Fannie Mae and Freddie Mac - remember those names. Their collective name is now mud since a rumor began to spread earlier today about Federal regulators taking them over. That move will cost common shareholders and you and me dearly. Maybe not me. Maybe my kids. If the rumors are true, the Federal budget will have to support billions of dollars in bad loans which have up to now been backed by the two giant semi-public entities. This is what happens when one is careless with someone else's money. What are the choices? There aren't any. A collapse of either or both of these giant underwriters would cause panic and start an unstoppable cascade of shareholders bailing out - like a run on a bank. Credit would get super tight. If money is not kept moving, the entire economy will grind to a halt. Perhaps we're hanging by a thread but don't yet know it. I wonder if the Chinese were wanting to cash in their chips? Or the rich Arabian sheiks? The Federal action, otherwise, appears premature. Good luck to us all.
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