and the average Joe resorting to barter while all the people who own most of the money get to keep the money.
Click to expand...

I've tried to parse this part a few times, and it's where I keep getting confused. So we agree that Fannie/Freddie shares are worthless. Yes, there are some banks and funds holding those shares. They will take a hit.

How does that leave them with money (well, they'll always have golden parachutes, but should have taken some hits) and me bartering (the part that concerns me, and I'm wanting to avoid...)? I don't mean it as a sarcastic question... If it IS the case, I'm trying to understand which direction I'm getting screwed from.
Click to expand...

So, a bank goes under, the guy with a couple of million in an account will get wiped out, but that's not real money. The guy with a few million in the banks shares? Poof. But that's not real money either. Bank deposits are small potatoes. People with real money don't use that sort of marker to store value. They are in the debt money big time. As of July 2006 the Fed had created around $800 and about half of that is now overseas. The debt instruments currently sitting in Fannie and Freddie are over $5 trillion. Federal bonds (which are also debt) are up around $9 trillion. Just in those two places there is over 15 times as much debt money as Fed money, and there's a lot more debt money out there than that.

Now, if banks fail then that simply wipes out bank shares and uninsured deposits but loans can be 9 times as much money as deposits (10% reserve) or more (since I believe the reserve requirement for the first $9 million is 0%.

The debt money survives the take-over as that is now an asset. That can be laundered off to other institutions like Fannie and Freddie and thus be guaranteed ultimately by your taxes. There will be inevitable depreciation in the process but that is the price of laundering your money and with everyone else getting wiped out it still leaves you on top, perhaps in a better position than before.

The multi-trillionaires win again.
 
ilwrath said:
One little wrinkle in the current proposal is that it will render Fannie and Freddie shares virtually worthless and a little bit of a problem for scores of banks who hold a lot of these devices to satisfy their capital reserve requirements. If those holdings become worthless then banks don't have any reserve to issue loans against which results in banks failing and the average Joe resorting to barter while all the people who own most of the money get to keep the money.
Click to expand...

I've tried to parse this part a few times, and it's where I keep getting confused. So we agree that Fannie/Freddie shares are worthless. Yes, there are some banks and funds holding those shares. They will take a hit.

How does that leave them with money (well, they'll always have golden parachutes, but should have taken some hits) and me bartering (the part that concerns me, and I'm wanting to avoid...)? I don't mean it as a sarcastic question... If it IS the case, I'm trying to understand which direction I'm getting screwed from.
Click to expand...

So, a bank goes under, the guy with a couple of million in an account will get wiped out, but that's not real money. The guy with a few million in the banks shares? Poof. But that's not real money either. Bank deposits are small potatoes. People with real money don't use that sort of marker to store value. They are in the debt money big time. As of July 2006 the Fed had created around $800 and about half of that is now overseas. The debt instruments currently sitting in Fannie and Freddie are over $5 trillion. Federal bonds (which are also debt) are up around $9 trillion. Just in those two places there is over 15 times as much debt money as Fed money, and there's a lot more debt money out there than that.

Now, if banks fail then that simply wipes out bank shares and uninsured deposits but loans can be 9 times as much money as deposits (10% reserve) or more (since I believe the reserve requirement for the first $9 million is 0%.

The debt money survives the take-over as that is now an asset. That can be laundered off to other institutions like Fannie and Freddie and thus be guaranteed ultimately by your taxes. There will be inevitable depreciation in the process but that is the price of laundering your money and with everyone else getting wiped out it still leaves you on top, perhaps in a better position than before.

The multi-trillionaires win again.
 
ilwrath said:
One little wrinkle in the current proposal is that it will render Fannie and Freddie shares virtually worthless and a little bit of a problem for scores of banks who hold a lot of these devices to satisfy their capital reserve requirements. If those holdings become worthless then banks don't have any reserve to issue loans against which results in banks failing and the average Joe resorting to barter while all the people who own most of the money get to keep the money.
Click to expand...

I've tried to parse this part a few times, and it's where I keep getting confused. So we agree that Fannie/Freddie shares are worthless. Yes, there are some banks and funds holding those shares. They will take a hit.

How does that leave them with money (well, they'll always have golden parachutes, but should have taken some hits) and me bartering (the part that concerns me, and I'm wanting to avoid...)? I don't mean it as a sarcastic question... If it IS the case, I'm trying to understand which direction I'm getting screwed from.
Click to expand...

So, a bank goes under, the guy with a couple of million in an account will get wiped out, but that's not real money. The guy with a few million in the banks shares? Poof. But that's not real money either. Bank deposits are small potatoes. People with real money don't use that sort of marker to store value. They are in the debt money big time. As of July 2006 the Fed had created around $800 and about half of that is now overseas. The debt instruments currently sitting in Fannie and Freddie are over $5 trillion. Federal bonds (which are also debt) are up around $9 trillion. Just in those two places there is over 15 times as much debt money as Fed money, and there's a lot more debt money out there than that.

Now, if banks fail then that simply wipes out bank shares and uninsured deposits but loans can be 9 times as much money as deposits (10% reserve) or more (since I believe the reserve requirement for the first $9 million is 0%.

The debt money survives the take-over as that is now an asset. That can be laundered off to other institutions like Fannie and Freddie and thus be guaranteed ultimately by your taxes. There will be inevitable depreciation in the process but that is the price of laundering your money and with everyone else getting wiped out it still leaves you on top, perhaps in a better position than before.

