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The Greatest Government Bailout of All Time
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This Link is located in the Public Channel Housing Bubble and Bear Links.
Posted by ian 74 days ago (www.moneyandmarkets.com). Views: 68
Tags: housing bubble fannie mae freddie mac |
| Related Tags: wall street credit crisis economics countrywide banks peter schiff gold |
We are now witnessing a rapid-fire 1-2-3 chain reaction of events that's leading to the greatest government bailout of all time ...
Event #1. In the mortgage market, where this crisis first erupted, nearly half of all subprime loans issued in 2006 are now delinquent ... late payments on mid-quality "Alt-A" mortgages have soared 41.5% ... and delinquencies on prime jumbo mortgages are up a staggering 55.2% in the past 6 months.
Event #2. At Fannie Mae and Freddie Mac, responsible for over half of the nation's massive mortgage market, losses are mounting so quickly — and so obviously — that even their supposedly "safer" preferred shares are crashing in value:
Fannie Mae and Freddie Mac
As you can plainly see in the charts above, since their mid-May high, Fannie Mae's preferred shares (NYSE: FNM PH) are down a shocking 58.8%, falling almost as quickly as the common shares, which have lost 77% of their value.
Freddie Mac's preferred shares (NYSE: FRE PK) have plunged even more: Down 65.5%. (The Freddie common shares, meanwhile, have suffered an 89.6% wash-out!)
And all of this has happened just since May 15, a meager 102 days ago! All in two giant companies that were the darlings of Wall Street, the creation of Washington and supposedly among the most "conservative" investments in the world!
Event #3. At financial institutions across the country, these devastating losses in Fannie and Freddie paper are ripping through balance sheets like an F-5 tornado. That includes:
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ian said |
| 74 days ago |
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wow
1. The quantities of Fannie and Freddie bonds outstanding and needing government support are so massive. According to the Federal Reserve's recently released Flow of Funds (pdf page 96), agency- and GSE-backed securities — mostly issued by Fannie and Freddie — total a whopping $7.6 trillion, or $2.4 trillion MORE than the entire amount of Treasury securities outstanding.
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