Thursday, August 21, 2008
Fannie & Freddie "have $223 billion of bonds due by the end of the quarter, according to data compiled by Bloomberg". Know what that means? It means that the U.S. Government Sponsored Entities are going to be Government Agencies sometime before the end of October. No one is going to fund that rollover without an EXPLICIT guarantee from Uncle Sam. It also means that housing will decline in price, in real terms, until the median income can support a mortgage that can service the median home. Since "real wages" in the U.S. are falling, and will continue to fall for quite sometime, it means many years of economic pain for the U.S.
Fannie & Freddie should be made into Poster Children, and their poster should hang in the office of every politician elected in the U.S., every bureaucrat, and every government agency - local, state, and federal with the caption:
If Fannie and Freddie did not exist, housing would be affordable to Americans, and our economy and currency - our very way of life - would not be in jeopardy. You can thank the socialist, do gooder, c&^% s*&cker, left wing jack asses in our political past for destroying the well being of their own constituents. Because this is going to hurt the poor and working classes a great deal more than the rich.
(Ah, but there will always be some well educated, miscreant scumbag willing to take advantage of the poor and working classes to advance their political careers - Senator Chuck Schumer and Congressman Bart Stupak come to mind - by promising them freebies and love and care from Big Brother. Never mind that we can't pay for it and the withdrawal symptoms are going to hurt far worse than the illness they were trying to assuage. Never mind that the real money that funded their candidacies came from the very folks they were supposed to protect the "little guy" from. Where was Chuckie Schumer when Stan O'Neal got his $167 MILLION severance package for destroying Merrill Lynch? Where was the OUTRAGE? Old Chuckie was not going to take Wall Street's excessive compensation on, he was getting to much money from the s&%t stains at the top. Oh no, old Chuckie directs his ire at "The Rich" folks making over $200,000 per year (LOLOLOLOLOLOLOLOL!! in NYC that ain't even middle class!). But the guys stealing $100 MILLION per year got a pass. Reminds me of the George Carlin routine about religion.)
But I digress...
Lehman got turned down for a dance, and without said funding they will be pushing up daisies in short order.
THE wipe out in the mortgage market has not even gotten here folks. I guess in some ways maybe this is some strange blessing in disguise vis a vie America's oil issue. The brake on the economy is giving the U.S. an opportunity to fully address the "Oil Train", and that train has left the station and is due here quite soon. What will we do with this window of opportunity?
America may be in complete denial about the certainty of a geological peak in oil supplies being either here or near, but the authoritarian regimes around the globe are most certainly not. These regimes do not need to hurry the process. This is more like an anaconda slowly squeezing its prey than tiger tearing its dinner to pieces.
The financial squeeze play that the Treasury and the Fed tried to engineer is over. The other side of the "squeeze" is now firmly in control. The equity markets are likely to be an extremely challenging place to be long, with the possible exception of energy. Of course, even energy equities can get dragged down in all of this...
It is going to be an interesting winter in terms of heating oil supplies. Hunger and cold are far more politically explosive than freedom fries and gay marriage. At $5 per gallon for heating oil, there are going to be some cold, pissed off folks in the north country.
Good thing the election is in early November before it gets too cold. I would love to hear how Obama's "hope and change" or McCain's "service and experience" pitch works out if the election were held in mid February.
BTW, did I mention that Oil put a low in?
Yours for a better world,
Mentatt (at) yahoo (dot) com
Posted by The Short Story Man at 5:01 AM