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Mortgage bailout aimed at stemming financial crisis

Reuters and The Associated Press

Latest comment posted at 8:08 AM EST 08/09/08

Finance companies Fannie Mae and Freddie Mac under U.S. government control; ‘a failure of either of them would cause great turmoil in our financial markets here at home and around the globe' ...Read the full article

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  1. Spence Cole from Vancouver, Canada writes: And so ends the most recent cycle of free money, absent covenants and lending against expectations and promises rather than assets and cash flow.

    Given that it was access to cheap home equity loans that drove the largest consumer market in the world for the most of the last decade, and those loans are gone, the fallout will now move from Wall St. to Main Street as retailers, distributors and Chinese manufacturers fold their tents.

    But there are some excellent businesses to be in. Food retailers will see their business expand while restaurant chains disappear. DIY places should have new life now. And being a couch potato will become fashionable again.
  2. bill k from Canada writes: Capitalism is a failed system. This is just more proof of that. Private profits and social losses = capitalism. This action will do nothing to save the housing crash or the economy. People in the US are maxed out in debt and this bailout does nothing to help those who have lost their home and those who will lose their home. It's a joke on the middle class/taxpayers
  3. jim corrigan from Toronto, writes: Could someone tell me how the US government is going to pay for this disaster?
  4. elkay elkay from Canada writes: Jim, its simple. You simply put on the third shift at the printing plant that prints the money. Failing that, you buy another printing press.
  5. andrea quartesan from Canada, writes: what happens to shareholders?
    what will their shares be worth?
  6. Volatility Stalker from Canada writes: Shareholders are toast. They've had so much warning, one must wonder who is left buying these companies?

    As for capitalism being a "failed" system - that is hysterical. The left has seen a total collapse of international socialism and both the Russians and the Chinese pay the barest lip service to those failed economc roots as they rush to be better capitalists.

    Capitalism is messy. There are ups and downs and distortions from government and non-capitalist sources.

    Lets face it - the low interest rates and easy money that caused the housing problem comes from the "central committee" planners of the big daddy central bank - the Federal Reserve. The Fed is not a capitalistic institution.

    Fannie and Freddie will shrink - and so will the governments involvement over time. This is hardly the end of either capitalism or the housing market.
  7. Sweeney Todd from Oilberta, Canada writes: Spence Cole from Vancouver, Canada writes: "And so ends the most recent cycle of free money, absent covenants and lending against expectations and promises rather than assets and cash flow."

    ==========================================

    I doubt very much that this is the end of the train-wreck, Spence. This is just the end of the Freddie/Fannie chapter. With so many homes in foreclosure with their taxes in arrears/unpaid - how are municipalities going to provide services like road work, snow removal, water & sewer repairs, schools, libraries, etc. I suspect that the overall mess is a lot closer to the middle than the end.
  8. Alastair james Berry from NANAIMO BC, Canada writes:
    The Land of Liberty, The Land of the Free Market..................

    And it makes me weep to see Washington adopt SOCIALIST NOSTRUMS when a blip occurs AND "THERE IS AN ELECTION IN THE OFFING".

    If this doesn't show that the MIGHTY USA RUNS at the BECK AND CALL of the Financiers who fill the PARTY COFFERS............ I just don't know what does!

    NATIONALIZATION OF INDUSTRY IS ANATHEMA!! My whole being screams against the notion that Civil Servants can run business better than businessmen!

    Now, all other CEO's will be watching as see that they, too, can play fast and loose, tossing caution to the wind, AND THE GOVERNMENT WILL BAIL THEM OUT IF THEY FAIL.

    I'm afraid the AMERICAN ECONOMY IS A 'GONER'

    SOCIALIST ECONOMIES DO NOT WORK EFFICIENTLY.........EVERY ONE LOSES EXCEPT THE PARTY BOSSES and their favourites running the nationalized industries!................Hell for the man in the street awaits!
  9. Right said Fred from Canada writes: And we have Lord Cheney over in Europe giving threats to Russia about the Georgia fiasco and supposed consequences. Russia will just sit back with a smirk and just watch things unfold further. The USD should plummet on this, there is no inherant value in it, what is left to hold it up? All commodities should be repriced to a basket of currencies or gold asap.
  10. west slope from Canada writes: ---
    Let's see, how did the USA get here?

    Low overnight US federal interesting rates for far too long under Alan Greenspan's waning years.

    A global glut of capital that kept returns on low-risk money low enough to create incentives to window-dress risky mortgage assets, load Asset Backed Commercial Paper (ABCP) and similar instruments with 'invisible' high-risk assets.

    De facto globalizing labour markets that helped keep inflation relatively low.

    The on-going silly American dream of every family owning their own huge home on a large acreage supported by cheap fuel, large automobiles, cheap, crappy food, no exercise, and pills to solve all problems.

    Ideologically driven, dogmatic opposition to government regulation and oversight.

    Another oil price shock, once again, in large part driven by silly American government policy, example: mandated ethanol contributions to gasoline.

    Did I miss any?

