Freddie and Fannie Bailouts

So while people are debating whether the PPT exists or not, here is our government with a plan to buy equity directly into Fannie and Freddie. If you are shorting either one of this stock, get out!

First, the governemnt bought about $30 billion worth of securities from Bear Stearns. Now, a plan to directly buy equities in Fannie and Freddie. Your tax dollars at work.

How about lending a few billions to Lehman Brothers? Or even better, buying Lehman stock? How about buying futures?

Just remember that if you are too big to fail, and you have ennough risk, the government will bail you out. Even if you are not too big to fail they will still bail you out. Just look at how they are trying to help the homebuilders.

Each day we wonder how many bullets the fed has left. And everytime, while they are running out of bullets, come up with a creative way of using taxpayer dollars.

The printing presses are running at full speed.

In a statement timed to precede the opening of Asian markets Monday, as well as a closely watched auction of debt by Freddie, the Treasury said it plans to seek approval from Congress for a temporary increase in a longstanding Treasury line of credit for the two companies.

The Treasury also said it would seek temporary authority so that it could buy equity in either company "if needed" to ensure they have "sufficient capital to continue to serve their mission" of providing a steady flow of money into home mortgages. The plan, which requires congressional approval, also calls for a provision to give the Federal Reserve a "consultative role" in the process of setting capital requirements and other "prudential standards" for Fannie and Freddie.

Once again, the fed showed it is trying to prevent markets from plunging.

Sunday's moves, by promising government funds to keep Fannie and Freddie operational, reinforce the notion that investors can count on the government to bail them out in a crisis. Until recently, that was an idea the Bush administration had tried hard to quash.

Bye bye capitalism...hello Socialism.

http://online.wsj.com/article/SB121603898437750725.html?mod=hps_us_whats_news