September 14, 2008

Here's Schiff. Just read this. And remember it.

Going forward the vast majority of new mortgages made to Americans will be bought by Fannie or Freddie, and will also become the equivalent of U.S. Treasury bonds. Therefore in a few short years there will be in excess of $10 trillion of new obligations for the U.S. Treasury.

The defenders of the bailout claim that Fannie and Freddie debt does not represent true obligations because they are collateralized by homes. But anyone with a casual interest in the current real estate market knows that homes are now only worth a fraction of outstanding mortgage debt. And that fraction gets smaller every day. My guess is that $10 trillion of Federally insured mortgages will result in $2 trillion or more of losses. That amounts to more than $25,000 per American family.

I do not see how the government could possibly cover these losses through legitimate means (taxation or borrowing). To make good, they must rely on the printing press to create money out of thin air. As a result, even though bond holders will get their dollars back, they will lose purchasing power.

14 comments:

Anonymous said...

Going forward the vast majority of new mortgages made to Americans will be bought by Fannie or Freddie, and will also become the equivalent of U.S. Treasury bonds.
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Socialism for the big corporations and the rich. Pure capitalism for everyone else.

It sucks to live in a failed Libertarian state.

hurin said...

I would argue that at this point it no longer really matters if it's 2T, 4T, 6T or any other number.

The amount of government debt, not just in the US but in almost every industrialized country on earth, has gotten so big there is no possibility it can ever be repayed, and we're rapidly approaching the point where it can no longer be rolled over as new debt either.

Got pension? Think again.

Anonymous said...

Looks at a zero% Fed rate and 3.5 % fixed rates .Bad inflation to
follow . It won't work but what the hell. Anything to stop the falling prices . Easy money fraud and corruption to follow . Equity loans for everyone .

Anonymous said...

It's always been a game of how to rescue Wall Street and the lenders and not piss off China . Easy money loans and corruption than inflation here we come.Condo's for everyone .

Hamstrung said...

Another thing to remember is that the local governments are suffering from this too. There will be even MORE taxation at the local level, and it is only going to keep getting worse.

The taxpayers are ripped; there is no hope!! But, at least the Fed will give the banks all the backstops they need. You can count on that!!

Anonymous said...

it has been said for a long time that we would simply print our way out of debt. I have been waiting for this to happen for 15+ years.

Anonymous said...

Why listen to an financial expert when you can tune in to McCain-Palin? I mean, jeez, what about snow machines and down syndrome babies?

Who cares about America future when you have desperate housewives for government appearing daily?

America is so Fucked.

Anonymous said...

too bad that without the fractional reserve system reserve being bailout moneys, because any depositor willing to lose 90 percent of their purchace power besides the sucker taxpayer forced to.... the average house value would be 25,000.... or go ahead and bid against my one dollar deposited in the bank with the 15 or twenty debt dollars created with my deposit, the bank will loan out and today not need the one dollar deposited because the taxpayers will supply it??

Anonymous said...

It sucks to live in a failed Libertarian state.

Yes! GOD DAMN the Libertarian Party policymakers in the Libertarian Party majority in Congress who brought this crisis down on our heads!

Lost Cause said...

Man, I never guessed that this country would go communist under Bush. It is like Nixon going to China. It just boggles the mind that we now have government ownership of residential real estate.

k.w. - Southern Ca. said...

Exactly - no way the pigs can rely on tax-payers dollars (many of those dollars coming from folks who didn't get scammed into the housing market) to correct this growing mess.

Indeed, the juicy stuff is coming.

bobby ray said...

it's called higher food and oil prices; that's how this will be paid off.

Anonymous said...


Socialism for the big corporations and the rich. Pure capitalism for everyone else.

It sucks to live in a failed Libertarian state.


Every time you post this statement, you show how uneducated you are. You obviously have no clue as to what Libertarianism is. There are no Libertarians in Congress or in the White House.

Do some research and get a clue so you don't make an ass of yourself anymore.

Anonymous said...

Anonymous said...

Socialism for the big corporations and the rich. Pure capitalism for everyone else.

It sucks to live in a failed Libertarian state.

Every time you post this statement, you show how uneducated you are. You obviously have no clue as to what Libertarianism is. There are no Libertarians in Congress or in the White House.

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Heh Heh. Ron Paul is just a what, practicing OB-GYN in Congress?

Now bow to your masters in Washington D.C., and their Libertarian New World Order!