Just a quick note today.
The taxpayers were all robbed once again over the weekend as the Feds ordered Fannie and Freddie to start buying $40 billion a month of bad loans:
"Oct. 11 (Bloomberg) -- Federal regulators directed Fannie Mae and Freddie Mac to start purchasing $40 billion a month of underperforming mortgage bonds as the Bush administration expands its options to buy troubled financial assets and resuscitate the U.S. economy, according to three people briefed about the plan.
Fannie and Freddie began notifying bond traders last week that each company needs to buy $20 billion a month in mostly subprime, Alt-A and non-performing prime mortgage securities, according to the people, who asked not to be identified because the plans are confidential. The purchases would be separate from the U.S. Treasury's $700 billion Troubled Asset Relief Program."
Here it is folks, the backdoor bailout! What a waste of money this is. This one could could cost us almost $500 billion annually as the government continues to try and sweep this nightmare underneath a rug.
My question here is what price is Fannie going to pay for these worthless assets? You can guarantee that Fannie will overpay for these subprime sandwiches on purpose in an attempt to re-capitalize the banks.
Fannie and Freddie going forward will be nothing but garbage dumps for toxic assets.
All of this spending by the government will result in dire consequences down the road. The risk of the USA defaulting on its own debt just rose considerably.
I guess if we go down, we plan on doing it in flames!