    Oh yeah, a persevering colonial attitude of first-come, first-serve, aka 'get-rich-quick', and an open, generous attitude to the welfare state cleaning up the mess that remains.

    Live and learn folks. We do similar kinds of silly things here in Canada, particularly in the domain of our natural resources.
  11. Don Portz from Trochu AB, Canada writes: West Slope - I agree with your comments for the most part, however the situation was not isolated to the USA. If you look at the economy over the 15/20 years you will see that all the industrial countries embarked on an aggrasive economic increase using low interest rates and easy crdit to stimulate it. Yas the USA went even a bit overboard but so did the rest of the world. The increases were unsustainable and now we are having a serious corrections. We will all recover and there will be some more prudent policies in place until the next generation comes along.
    Dont believe me? Look at history.
  12. Hendrick Larose from Canada writes: Question for the posters...What do you think? Will the stock markets be up or down on the news when they open tomorrow?. I could see either market response.
  13. west slope from Canada writes: ---
    Don Portz, I agree and would add that with the notable exception of Canada and a few other countries, expansionary fiscal policies in many rich OECD countries have contributed to this disaster.

    Yes, it does seem that as past lessons fade into history, we cannot help ourselves but simply repeat the same mistakes.
  14. R. M. from Regina, Canada writes: Are people getting the picture now that the so called "experts" are really not experts at all but either simply lucky or unlucky and we are tried inextricably to their fates as well???? We may be educated but we are far from smart.
  15. Rene L from Canada writes: Hendrick Larose from Canada writes: Question for the posters...What do you think? Will the stock markets be up or down on the news when they open tomorrow?. I could see either market response.
    -----------------------------------------------
    Hendrick, I was wondering exactly the same thing... I have heard pundits on both sides of this arguement. Fridays aftermarket numbers shows FNM/FRE down substantially while the other financials seemed to be generally higher - I assume on the belief that now that the U.S. gov't is explicitly running Fannie/Freddie, there will be less uncertainty as well as better credit conditions.
  16. Hendrick Larose from Canada writes: I think the first mistake about playing the markt is to think that it runs on logic. Once you realize that psychology has much more to do with it than earnings and growth and economics you can succeed or at least have a better chance.
  17. Tiu Leek from Here, Canada writes: "The left has seen a total collapse of international socialism and both the Russians and the Chinese pay the barest lip service to those failed economc roots as they rush to be better capitalists."

    Um, weren't the Russians commies last week? And wasn't anyone who didn't quite buy the US explanation for Georgia a Moscow supportin 'useful idiot'?

    So what exactly is your beef with Russia, anyhow? They're capitalists, but they aren't democratic enough for you?
  18. Tiu Leek from Here, Canada writes: "Capitalism is messy."

    So is open heart surgery. And this looks a look to me like an emergency bypass.

    Face up to facts. This is government interference in the marketplace, pure and simple.

    Something you free marketers are supposed to hate, but of course don't seem particularly bothered by in this case.
  19. Little Dickie from From Beautiful Downtown Port Dover, Canada writes: The dominos are starting to fall....which Wall Street investment bank is next...The US must be close to running out of printer's ink and blank currency paper soon...it can't go on for much longer.

    There is no gold left in the world's central bank's vaults, as it has been mostly sold off. They agreed years ago....paper will do. There is nothing behind most countries paper debt...just an IOU of pieces of paper.....most of it held by the middle east, in the orient.....time to start buying actual gold and silver coins....or outright bullion
  20. Gardiner Westbound from Canada writes:
    The captains of finance and industry are capitalists until they need the a bailout with the little peoples' taxes. Crisis over, they will again espouse minimal government interference in business.
  21. Big M from Canada writes:

    "State Capitalism"

    ... go to wikipedia and read about it.

    These bailouts make me sick to my stomach. The taxpayers will be rolling the dice on over $500 Billion just for $1 Billion in preferred shares and some warrants on future common stock. Ridiculous!

    The first $200B is ($100B for each GSE) at 50 basis points over LIBOR. This is a massive Asset Backed Commercial Paper (ABCP) scheme sponsored by the Treasury at taxpayer risk. This is the type of thing that got everybody into this mess in the fist place.

    This is a sad sad day for both freedom and capitalism.
  22. Ricky for a Centrist Canada from Canada writes:
    What about those good ole American values of capitalism, self-reliance, and freedom from government?

    Disgusting.

    Bail out the criminals.

    Let the victims rot in the streets.