The multi-trillionaires win again.
 
ilwrath said:
One little wrinkle in the current proposal is that it will render Fannie and Freddie shares virtually worthless and a little bit of a problem for scores of banks who hold a lot of these devices to satisfy their capital reserve requirements. If those holdings become worthless then banks don't have any reserve to issue loans against which results in banks failing and the average Joe resorting to barter while all the people who own most of the money get to keep the money.
Click to expand...

I've tried to parse this part a few times, and it's where I keep getting confused. So we agree that Fannie/Freddie shares are worthless. Yes, there are some banks and funds holding those shares. They will take a hit.

How does that leave them with money (well, they'll always have golden parachutes, but should have taken some hits) and me bartering (the part that concerns me, and I'm wanting to avoid...)? I don't mean it as a sarcastic question... If it IS the case, I'm trying to understand which direction I'm getting screwed from.
Click to expand...

So, a bank goes under, the guy with a couple of million in an account will get wiped out, but that's not real money. The guy with a few million in the banks shares? Poof. But that's not real money either. Bank deposits are small potatoes. People with real money don't use that sort of marker to store value. They are in the debt money big time. As of July 2006 the Fed had created around $800 and about half of that is now overseas. The debt instruments currently sitting in Fannie and Freddie are over $5 trillion. Federal bonds (which are also debt) are up around $9 trillion. Just in those two places there is over 15 times as much debt money as Fed money, and there's a lot more debt money out there than that.

Now, if banks fail then that simply wipes out bank shares and uninsured deposits but loans can be 9 times as much money as deposits (10% reserve) or more (since I believe the reserve requirement for the first $9 million is 0%.

The debt money survives the take-over as that is now an asset. That can be laundered off to other institutions like Fannie and Freddie and thus be guaranteed ultimately by your taxes. There will be inevitable depreciation in the process but that is the price of laundering your money and with everyone else getting wiped out it still leaves you on top, perhaps in a better position than before.

The multi-trillionaires win again.
 
ilwrath said:
One little wrinkle in the current proposal is that it will render Fannie and Freddie shares virtually worthless and a little bit of a problem for scores of banks who hold a lot of these devices to satisfy their capital reserve requirements. If those holdings become worthless then banks don't have any reserve to issue loans against which results in banks failing and the average Joe resorting to barter while all the people who own most of the money get to keep the money.
Click to expand...

I've tried to parse this part a few times, and it's where I keep getting confused. So we agree that Fannie/Freddie shares are worthless. Yes, there are some banks and funds holding those shares. They will take a hit.

How does that leave them with money (well, they'll always have golden parachutes, but should have taken some hits) and me bartering (the part that concerns me, and I'm wanting to avoid...)? I don't mean it as a sarcastic question... If it IS the case, I'm trying to understand which direction I'm getting screwed from.
Click to expand...

So, a bank goes under, the guy with a couple of million in an account will get wiped out, but that's not real money. The guy with a few million in the banks shares? Poof. But that's not real money either. Bank deposits are small potatoes. People with real money don't use that sort of marker to store value. They are in the debt money big time. As of July 2006 the Fed had created around $800 and about half of that is now overseas. The debt instruments currently sitting in Fannie and Freddie are over $5 trillion. Federal bonds (which are also debt) are up around $9 trillion. Just in those two places there is over 15 times as much debt money as Fed money, and there's a lot more debt money out there than that.

Now, if banks fail then that simply wipes out bank shares and uninsured deposits but loans can be 9 times as much money as deposits (10% reserve) or more (since I believe the reserve requirement for the first $9 million is 0%.

The debt money survives the take-over as that is now an asset. That can be laundered off to other institutions like Fannie and Freddie and thus be guaranteed ultimately by your taxes. There will be inevitable depreciation in the process but that is the price of laundering your money and with everyone else getting wiped out it still leaves you on top, perhaps in a better position than before.

The multi-trillionaires win again.
 
FANNIEMACbig.jpg
 
Re: Gov is expected to take over Fannie Mae & Freddie Ma

redrumloa said:
Bastards!!
Click to expand...
Seems to me how modern Republicanisms is operating the economy..
Let private industry take the profits.
Let government take the losses.
Borrow from China to do it.
Pass the Bill to our childern + interest.
 
Re: Gov is expected to take over Fannie Mae & Freddie Ma

redrumloa said:
Bastards!!
Click to expand...
Seems to me how modern Republicanisms is operating the economy..
Let private industry take the profits.
Let government take the losses.
Borrow from China to do it.
Pass the Bill to our childern + interest.
 
Re: Gov is expected to take over Fannie Mae & Freddie Ma

redrumloa said:
Bastards!!
Click to expand...
Seems to me how modern Republicanisms is operating the economy..
Let private industry take the profits.
Let government take the losses.
Borrow from China to do it.
Pass the Bill to our childern + interest.
 
Re: Gov is expected to take over Fannie Mae & Freddie Ma

redrumloa said:
Bastards!!
Click to expand...
Seems to me how modern Republicanisms is operating the economy..
Let private industry take the profits.
Let government take the losses.
Borrow from China to do it.
Pass the Bill to our childern + interest.
 
Re: Gov is expected to take over Fannie Mae & Freddie Ma

redrumloa said:
Bastards!!
Click to expand...
Seems to me how modern Republicanisms is operating the economy..
Let private industry take the profits.
Let government take the losses.
Borrow from China to do it.
Pass the Bill to our childern + interest.
 
Re: Gov is expected to take over Fannie Mae & Freddie Ma

redrumloa said:
Bastards!!
Click to expand...
Seems to me how modern Republicanisms is operating the economy..
Let private industry take the profits.
Let government take the losses.
Borrow from China to do it.
Pass the Bill to our childern + interest.
 
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