Thursday, July 10, 2008

Are Freddie Mac and Fanny Mae Toast?

Martketwatch asks, "What if mortgage giants Fannie Mae... and Freddie Mac were to fail, thus requiring a massive taxpayer bailout to keep mortgage lending from completely collapsing?" (See their off-the-cliff stock charts here and here).

The Bush administration answers, "The government doesn't expect the entities to fail and no rescue plan is imminent."

Marketwatch's reaction is, Oh no, the kiss of death! They're toast.

It adds,
"Here are a few other things the Bush administration didn't expect:
  • Terrorists to fly airplanes into buildings.
  • Saddam Hussein to have been telling the truth about not having any weapons of mass destruction.
  • Iraqis to object to a long-term occupation by a foreign power.
  • Hurricane Katrina.
  • People in New Orleans to object to the government's response to Hurricane Katrina.
  • The Democrats to take control of Congress.
  • The Democrats to cave in so easily on important issues after they took control of Congress.
  • Scooter Libby to get caught.
  • Jack Abramoff to get caught.
  • Abu Ghraib to be discovered.
  • Scott McClellan to smell the coffee.
  • The housing bubble.
  • The credit bubble.
  • The housing collapse.
  • The credit squeeze.
  • Bear Stearns to fail."
And that's the short list. Think oil nearing $150 a barrel... deepening recession... 4,100-plus dead soldiers in Iraq... Tom Delay arrested... the VA's Walter Reed hospital exposed... brother Jeb schlepping Wall Street's toxic derivatives to his pals in Florida... Arctic ice melting... yadda, yadda...

Well, you get the idea. With this administration's powers of foresight and knack for maladministration, by the end of the year George W. Bush will be making Herbert Hoover look good by comparison.

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