    A fine legacy for Bush.
  23. kelly moss from Canada writes: i often wonder what "insiders" know - if this is the calm before the storm no wonder Harper called an election

    Cdn banks are ok i suppose - but how much does CMHC owe - $148 bil .i looked at their balance sheet but its too tough for me to figure out . they must have some condos and house overfinanced too..

    anyone who bought in the last 3 years and put 5% down is probably upside down now ( owe more than they paid ) - and i think a lot of credit unions have got sucked in on commercial stuff -- some has doubled in the last 5 years - been refinanced under new none too bright owners and for sure they are in trouble ( again no thanks to the overzealous /sleezy appraisals )- big trouble if they have vacancy

    a friend told me once that it was " a good time to tie a string around your bum and stop eating "

    the world has a way of looking after itself ... i hope
  24. Hairy Wrangellian from Saltspring Island, Canada writes: Big M and Ricky: You're absolutely right; this is disgusting. Government interfering in the marketplace. Just because they're big shouldn't mean they aren't allowed to fail.
  25. jc pomerleau from Canada writes: Just to say how bad it is, the neocon are nationalizing almost half of the mortgage market of the US. This is the downfall of the reagan revolution: Deregulated market and free money. Stay tune it should last until 2011:(http://www.marketwatch.com/news/story/paul-b-farrell-rip-reaganomics/story.aspx?guid={9B24FFF5-8588-44AD-A59E-227DB7F1DCB5}&dist=hplatest).
  26. The Iconoclast from Canada writes: "Well, Here's another fine mess you've gotten me into,"
  27. robert roels from Canada writes: kelly moss;

    The insiders know how bad it is and how bad it is going to be, but they won't tell for if they do the "run" will be disastrous.

    Personally I don't believe anything I hear as a week ago Fannie and Freddie were "sound". Now they "cooked" their books. They always wait till the weekend. Eleven banks have been closed on the weekends including IndyMac and Freddie and Fannie and Bear Stearns.

    Next will be Lehman Bros or Merrill Lynch. I just don't know which weekend is all
  28. black and white from Canada writes: One of Bush's "big economic moves" was to deregulate the banking industry starting in 2003 and let them regulate themselves.....well here's the aftermath.....the exact opposite!! ....nice job GWB....the worst is yet to come...
  29. black and white from Canada writes: of course the CEOs are fired and hired back as "consultants"....no blame/no shame attributed to anybody...it just "happened".....like a big drunk as GWB said...just like when CIBC was fined 2.4 B US for manipulation and abettment and misleading investors in the Enron fiasco.....noblame/no shame...it just "happened"....or the computer did it....white collar crime at its slickly best...
  30. robert roels from Canada writes: I wonder who is really losing the money. The sub primees lost homes they had little or no equity in so they didn't lose. Forbes' list of Billionaires is growing. There are more millionaires in the world today.

    Billions were lost and lots of people are crying, but who lost it?
  31. J M from Canada writes: Bailing out his buddies at the expense of the taxpayer for a problem that he created. Typical Republican behaviour I guess. Will Harper do the same for Big Oil next year when oil finished its plummit?
  32. jc pomerleau from Canada writes: The prices of houses are already down 15%; that mean a shave of 4 trillions of equity value for the owners (http://money.cnn.com/2008/08/29/realestate/housingretirement.moneymag/index.htm?postversion=2008090207)

    The guy who saw it coming are commenting here:http://www.rgemonitor.com/blog/roubini/

    The 10 % correction forecast of the house market for next years will hurt badly. sepcialy the banks: 800 banks out of the 8000 will go down the tube
  33. Paul Collins from toronto, Canada writes: CEO's Daniel Mudd and Richard Syron should both be tried for corporate fraud. The executives and boards of directors should not get off either. I can't imagine the money and resources lost because of such poor planning. A lot of people will be eating dog food this christmas. And the ones responsible, got away with it too.
  34. Hendrick Larose from Canada writes: Paul Collins from toronto, Canada writes: CEO's Daniel Mudd and Richard Syron should both be tried for corporate fraud. The executives and boards of directors should not get off either. I can't imagine the money and resources lost because of such poor planning. A lot of people will be eating dog food this christmas. And the ones responsible, got away with it too.
    =========================================

    Putting these folks in jail would have no other value other than making convenient scape goats. Last time I checked bad judgement and thinking the good times would continue to roll were not criminal offenses. Easy to make these calls looking back but if it was so obvious I am sure there would be a bunch of folks who would have benefitted from this crash and I haven't heard about too many
  35. black and white from Canada writes: Hendrick Larose from Canada writes:thay were not criminal offences and no one benefitted from these acts.Take note from the Washington Post Sept 28,2007:

    WASHINGTON - Freddie Mac, the nation's second-largest financer of home mortgages, is paying a $50 million fine to settle civil securities fraud charges brought by federal regulators in a four-year accounting lapse.

    In addition, four former executives at the government-sponsored company settled negligent conduct charges by agreeing to pay a total of $515,000 in civil fines and to make restitution totaling $275,548. ....believe me if the hounds are called into this mess.....
  36. j boland from United States writes: As usual, problem in US, blame Bush. But this one won't fly. Both of these companies in the past 20 years have become bastions for democrat pols to make lots of money when their buddies are not in office. And the politics of the companies themselves turned left instead of sticking to sound financial business.

    Take Franklin Raines, for example, budget director for Billie Bob Clinton, who left the white house to take over Fannie in 2001, and in 3 short years managed to mismanage it horribly, having to restate earnings to drop a cool 9 BILLION dollars in 2004-5. He finally stepped down but walked with a severance of $15-20 million. Just imagine what he would have gotten if he had been competent and actually improved the company. Sad joke on the nation, he should be in jail.

