Market Failed Over Freddie and Fannie... by Milota Sidorova

America's on fire. Unless the housing crisis is overcome, the mayor economic won't get better.
One of the shinest representatives of market economy strategies has a serious problem.
Surely, you've heard about 'the historical solution', putting U.S., the country of possibilities back to theoretical funds of old-good socialism.

FED has taken over Freddie and Fannie corps, because they've been too big to let them bankrupt without serious consequences. Freddie Mac and Fannie Mae have been actually backing about $5 billion from total volume of $12 billion loans in U.S. on one side, however they have been constantly loosing in long term run. Two of the biggest American banks have lost more than 3,1 billion during April-June period, summing their debt to total $1,600 billion in the last year.

Abandon your national pride.

About 53 percent of Americans do agree with governmental support in case of crashing private concerns, said Wall Street Journal. However, things rarely seem that easy in long term vision.
FED has taken over approximatelly 79.9 percent in each of the banks, replaced their CEO's and literally assured investors to back the debt more explicitly. This step has been welcomed by current President George Bush claiming Americans could be proud of steps being taken, just like Republican's Duo McCain and Polin and their Democratic rival Obama.
Despite of gained certain safety amount, one has to realize playing Savior will finally impact those who should have been saved. About $200 billion back up has to be collected from somewhere and even Government suggests it is making money in itself, according Dariusz Kowalczyk, CFC Seymour Chief Investment Strategist the idea looked nice on paper, but certainly wasn't the main issue.
Once again and shortly, the power of taxes is almighty.

Apart that, there have already been voices whether governmental back up will be sufficient to revert the crunching housing crisis.
Apart from blessed and hateful capitalism, it's been several times that the Government held up private sector. We can still remember Bear Stearn's case, such as constant support to farmers and shippers.

As for dreamers, if somebody believed in clarity of American free market power, now is the time to wake up.




related story: http://news.yahoo.com/s/ap/20080907/ap_on_bi_ge/mortgage_giants_crisis;_ylt=Aler38XBLLs5CKINRRsTN8Ss0NUE

by Milota Sidorova for PocketNews (http://pocketnews.tv)

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edited by Beata Biskova