How much longer can the Fed keep this pyramid scheme going?

[marmar]

from Bloomberg:



Paulson Puts Treasury's Weight Behind Fannie, Freddie (Update2)

By Brendan Murray and Dawn Kopecki

July 14 (Bloomberg) -- Treasury Secretary Henry Paulson put the weight of the federal government behind Fannie Mae and Freddie Mac, the beleaguered companies that buy or finance almost half of the $12 trillion of U.S. mortgages.

Paulson, speaking on the steps of the Treasury facing the White House, asked Congress for authority to buy unlimited stakes in and lend to the companies, aiming to stem a collapse in confidence. The Federal Reserve separately authorized the firms to borrow directly from the central bank. Fannie and Freddie shares surged in Frankfurt trading.

The steps would bring the U.S. closer to giving an explicit guarantee for the debt sold by the shareholder-owned, federally chartered companies. That reflects a need for the government to bail out an economy that's been rocked by the worst housing recession in 25 years, the credit crisis, and soaring energy costs.

``They appear to be crossing the Rubicon,'' Sean Egan, president of Egan-Jones Ratings Co., a credit-rating company based in Haverford, Pennsylvania, said, referring to Caesar's invasion of Rome to set up a dictatorship.

The announcements followed weekend talks between the firms, government officials, lawmakers and regulators, after Fannie Mae and Freddie Mac lost about half their value last week. .....(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601087&sid=apOxhoMjja1M&refer=home

[alphafemale]

1. Upside down pyramid at that.

Well, not technically. Put everything feels about that perilous now.

[customerserviceguy]

2. The Rubicon was crossed

when the Bear Sterns bailout took place. They only have six more months to fully merge the US government with corporate America before President Obama takes office, they know they need to work fast...

[NNN0LHI]

3. I think they can keep printing money indefinitely?

I am not sure how well that will work out in the long run though?

Don

[marmar]

4. That will make the dollar all but worthless.....

n/t

[durablend]

5. Not a problem

All the important people already have their money in Dubai funds. If the dollar collapses (and takes us with it), tough shit for us.

[indepat]

8. Twenty-seven years of 'puke governance since 1969 and what do you get:

astounding destruction of everything in sight and much further concentration of wealth in the hands of a relative few. And in 2004 with this destruction mounting and a pre-emptive war of aggression raging, the tumultuous crowds roared: four more years, four more years. :D

[screembloodymurder]

10. Check it out the dollar is up against the euro.

Who in their right mind ...

[marmar]

12. That won't last.....

n/t

[islandmkl]

6. you know the 'countdown clock' to 1.20.09??...

these assholes have the same clock...

and theirs is ticking way louder than mine....

[Frank Cannon]

7. Probably until two months after Inauguration Day

When everything can be squarely pinned on President Obama and the Democrats on Capitol Hill.

That is, unless McCain gets "elected". Then you'll never hear about our country's complete economic destruction, even as you read the headlines of the newspaper covering you in your cardboard shack.

[NMDemDist2]

9. "put the weight of the federal government behind Fannie Mae..."

it's now a feather weigh, we have no money remember?? just a pile of IOUs belonging to Asia...

sigh

[TheWatcher]

11. A Lot Longer Than Any Of Us Can Remain Solvent.

[zeemike]

13. Sounds like things are going as planed to me

Inflate the currency till it takes a 100 dollar bill to buy a cup of coffie...That will make entitlements and debt disappear but will not hurt the rich who will own every thing of value.
It is just as good as using the army to take over the country, and much cleaner.

[bemildred]

14. Nobody knows, but probably a lot longer than you might think. nt

[PATRICK]

15. Christmas

would end all the illusions since consumer spending can't be gamed. No infusions, job cuts, soaring cost of living, no confidence, no production. It is the traditional weak part of a popping bubble. Wouldn't it be that much worse this year? Pumping up the banks with our money that we might rush to get hold of during a glum shopping season does nothing except postpone the crisis.

[dysfunctional press]

16. that's been my thinking as well...

the holiday shopping season is going to be one big BUST this year...starting with the thanksgiving weekend where everyone stays home or at school, instead of going cross-country to grandma's house due to high fuel prices.

perhaps they'll come out with a second 'stimulus' package in late november, in the form of a retail cash card that can only be used to buy merchandise, not pay utility bills and the like...:shrug: