Stormin Mormon wrote:
A guy walks into a party, and asks a woman "Would you have sex with
me for a million dollars?" She says sure. And of course he doesn't
have a million dollars. But the decision is made, they are going to
get it on. Now, it's just about deciding how much is the price.
I have that sense with the bailout for Freddy and Fannie. My sense is
the bailout is a done deal. The question is only the details. What's
the end result? The Fed, with all the power of the government, will
take large ammounts of my money, and give it to someone else. It's
not roads, bridges, or even pork barrel construction projects. Just a
big transfer of money.
It's more like a loan, although not exactly that either. Remember, the
government made a profit on the Mexico, Chrysler, and New York City
bailouts. By most accounting standards, the government made a profit on the
S&L rescue, too.
The government will buy troubled mortgages at a significantly reduced
value - some say as low as 10% of the face value. The feds then own the
mortgage or, in the event of default, the property itself.
The people who are for sure getting screwed are the investors in Freddie Mae
and Freddie Mac. Probably also getting screwed are the illegal aliens who
work in the building trades. There are ample foreclosed houses to handle the
housing market for quite some time, so new construction will fall fall way
Reconditioning of these foreclosed homes will boom, so there will be an
increased need for skilled tradesmen...