Fannie and Freddie are "too big to fail," no doubt about it. But who has the money to stop them from failing? Where are those Sovereign Wealth Funds when you really need them? We doubt whether they are stupid enough to do it, but what a coup it would be! We mean, if the Sovereign Wealth Funds recapitalized America's largest mortgage lenders. So far, they've contented themselves with a few minor purchases of America's iconic buildings, infrastructure and industries. But if they bought control of Fannie and Freddie, they would hold the mortgage on America's housing too. And they could get rid of trillions of their unwanted dollars.
The chickens are coming home to roost. We cannot bail out Fannie and Freddie without printing more worthless dollars. Investors are getting nervous. Don't be surprised if the mortgage you owe to an American lender now is sold to an Arabian consortium in the near future.
No comments:
Post a Comment