Friday, August 22, 2008

US pumping capital into Freddie & Fannie - Do you know how much?

Freddie & Fannie account for more than half of the $12 trillion US mortgage market. So if the US government is pumping capital into these companies to bail them out, how much are we talking about? $6 trillion, or more or less than $6 trillion?

I haven't seen any article on the figures but as a layman, I feel quite secured to see that the US government is now supporting more than half of the US mortgage market. As long as the US government has money or has ways to generate or print real money, then more than half of the US mortgage market is or could be solved. It's just a matter of time. So I am curious to know why people are still worried about the housing crisis in US.

May be I am too naive but when two giants are in financial crisis and they actually have got support or confirmed support from the richest government in the world, then where is the problem? What they don't have any net worth? Well, legally how can you carry on business like that? Or is this a real practical problem when you have the blessing from the richest government which is going to pump capital into your pocket when you want it? Anyway, I would say that the US housing crisis has come to an end.

NO, no, no! It is just more than half of the $12 trillion; what about the remainder? It may be $6 trillion, 5, 4, 3, 2 or 1 or less? But come on, some clever guys can come up with a certain estimate at least of the maximum amount that can go bad or that must be written down. Once we have a certain reliable figure (I don't care how you qualify the estimates), we can see the light at the end of the channel. I mean we can measure the number of steps leading to the end of the bloody housing crisis. Would someone do this for the benefit of all of us?

Just a minute. The next issue is how to fill up the hole or holes bursting out from the US mortgaged land? Yes, the US government is going to pay capital to Freddie & Fannie and how do you find the real money to pay? What about the remaining $1 - 6 trillion? Where do you find the real money? Well, go and sell your assets. That explains why everything is going down and down. Right?

Oh, dear! I am so ignorant. May be I should seek a good subsidy to get some money to do a research on the issues before thinking any further. This is not a matter for ordinary layman like me. That's why we need Ben and Henry to help us; they are supermen.

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