    And these companies pushed the sub prime mortgage concepts big time as a matter of policy--why should low income, unqualified for loans kind of folks be deprived of the chance to own their own home, and presto another surprise "beyond the wildest imaginations" of democrats and an economic crisis develops---another economic miracle by the democrat party, a miracle that they can so consistently screw things up.
  37. robert roels from Canada writes: j boland from United States;

    Your comments re: Democrats or Republicans are not accurate and I agree that Bush is not the cause for every disaster, although that Iraq thing was his undoing.

    I know people of both parties who don't condone what is going on and these crooks who led the world into this mess were members of both parties.

    This is gone past being a partisan issue. This one effects everyone and the best minds from both sides will have to work together to dream of a way out, and if that is not possible minimize damages and insure it doesn't reoccur.
  38. black and white from Canada writes: Sorry j.boland for blaming it on America's CEO....his explanation is all we need ..."the banks got drunk"...the statement reveals Bush’s extremely limited understanding of the financial crisis shaking the US economy...he won't be around Washington when another tsunami hits...
  39. Yvonne Wackernagel from Woodville, Canada writes: "A senior adviser to Republican presidential nominee Sen. John McCain described the companies as examples of “crony capitalism” and said McCain believes they should eventually be privatized"
    =================================

    AND this is the man who would be president? He thinks some private enterprise would consider taking these two B I G failures over?
  40. Frank Enstein from Montreal, Canada writes: the bailout of slimy corrupt bankers continues- stick around, more to come! who's next? maybe Citibank?
  41. jimmie rabbit from toronto, Canada writes: elkay elkay from Canada writes: Jim, its simple. You simply put on the third shift at the printing plant that prints the money. Failing that, you buy another printing press.

    >>easier solution just add some zeroes to the bills

    i.e. 1.00 becomes 100 new dollars
    100 old dollars equals 10000 new dollars

    and so on.

    this has been done before with great success (germany in the 1930s; zimbabwe today).
  42. jimmie rabbit from toronto, Canada writes: robert roels from Canada writes: I wonder who is really losing the money. The sub primees lost homes they had little or no equity in so they didn't lose. Forbes' list of Billionaires is growing. There are more millionaires in the world today.

    Billions were lost and lots of people are crying, but who lost it?

    >>easy to answer, who is paying? the taxpayers are paying so they are the losers.

    (they can always sell their houses if they're short the cash!)
  43. Hendrick Larose from Canada writes: black and white from Canada writes: Hendrick Larose from Canada writes:thay were not criminal offences and no one benefitted from these acts.Take note from the Washington Post Sept 28,2007:

    ============================================
    Do you work for the national enquirer? Go back to my post. Did I say what you suggested in the above? You directly misquoted me. Here is what I said

    Putting these folks in jail would have no other value other than making convenient scape goats. Last time I checked bad judgement and thinking the good times would continue to roll were not criminal offenses. Easy to make these calls looking back but if it was so obvious I am sure there would be a bunch of folks who would have benefitted from this crash and I haven't heard about too many
  44. Tony . from Waterloo, Canada writes: robert roels from Canada writes: "I wonder who is really losing the money."

    Every last dime, and then some, will be paid for by the ordinary citizen of the U.S. (and to a lesser extend people like us Canadians who count the U.S. as a major trading partner).

    They will pay for this in two ways: Higher taxes and inflation.

    Higher taxes might not happen immediately, it can be postponed through deficit spending, but whether it's slightly higher taxes now, much higher taxes 10 years from now or stiflingly high taxes 25 years now it will have to be paid for by someone.

    Inflation is a trickier one to quantify, but could end up being the bigger cost in the long run. The debts will be covered by summing up new money from the Federal Reserve. However since that money will not come with any new value being added to the economy it will simply dilute the existing money supply.

    It's like if you pay someone more to do the exact same job with no improvement in quality or quantity of what they're making. Unless you can cut loses elsewhere, the inevitable result is either to lose money (ie government deficit), increase prices (inflation) or both. This bailout is big enough that 'both' is the only possible solution here.
  45. Carl Hansen from Canada writes: jim corrigan from Toronto, writes: Could someone tell me how the US government is going to pay for this disaster?

    VISA, maybe Mastercard.
  46. garlick toast from Canada writes: robert roels from Canada writes: I wonder who is really losing the money. The sub primees lost homes they had little or no equity in so they didn't lose. Forbes' list of Billionaires is growing. There are more millionaires in the world today.

    Billions were lost and lots of people are crying, but who lost it?

    ------------------------------------

    If you bought the house you could afford,had some equity in it,made your payments on time......The value of your investment still plummets when every other house on your street is for sale at repo prices.1 in 35 houses is unoccupied in the States.The asset bubble has a long deflation ahead of it.Meanwhile legitimate borrowers will have difficulty renewing their mortgages because of this mess.
  47. andrew lawton from Canada writes: These two 'companies' were in fact, the equivalent of canadian crown corporations and similarly, were the playthings of politicians of both stripes in the USA. Had they been properly regulated, which is almost unheard of in the US banking system, this mess would not have happened.

