...For now, the federal budget will not include Fannie’s and Freddie’s liabilities, the Office of Management and Budget said on Friday. Including the debts on the government’s books would have doubled the national debt. *****************************
Just because the debt isn't on the books officially doesn't mean the US isn't on the hook for it. Unless the US wants the financial world to implode Uncle Scam is going to have to make good on the debt or risk America losing its position as a major center of finance.
Being Canadian we are allowed to have the government own business this is called a crown corporation. Can some explain to me how the US government can own Freddy and Fanny. I thought this was against the US laws and against capitalism?
It isn't against the law for the US Government to own a company (The US owns the Tennesee Valley Authority.)
Fannie and Freddie were US Corporations that were turned into private corporations that had implied bond gaurantees that if anything happened the US Government would make good on the debt.
Fran and Fred (or Frick & Frack if you will) were quasi-governmental agencies, considered to be government by the public but were supposed to be private corporations.
As far as being against capitalism- The US hasn't really ben as capitalistic as it once was since the Great Depression. Government agencies were created to get the US employment increased and ceritan practices eliminated (owning stocks on margin for example.)
The takeover of F&F is to keep mortgages available to those who need it (the official line) and to keep foreigners confident that the US securities are safe and there is no need to dump them (the reality "where the rubber meets the road" truth)
I know it seems strange for the US which owns so little in the way of businesses to own Freddie and Fanne, but since these were federal agencies at one time, and since there was a clause in the housing act passed in 2007 or 2008 allowing the government to take over F&F if needed, then take over F&F the US will do.
These are indeed the strangest times of all- US facing gigantic deficts but the US Dollar rises Silver is going down in price but is getting hard to find for sale Gold production in south Africa declining but the price of gold had gone down for weeks. Strange days indeed. (And i still can't spell worth a dram.)
The government actually did not "take them over" in terms of traditional ownership. I think they called it a "conservitorship" or something like that. Basically the goverment appointed a receiver to operate two insulvent businesses.
“The reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore all progress depends on the unreasonable man.” – George Bernard Shaw. Why Copper Bullion ~~~ Interview with Silver Bullion Producer Market Harmony Passive Income blog
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Posted - 09/13/2008 : 21:41:34
