As leveraged assets go down in value, the leverage multiples go up. Adding to that multiple is the falling dollar and the fact that these assets are in reality debt deposits, not cash deposits, that were passed on in different forms to be leveraged over and over.
Fannie Mae (FNM) and Freddie Mac (FRE) have $233 billion worth of bonds due by the end of the quarter. Their ability to repay that debt will determine next steps for the government-sponsored enterprises. The poignant question with socialization, according to Toddo, is where do you draw the line? The automakers, airlines and others are still waiting at the bloodbank.
Nationalization will be tolerated to exactly the point where it starts to benefit the middle class. For example, nationalizing Fannie and Freddie to protect their bondholders and counter-parties mainly benefits the rich, so that is likely to happen b Read More
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