    It's a dreadful sight to see the worlds largest economy fall prey to such reckless disregard for the safety of capital. With the stroke of a pen America now has the world's largest socialized housing system. They have no choice though. The US federal reserve is now wholly dependent on the influx of funds from the other major western central banks. Unless the US gov't fixes this nonsense, the money won't flow anymore.

    truly, someone has placed idiots in charge of America
  48. Voice of Reason from Ottawa, Canada writes: I wonder if CIBC will be at the government trough for money like it was with Dome Pertroleum. From what I heard, they got a Canadian law changed so that they could go south for business and leave us Canadians behind.
  49. robert roels from Canada writes: There was a song that went like this I think, "Load sixteen tons of coal a day, another day older and deeper in debt, I owe my soul to the company store"

    It looks like Big Brother is the company store and we are the coal miners.

    Let Freddie and Fannie and their shareholders deal with it and we'll see what happens.

    They start using my money in Canada to bail out CIBC or another corp and I won't pay taxes no mo.
  50. William J Gillies from Canada writes: Tony . from Waterloo, Canada writes: "They will pay for this in two ways: Higher taxes and inflation."

    And when the middle class has been sucked dry, they will lose government services, things like food inspection, road maintenance, garbage collection ...
  51. deep breaths from Partly Sunny Vancouver, Canada writes: Robert you said the only empowering thing any of us can do. stop paying your taxes and you'll see them listen to us!
  52. If I had a million lobsters from Halifax, Canada writes: The election was called today to get it over with before the bell tolls. You'll hear after the election about common trading zone in North America and a new currency called the Amero. The reason they bailing out Fannie and Freddie now is so they start the AMERO with a clean bill of slate. It's something like when a company goes bankrupt. The savvy owner puts all the old debts on the old company and when they start a new one they have no debt.

    My advice to you all is be very careful about where you invest. By the way if you're curious what the AMERO is Google it. You may be surprised. NAFTA was the first step. If you think it isn't possible look at the European union. same thing really.
  53. Cameron M from Toronto, Canada writes: Is that a mess or what. One big giant Ponzi scheme can't possibly end well. Who started this whole mess and who really benefited? That's what I want to know. Where is the money? Find where it went and you shall find the culprits. It's not that complicated. It may expose some politically sensitive personalities/entities but it's not rocket science .
  54. Cameron M from Toronto, Canada writes: Americans are in debt to their necks. The US government can't print money fast enough. Proof? They stopped publishing figures because they can't keep up. The US will go bankrupt as will every deadbeat american. That's what massive greed and a Ponzi scheme style economy get you.
  55. Sweeney Todd from Oilberta, Canada writes: If I had a million lobsters from Halifax, Canada writes: The election was called today to get it over with before the bell tolls. You'll hear after the election about common trading zone in North America and a new currency called the Amero. The reason they bailing out Fannie and Freddie now is so they start the AMERO with a clean bill of slate. It's something like when a company goes bankrupt. The savvy owner puts all the old debts on the old company and when they start a new one they have no debt.

    My advice to you all is be very careful about where you invest. By the way if you're curious what the AMERO is Google it. You may be surprised. NAFTA was the first step. If you think it isn't possible look at the European union. same thing really.

    ========================================

    Interesting. I wonder what currency the Republic Of Alberta will use? ;)
  56. Sweeney Todd from Oilberta, Canada writes: Cameron M from Toronto, Canada writes: Americans are in debt to their necks. The US government can't print money fast enough. Proof? They stopped publishing figures because they can't keep up. The US will go bankrupt as will every deadbeat american. That's what massive greed and a Ponzi scheme style economy get you.

    =========================================

    Ontario's economy is tied to the US economy at the hip. You DO realize that, right? Perhaps not...
  57. Child of the North in Canada from Canada writes: To J. Boland: Okay, nobody will blame Bush. Now do you feel better.
  58. robert roels from Canada writes: Hey Cameron;

    Take a drive in those exclusive neighborhoods with the McBurger Mansions or go to Pedigral in Cabo San Lucas or Indian Wells in California to name one or two and see how they live.

    I have been in homes that have lobbies that embarrass hotels. Most of these are homes of corporation employees, the executive class. The ones who tell us we are in "good hands" because they are "experts".

    It takes a lot of money to build and maintain these places, more than the chicken feed the middle class are fed.

    That takes a lot of ingenuity conning all of us "little" people that way.

    You got to give them credit, we allowed it to happen and the governments in the USA and Canada are democracies and look what kind of leadership we have.

    Personally I don't care what the dollar is or isn't worth. If we export food and fuel to other countries why do we pay more for these essentials than our customers?

    Fannie and Freddie will be a good excuse to raise "sin" taxes and fuel prices again. It's nice to know the sheep have deep pockets eh?
  59. A. Nonymous from Listeria Ville, United States writes: Capitalism is a failed system, it's people taking advantage of other people.

