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Tuesday, September 30, 2008

Debtor's Mess


The Monday deal was sold as a rescue of the entire economy of the free world. The rescue really is of the government sponsored enterprises Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Muck, er, Mac). Fannie does the mortgages sales to individuals and Freddie does the selling of the resulting mortgage paper to the debt (bond) market. Backed, as they are, by the full faith and credit of the United States Givermint, the bonds have always had ready markets. But the FNMA has gone berserk at the behest of the Democraptic dancing masters, and done a lot of mortgage deals which were unsupportably bad debt. This stopped selling and the feds had to back up the full faith and credit bit. Which they have way to heck overdone. Imagine that $750 billions is enough to buy the balance of roughly half the mortgages in the US and you see what I mean. There are tons of pork. Tons of pork. And yet more pork. Even the trimmed down bill of "only" $250 billion is far more than is required. This sort of interventionism in the free market makes the free market nervous, thus the weird behavior of investors on Monday.

Wall Street is Main Street. The main bulk of cash in the US still is with the Great Unwashed, not the select gazillionaire investors like Warren Buffet and slithering, market-corrupting, leftist troglodyte dwarves like George Soros. To their credit, these super investors have nerves of steel, where most ordinary people are truly on the market with the whole nest egg. The giant investors can tough it out and still get by with a few million. If I were to lose a "few" million, my goose is cooked, incinerated, and paper plates are in the trash. Small time investors like me get nervous. Some lose their nerve and bail, thus sending the market even lower. Some, like Soros, short the market and make money by everyone else losing their shirts. I know it sounds odd, but shorts, if they are big enough, can start a panic which makes money for them who sold short. Like Soros, who made his first billion by shorting Sterling. What with Soros being an ultra-fascist lib, you can bet he makes political power points too. Very corrupting.


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