FEDERAL RESERVE BAILS OUT FANNIE & FREDDIE by Roy MacKinnon My understanding is that the total indebtedness of Fannie and Freddie is some $5.3 Trillion not quite half of the $12 Trillion which constitutes the total U.S. Mortgage Market - an enormous amount when you consider that the total annual earnings of the U.S. is only $14 Trillion. Last year I think their losses amounted to $14 Billion somewhere around 1% of the value of all mortgages but the drop in the value of property has reduced the value of their property securities and thereby increased the total indebtedness of the two companies by $800 Billion. Total mortgage losses in the U.S. grossed last year to some $1 Trillion or 7% of national income. Another problem is that the Fannie/Freddie assets are split between large foreign investors and domestic ones. The overseas investors are/have rapidly disappeared (I wonder how much the Bank of China holds now - Chinese investors once held $376 Billion. It wouldn't surprise me if it was zero now). The remainder and most of the investors are U.S. My understanding is that with Fred/Fan effectively nationalised that the investments of America's good people in the two companies are worth next to zero as well. It is quite possible as the recession deepens that the number of unemployed substantially increases and the number of mortgage foreclosures rises correspondingly. Then the Federal Reserve will have to plug up alarmingly large holes created by these foreclosures and bankruptcies. How, we could be talking in terms of mortgage losses over all lenders of $5 to 10$ Trillion and there then would be a Wall Street Total Crash. Who pays for this ? The American taxpayer (those left in work) will be taxed out of existence. Others, millions of unemployed will be starving as other institutions collapse and food prices rocket. Health schemes will crumble into chaos and the nation will become, in my view, very unsettled. In fact one of the possibilities as Saturn transits conjunct the Sibly Neptune and Uranus transits in opposition is that you end up with civil war. Uranus opposite to Saturn and Neptune can be highly rebellious of authorities and unsympathetic of stockmarket collapses because of suffering and sacrifice. So, civil war is one very real possibility. The Fed advised the bail out on Sunday, 7th Sept. 08.