    I propose we move to communism, where its the exact opposite.
  60. garlick toast from Canada writes: Steal a hundred grand, go to jail.Steal a billion,the president bails you out and no one goes to jail. Ain't life grand?
  61. East Coast Living from Halifax, Canada writes: bill k from Canada writes: Capitalism is a failed system. This is just more proof of that. Private profits and social losses = capitalism.
    Oh really? And what tenat of capitalism calls for governments to bailout insolvent corporations?
  62. robert roels from Canada writes: It is not capitalism. If it was we would let supply and demand and economies of scale take it's course.

    It is the bloodsuckers that try and evade capitalism by asking for bailouts and expecting 14.1 million dollar settlements for getting fired that is the problem. And those lucrative instruments that Wall Street love to sell, except no one can understand them.
  63. John Connor from Canada writes: So begins the transformation of the American monetary system.
  64. Bryce Richards from Calgary, Canada writes: Guess the US Federal Reserve will have to rev up the printing press's to the tune of 33.4 million an hour to cover the expected collapse of Fredie Mae and Mac. to cover the 12 trillion of expected losses. PRINT PRINT PRINT MORE. Numbers are getting so large that it will be impossible to even pay the interest on all accumualted. 911 was only 7 years ago. Expect the towers to fall on 911 this year for the last time. This hurricane will make Ike look like a romp in the park.
  65. Little Dickie from From Beautiful Downtown Port Dover, Canada writes: This article is a good read

    Jim Willie tells you what is happpening, and what is going to happen. I might just convert my paper $$$$ to gold, or silver bullion....and sit this one out.

    http://www.kitco.com/ind/willie/sep052008.html
  66. Matthew Sheppard-Brown from Calgary, Canada writes: Carl Hansen from Canada writes: jim corrigan from Toronto, writes: Could someone tell me how the US government is going to pay for this disaster?

    VISA, maybe Mastercard.

    ===================================

    Your Comment = Gold

    Pissed myself a little, lauging so hard.

    Well Put.

    M
  67. garlick toast from Canada writes: This will effect markets everywhere.
  68. robert roels from Canada writes: Little Dickie;

    It is a good read and the fact that the Chinese and Russians already pulled out or did not re-invest matured bonds on $62 Billion in Fannie or Freddie this year supports the article.
  69. Comments closed, censored, deleted or made to disappear from Mini Bushland, Canada writes: Privatize profits and socialize losses. -- "I'm not a crook!"
  70. Thames Sailor from South West Ontario, Canada writes: Early on in this thread someone asked if stocks would go up or down. I don't know what the market will do, but I'm thinking if up it's a good time to take some money off the table. For the last while optimists have been saying it's a good time to buy. They may be right. For all anyone knows ten years from now shares of, say, Canadian banks may be higher than they are now. But if a month from now Merrill or another biggy crawls to the abyss, today's share valuations will look way high. Damn, I'm almost out of debt. I wish I'd mortgaged my house two years ago for all the dough I could get, and then when the round of inflation many of the posters are predicting comes I could pay off with worthless money. Then again if the depression many others predict comes, I could loose my job and not be able to pay the mortgage before the inflation bails me out. I'm not saying either scenario is wrong. No one knows. Hundres of years ago the majority of people were kept in servitude by being told it was the natural order of things that they live in hovels with dirt floors and watch their kids suffer malnutrition while a few people with the right parents had luxury and the poor'd get their reward in heaven. For the last 200 years or so (and it wasn't a straight upward curve) lower classes did make some real progress toward a better life, so were deluded into believing there was hope for them, or their kids to get to the upper levels. The last 25 years or so the robber barons were busy looting again. (not everyone was dishonest, but look at enron). Those at the low end of the economic scale were kept happy with low interest rates so they could "afford" houses and TV's and Cell Phones and Holidays, and I-Pods. If things really do crash, what will the robber barons and the governments use to keep those who can no longer afford homes and TV's and, OH Yes Computers, from getting completly ticked off and really storm the gates? And I'm not a socialist. Cheers
  71. The Skipper from Canada writes: The U.S. Federal Government is going to pay for this "how ?"

    What a financial mess this world is in.
  72. Political Economist from 2nd-time voter, Canada writes: LOL. Of course this is just part of the plan. Consolidate private debt into government debt, inflate the dollar (or, hell, even just default on some of the debt), screw a foreign creditor (China), and laugh all the way to the bank because your military is still better than theirs.

    It'll work fine, as long as Pres. Obama follows thru.
  73. His Ice Anvil from Toronto, Canada writes:

    After living the 'American Dream' for more than 60 years following the end of WWII, Americans are only now coming to the stark conclusion that their excessive lifestyles (living beyond their means in the pursuit of the 'American Dream') is unsustainable. The American economy is little more than a ponzi scheme with each American's share of the US Government's debt at $53,000 or 76 times that of the per capita US Government's debt back in 1957. With any NINJA (No Income, No Job/Assets) qualifying for a mortgage in the 'US and A' it is no surprise that they've seen multiple bank failures (IndyMAC being the latest) and now mortgage guarantors like Fannie May and Freddie Mac collapsing.

