The Financial Tsunami: The Next Big Wave is Breaking Fannie Mae, Freddie Mac and US Mortgage Debt

[Joanne98]

The announcement by US Treasury Secretary Henry Paulson together with Federal Reserve chief Bernanke, that the US Government will bailout the two largest guarantors of housing mortgage debt—the Fannie Mae and Freddie Mac—far from calming financial markets, has confirmed what we have said repeatedly in this space: The Financial Tsunami which began in August 2007 in the relatively small "sub-prime" high risk US mortgage securitization market, far from being over, is only gathering momentum. As with the Tsunami which devastated Asia in wave after terrifying wave in December 2004, the financial Tsunami we are witnessing is a low-amplitude, long-wave phenomenon of trillions of dollars of financial securities being unwound, defaulted on, dumped on the market. But the scale of the latest wave to hit, the collapse of confidence in the two Government-Sponsored Entities, Freddie Mac and Fannie Mae, is a harbinger of worse to come in what will be the most devastating financial and economic catastrophe in United States history. The impact will be felt globally.

The Royal Bank of Scotland, one of the largest financial institutions in the EU has warned its clients "A very nasty period is soon to be upon us—be prepared." They expect the S&P-500 index of US stocks, one of the broadest stock indices in Wall Street used by hedge funds, banks, pension funds could lose almost 23% by September as in their term, "all the chickens come home to roost" from the excesses of the US-led securitization revolution that took hold after the dot.com bubble burst and Greenspan lowered US interest rates to levels not sustained since the 1930’s Great Depression.

This all will be seen in history as the disastrous Alan Greenspan "Revolution in Finance,"—the experiment in Asset Backed Securitization, a mad attempt to bundle risk in loans, "securitize" them in new bonds, insure them via specialized insurers called "monoline" insurers (they only insured financial risks in bonds), rate them thereby via Moody’s and S&P as AAA, highest grade. All that was done so that pension funds and banks around the world would assume they were high quality debt paying even higher interest than safe US Government bonds. Fed in Panic Mode

http://globalresearch.ca/index.php?context=va&aid=9588

[MadMaddie]

1. I have been thinking...if the 2nd or 3rd largest bank failed and it

wasn't on the watch list of 70 banks....
1. Were they purposely overlooked because this Adminstration is so naive that they could never see a failure of this magnitude coming.

2. If this bank one of the largest wasn't on the list....who else is NOT on the list? I get the sinking feeling that it's in the hundreds....

No regulation, no oversight....sound's like pre-Depression times......

[bluesmail]

2. I gotta reply. This has scared me, we need to be prepared

for the worst financial/economic ruin EVER. If you have the money buy lots of food. Canned. I hope some more DUers will reply to this urgent message. Everday that gos by is a day deeper in debt for most people. Thanks FratBoy/Cheney-Gang.

[undergroundpanther]

3. I'm scared too

Because I am on disability,I have NO cushion.None Zip Nada.
So when the shit hits,I won't have much.at all.
I figure the greedy fuckers will cut programs and shred the social safety net first.So before the middle class gets screwed totally I,and others in my situation will have been fucked over long before that.
I don't have enough cash to stock up on anything.I usually eat most of what I got by the end of the month. Luckily I have a Costco card I can get more there than I could at a regular grocery store at least.

Alot of people are on SSI ,SSDI,Welfare Food stamps.We all are going to be screwed.Right along with everyone.Except the poor have no cushion to prepare for this collapse with.
I can't afford a passport.I can't drive or afford a car.

I know I am doomed. I just want it to be over with the wait for the other shoe to drop is excruciating .
I hope death takes me soon because with my disabilities it is really going to be hard to find a way to find a reason to live.Everyone with disabilities ,who need help,who take medicines etc.We are going to really be in for it.Saddest thing is, we are invisible, politically.We do not exist,the disability vote is nothing politicians pay attention to,like homeless people get ignore we get ignored..And since we are invisible,no one politically has any compunction to give a rats ass about us and care if we live or die or suffer or whatever.I know the disabled,poor and homeless are not valued as people in this culture really, we are worth less to those who make policy than middle class human beings or upper class.

[Hestia]

4. Cannot recommend reading The Shock Doctrine

what happened in Asia in 2004 is exactly what is happening here - rumors brought down the Pacific Rim because the countries would not accept WTO funds and financing. The hedge funds triggered one huge selloff.

The only country who refused in the end is Malaysia, who is just now recovering from then. 2004 was one big fire sale, which is what is happening now. South Korea still hasn't recovered. The suicides there from economic ruin is horrifying and I wonder if the same will happen here.

I don't know which way to turn - buy a bunch of food and then have to leave it behind? Will Obama be ABLE to do anything with this big pile o' steaming crap the evil doers have left?

Didn't someone here say to keep an eye on Citigroup - if they go, it's all over but the cryin'?

I really wish I knew which way to turn - nobody is saying anything to help us out.