"John R. Carroll" wrote in message
...
Ed Huntress wrote:
"cavelamb himself" wrote in message
m...
azotic wrote:
It appears the american taxpayer will subsidize the risks taken by
sophisticated investors.


http://www.reuters.com/article/press...008+BW20080711

Since we have a free market Freddie Mac and Fannie Mae should be
allowed to go broke.
New entities will arrise to fill the vacume left by Freddie Mac and
Fannie Mae in the mortgage
market.


Best Regards
Tom.




That's because _you_ have no money invested there...

Everybody has money invested there, directly or not. They hold half

70 percent now Ed.
70 percent and climbing.

of the country's 12 trillion dollars in mortgage debt. They truly are
too big to fail. If they did, we wouldn't be talking about recession.
We'd be in a hell-bending depression that would knock down the
world's economies like dominoes.

The idea that we could let them fail and that some other "entity"
would pop up to take their place is a blissful pipe dream.

We could always "pop" a replacement up.
There isn't a single reason not to wipe out every dollar of shareholder
equity as a quid pro quo and I can think of several reasons to do exactly
that.

And then what do you do when a court tells F and F to liquidate some assets
to pay off the shareholders? And how about those people who are holding the
debt?

--
Ed Huntress