A bailout, or just prolonging the inevitable?
July 14th, 2008 by Grant in: Economics, FinanceYesterday the White House and the Federal Reserve took steps to prevent Fannie Mae and Freddie Mac from going the way of the Bear. Bear Stearns, that is.
Treasury Secretary Henry Paulson said the “global reach of Fannie and Freddie necessitated unprecedented action”. In other words, the government believes that Fannie May and Freddie Mac are too big to fail. Must be nice.
Technically, the treasury increased its existing line of credit to Fannie and Freddie. On top of that, the treasury was given the power to buy the two companies stock.
Wow.
So much for a free market economy!
So I suppose the question is, how much of my Federal tax dollars are going to be thrown after poorly managed financial institutions?
Tags: Economics | Fannie | Freddie
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July 16th, 2008 at 8:30 pm
I understand the importance of Freddie and Fannie, but can’t this blank check be seen as adding to the inflation that is already occuring. And what is with the whole comment about we don’t plan on using this unlimited borrowing supply, but investors will just know it is a possibility and respect the economy then? Why ask in the first place, and isn’t this the kind of crap they say before a war anyway?
July 16th, 2008 at 8:36 pm
Right on, MJ!
It may be the federal government that bails out Fannie and Freddie, but it’s our money they’re using to do it!
The least the government could do is raise interest rates to the point that it’s worth while to save a few pennies again!