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Fannie Mae & Freddie Mack

September 8, 2008

In case you wouldn’t believe it before, believe NOW! America is no longer a capitalistic system. We’re more tha n headed to a social, if not a communistic system. Ah come now, surely things aren’t that bad! The question needs to be asked though. Has America created its own variety of communism with the U.S. Treasury Department’s bailout of two beleaguered government-sponsored enterprises (GSEs), Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE)?

Who Wants Cheaper Auto Insurance?

According to Rogers Holding CEO Jim Rogers, the answer is yes. He specifically said, “America is more communist than China is right now,” Rogers told CNBC Europe’s “Squawk Box Europe” September 8. “You can at least have a free market in housing and a lot of other things in China. And you can see that this is welfare for the rich. This is socialism for the rich.”

I’m not sure I’d go that far, but look at these facts!

We’ve just seen the largest government bail-out (some call it a nationalization) in world history, as the US Treasury has taken over Fannie Mae and Freddie Mac. These two government sponsored agencies between them provide funding for over 75% of the new home mortgages in the US. The implications of this move are momentous. Sentiment has already turned in favor of the financials, and it’s possible that a floor has been placed under the price of US real estate.

We’ve already had a rescue mission to save a major financial player.

And the big three auto industry is lining up at the table for BILLIONS in loan guarantees!

The announcement Sunday that the Treasury Department was seizing control of the companies, which own or back about 75% of the nation’s mortgage debt, brushed aside investors’ long-simmering worries that the pair would be felled by a spike in bad mortgage debt. And the stock market went crazy on what news? What’s good about a government take-over, bail out, nationalization?

Fannie Mae and Freddie Mac used to trade around $70 a share, but in the last few months, getting out ofsingle digits seemed impossible as both lost about 90% of their first of the year value. With the announcement of a government take over, both are now PENNY STOCKS!

And we Americans? We’re more PENNILESS as this bail out will cost you and I 1-2 TRILLION. And that’s where GOLD comes in. More inflation, more trouble, and what looks like more security now will be less down the road. We’re selling out tomorrow for today. What’s new!

Written by Ernie · Filed Under Gold News 

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