    This recent failure represents a major blow to the market's confidence in the US dollar. Watch Gold rise again on this news as millions of investors get out of the USD in favour of safe havens. The price of a barrel of oil will also spike again, as it is priced in US dollars.

    http://mwhodges.home.att.net/nat-debt/debt-nat-a.htm
  74. Mindfully Partisan from Ottawa, Canada writes: The U.S. government is infringing on freedom by intervening in the marketplace! This is a communist plot! The world must band together and resist this madness of not allowing their economy collapse and be liquidated in a market meltdown for the sake of freedom! We need to invade them and overthrow their commie government and defend market freedom, until they learn to understand democracy!
  75. C. M. from London, Ontario, Canada writes: I don't know where everyone is getting this "bailout" stuff from ???
    The shareholders, both common and preferred, are wiped out. My big thing is that no one is going to invest in these companies for a couple of decades. Does that mean the Treasury Dept is now in the mortgage business for the foreseeable future ? It appears so. That would make the Bush Republicans, historically, the biggest socialists in terms of government investment in private enterprise.... a very funny outcome ! I'd also like to know why the greenback keeps appreciating in value against other currencies while the treasury just keeps on inventing money out of thin air on top of the TRILLION lost on Iraq. Maybe some qualified poster might explain that currency climb to me.
  76. Mindfully Partisan from Ottawa, Canada writes: The U.S. government is being run by socialists! We all have to gather round and pray to Jeezuz that the American government is overthrown and somebody from a more responsible country that understands freedom and democracy install a puppet dictator for them until they can learn that freedom comes with responsibility. Freedom is not free! Vacate your houses immediately, Americans! Allow your dollar to collapse like it should, liquidate your economy to the highest overseas bidder! The formerly middle-class can make their living picking through garbage like in those other bastions of market freedom like Guatemala and El Salvador! For Freedom! That's what Jeezuz wants!
  77. Thames Sailor from South West Ontario, Canada writes: C.M. From London, Here's why I think it's a bail out. First yes the share holders are wiped out. But the bond holders will get their money back even though the companies are toast. If I had leant you money (not that I have any) to buy a house, and you couldn't make the mortgage payments, and your house isn't worth the principal any more, I loose my investment. If I lend money through a bond, to ABC mortgage company to lend to you to buy a house and it goes broke, I loose my investment. In this case the bond holders get bailed out. I think that's the way it's going to work. Other than that, GREAT POST. Yes, I think it means the U.S. is in the mortgage business, and I think you (and other posters) nailed the implication, the Bush Republicans are in the socialism business. I really think they didn't have a choice though. If they let the bond holders take the hit, no one would lend to the U.S. again and with the size of the deficit they are running.........wow. The time to crack down was back when the federal reserve bailed out that Long Term Capital Hedge Fund......If they hadn't a few others might have been more careful in their loans. As to why the US dollar is rising. I haven't a clue, anyone else?????? Seems to me that's a big question. Cheers
  78. Strong North from Canada writes: endless bailout? Why aren't any one thrown into jail?
  79. ali mansur from etobicoke, Canada writes: This is entirely Bush's fault and no one else's.

    Lending regulations are controlled by executive order, and he could have stepped in at any time but chose not to because of the unstoppable profits. Just like Enron the profits were fake, but who cares: take your bonuses and run.
  80. East Coast Living from Halifax, Canada writes: C. M. from London, Ontario, Canada
    I am not an expert by any means but I just read the article Little Dickie suggested in his 9:02 post. This article reinforces a couple of others that I have read in the last few of days.

    http://www.europac.net/externalframeset.asp?from=home&id=13906
    http://www.chrismartenson.com/more-fuzzy-numbers-layoffs-expand-concert-gdp-bill

    All of these articles indicate that there is something fishy with the numbers being reported by the US government.

    I have also read that the Chinese government has been increasing the reserve requirements of banks and these increases must be held in USD which would certainly help prop up the greenback.

