US has $10 trillion dollar debt...Increase that by 5 trillion!

C

CanadianKid

New member
Thanks to FannyMae and FreddyMac....

The US government is taking over the 2 largest mortgage lending companies...with $5 trillion dollars in liabilities...

Thats $5 trillion more government debt....All for the taxpayers.... Enjoy!

CK
 
http://www.ft.com/cms/s/0/d4794e4e-50fe-11dd-b751-000077b07658.html

US taxpayers are about to find out what their long-standing and (strictly speaking) non-existent guarantee of Fannie Mae and Freddie Mac will cost them. One way to think of it is this: take the US national debt of roughly $9,000bn and add $5,000bn. Not bad for an obligation still officially denied.

In the end, that astounding prospect might be the outcome. Partial or outright nationalisation of the housing lenders – colossal pseudo-private entities that own and underwrite US housing loans – would add some or all of their $5,000bn (€3,144bn, £2,513bn) in liabilities to the government’s balance sheet.
 
There is a difference when you are bailing out mortgage companies.

There is the property that the loan was made for, which can be converted to provide capital. While the extreme low property levels that currently exist may not seem like much, the property prices will rise. And when they do, the assets of Fannie Mae and Freddie Mac will be worth more and more.

This is a bailout, but its also an investment which should show positives in the future.

Also, the real estate is a cornerstone of the entire economy. Shoring that up is far better than letting it fold. If we let these two go under, the consequences for the economy would be FAR worse than if we buy them out.
 
Time will tell if we are just putting good money after bad.
But in principle I understand what you are saying Sol and somewhat agree.

But it would have been much smarter not to modify the lending rules in the first place that let us get into this mess.
 
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