Do you remember Fannie Mae and Freddie Mac?
The infamous couple is at the core of the current financial crisis and a prime example why over-regulation and government involvement is a bad idea.
Between the two government backed companies, greetings to our communist friends in the House of Representatives and the Senate, they underwrote about 90% of all mortgages.
In other words, they made sure that you could, and still can, purchase a liability which you cant afford with money that you don't have. Keep in mind that they 'enjoyed' the tightest regulation and oversight in the entire financial sector. I mean, it was so tight that if you would have shoved a shovel of coal in their ass, you would have gotten diamonds in less than a day.
Of course hedge funds, derivatives, leverage and lack of regulation are blamed for the crisis so now the government wants to create more Fannie's and Freddie's in order to create a bigger crisis. Please keep in mind that the only financial sector which did not require a bailout was the hedge fund sector. It is like you using a hammer with a screw and wonder why it does not work. Of course it is the fault of the hammer and not your own stupidity.
Anyway, it is time again for another round of bailouts and this time Fannie Mae and Freddie Mac only require another $363 billion
So, what's the funny part?
That a big chunk of that cash will go to the Treasury, led by I-can-never-guess-it-right Geithner, in form of dividend payments. One way the Treasury tries make up for lost revenues due to decrease in foreign demand for worthless U.S. paper.
Yes we can...
...make it worse!
Photo Credit: The picture in the top left corner was created by Boaz Yiftach and downloaded for free use at freedigitalphotos.net.
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