"News that's not known, or not known enough."
Helen & Harry Highwater's cranky weblog of news and opinion.
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"News that's not known, or not known enough." Helen & Harry Highwater's cranky weblog of news and opinion. |
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The Fannie/Freddie scam by Hazel Burke Friday, July 18, 2008 PERMANENT LINK I don't know, perhaps I have something useful for someone to look into... 1.) Hank Paulson's made a hard sell in Congress for his Fannie Mae/Freddie Mac bailout. The bailout shocks the conscience because he asked for the authority to expend unlimited amounts of money. Literally unlimited. Without limit. He claimed his inability to quantify the conditions wherein the GSEs could be bailed out to be a virtue, by saying that if everyone knew you had a water pistol
Paulson also requested the authority to buy Fannie/Freddie stock, which would amount to a bail-out of investors in their stocks. This is shameless. A bail-out might be considered mandatory to save "The System", but in that eventuality the shareholders ought to walk away with zero — or else, what are we doing? 2.) "The System" responded magnificently to the idea of a bail-out. Stock markets rose around the world, and suddenly, we're all wearing sunglasses even at night because our future is so bright! One reason for the "relief" is that foreign governments have invested hundreds of billions, maybe more than a trillion in Fannie/Freddie bonds. So have pension funds, and other major groups. So if Fannie/Freddie fail, then "The System" goes belly up and unimaginable horrors ensue, including literal riots in the streets of America as "The System" shuts down. So... If you look back, Mar 17 was the Bear Stearns bail-out, and that was the local maximum for gold, and the local minimum for stocks. After that, stocks recovered somewhat, temporarily, and gold fell. Then, leading up to this week, say, for the last 5 weeks or so as fear increased, gold rose again and stocks fell — and I mean globally... gold was rising in terms of the major currencies, not just the US dollar. Therefore, I predict a short-term correction in gold, which will last until the next rise in fear about "The System" failing. This will create a good opportunity to exit US dollars and buy gold at some time in the future at a good price, and perhaps, to unload some stocks at some time in the future. (I am not advocating these actions but merely pointing out what seems reasonable to me.) Good luck. Hazel Burke  |
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