    I guess the most unsettling thing about this mess is that governments and central bankers are acting in such an irrational way and one wonders whether these are just desperation moves.
  81. Alastair james Berry from NANAIMO BC, Canada writes: IS WORSE TO COME?? On March 13th 2008 there was a SECRET closed door meeting of The United States House Of Representatives in Washington. During the last 182 years in the history of The United States, this is only the sixth time a secret meeting has been held by The House. US Rep. Dennis Kucinich refused to sign the confidentiality agreement and was therefore barred from the meeting............ ------------------------------------------------------------------------------------- THIS HAS LEAKED OUT SO FAR........ The imposition of MARTIAL LAW, The imminent collapse of the U.S. economy to occur by September 2008, The imminent collapse of US federal government finances by February 2009, The possibility of Civil War inside the USA as a result of the collapse, advance round-ups of “insurgent U.S. citizens” likely to move against the government, The detention of those rounded-up at “REX 84″ camps constructed throughout the USA, The location of “safe facilities” for members of Congress and their families to reside during expected massive civil unrest The necessary and unavoidable merger of the United States with Canada (for its natural resources) and with Mexico (for its cheap labor pool), The issuance of a new currency - THE AMERO - for all three nations as the proposed solution to the coming economic Armageddon. ---------------------------------------------------------------------------------------- FANNIE MAE AND FREDDIE MAC ARE JUST THE PROLOGUE OF THIS SCENARIO !!! Google : http://www.stomverbaasd.com/stomverbaasd-congress-secret-session-march-13-2008-about-the-collapse-of-the-usa/
  82. Sue W from Canada writes: When will they round up Greenspan?
  83. ali mansur from etobicoke, Canada writes: C. M. from London, Ontario, Canada writes: I don't know where everyone is getting this "bailout" stuff from ???

    ------

    I'll be nice, because you don't understand what has happened. Shareholders, bondholders and homeowners are all undoubtedly going to lose a lot if not all of their money.

    However, taxpayers are going to bailout MBS holders by buying back these securities before failure of the companies. The bulk of the wealth associated with these securities is held by institutional players.

    The government has effectively decided they are only willing to bail out one class of participant. And that class is the wealthiest.
  84. Carl Baldin from Canada writes: Comical......The Wall Street boys play all these creative financial games to leverage a toothpick into looking like a forest, provide cheap loans to Fannie & Freddie then make millions each (investment bankers et al) in bonuses. Now, the tax payer pays the piper. These Banker boys are laughing all the way to the banks (to count their money that is in offshore accounts....tax free of course!).

    The "bonus system" that the US introduced years ago is to blame for this. These crooks on Wall Street made $22 Billion in bonuses around Xmas/Hannuka 2006 and now the tax payer pays! American capitalism is doomed....but these guys don't care!
  85. robert roels from Canada writes: We all pontificate on various scenarios and attempt to tell the future and lay blame.

    What does it matter? It is impossible for us as individuals to change it.

    We all have the means and time to sit and type our views so I assume life for all of us can't be that bad.

    Life is full of change and we are at the dawn of a new age. Good or bad, we may as well enjoy it. When tough times come, usually other things happen to make them bearable. When good times are here we can enjoy them too, eh?
  86. ali mansur from Etobicoke, Canada writes: robert roels from Canada writes: We all pontificate on various scenarios and attempt to tell the future and lay blame.

    What does it matter? It is impossible for us as individuals to change it.

    -----

    You can start by voting for a party that is not the establishment.
  87. robert roels from Canada writes: Hi ali mansur;

    "You can start by voting for a party that is not the establishment. "

    Unfortunately there are never enough voters for them to get in. Times really have to get tough before change comes. When people start losing homes, have trouble buying groceries and such in Canada then maybe it will happen.

    I am not being negative, it is reality. Democracy works fine when the voters attempt to determine the issues and vote based on the qualifications of the candidate representing them.

    Unfortunately that is not the way the game is played. Politics are not much different than the workings of Wall Street.
  88. J S from Canada writes: Capitalism gets another socialist bail-out...
  89. The Accountant from Canada writes: A Treasury that probably has the most debt in US history is taking over.
    More diluted value in the US economy.
    Don't worry we will print more money when we need it?
  90. ali mansur from etobicoke, Canada writes: Robert roels, reality is only reality until you change it.

    Whether you vote Harper or Dion, you get a lot of establishment-baggage that follows. Therefore, you should not be afraid to vote for the non-establishment party most likely to be voted in.

    Our puppet-masters will easily capitulate in the face of change. If you're liberal, vote communist, if you're conservative, vote libertarian. Who cares? If these fringe parties start getting 5% of the national vote, things will change quickly.
  91. J. Michael from Australia writes: Printing more money will increase inflation. Inflation will reduce the value of one's wealth. Interest rates will go up calling for more money to pay back existing debts - this is necessary to protect the value of the debt to the lender.
  92. Mindfully Partisan from Ottawa, Canada writes: Oh, free market Jezus, hallowed be thy name. Please, above all else, protect the value of the debt to the lender in accordance with your sacred free-market teachings. May workers work harder for less to return more dividends to your sacred representatives of your holiness on earth, the all-sacred investor. May every American who holds a mortgage with Fannie and Freddie be forclosed upon and driven into the streets so that thy holy investor may recoup some small portion of their sacred investment capital. Oh holy free market Jezuz, may you show the Americans the error in their ways in contradicting your divinely inspired market laws with their socialist actions inspired by the needs of man and therefore purely evil in their nature. May you shower your wrath and fury down upon them for breaking your most sacred holy covenant of not intervening in the free marketplace. For yours is the power, the glory and Free-Market Kingdom on earth as it must be in Heaven, forevever and ever. Amen.
  93. William J Gillies from Canada writes: Thames Sailor from South West Ontario, Canada writes: "I think you (and other posters) nailed the implication, the Bush Republicans are in the socialis