Get ready for the spin: the Fannie/Freddie bailout is GOOD for America

[Newsjock]

The AP is already complying, and Wall Street is already responding with a futures gain of 2% (or roughly 220 points on the Dow industrials).
http://biz.yahoo.com/ap/080907/mortgage_giants_wall_street.html

NEW YORK (AP) -- Wall Street finally got what it's been angling for: a bailout of Fannie Mae and Freddie Mac that could aid a recovery of the broken U.S. housing market and arrest a slide in stock and credit markets worldwide.

Overall, the move is a positive for banks around the world, including Citigroup Inc., Merrill Lynch & Co. and UBS AG that invested in U.S. mortgages, according to Daniel Alpert, managing director at the investment bank Westwood Capital. And in electronic trading Sunday evening, futures for the major U.S. stock indexes all rose about 2 percent.

"There's no doubt in my mind that this will stabilize the mortgage market," Alpert said.

[aquart]

1. So this is a bailout for Citigroup and Merril Lynch?

Damn, I was looking forward to the asset sale.

[BlooInBloo]

3. No, it's a bailout of Freddie/Fannie, like the OP said....

Background, if you don't know what that means

http://en.wikipedia.org/wiki/Federal_National_Mortgage_Association

http://en.wikipedia.org/wiki/Federal_Home_Loan_Mortgage_Corporation

http://en.wikipedia.org/wiki/Mortgage-backed_security

[BlooInBloo]

2. Nationalizing it is probably a good idea, transient details aside...

But it's hilarious listening to freemarketeers endorse it. :rofl:

[Truth2Tell]

8. My bet is the nationalization is transient.

Watch for the Feds to clear the books and then propose some hair-brained cronyist scheme to re-privatize.

[rfranklin]

4. S&P futures are up about 30 points....its spun already....

that is an insane gap based on what should be viewed as a massive fuckup.

[Robbien]

9. I would expect the stock market to skyrocket

Taxpayers have just agreed to transfer over a trillion dollars over to holders of debt instruments of Fannie/Freddie. And taxpayers have agreed to buy every single phony baloney real estate debt instrument from Fannie and Freddie and have told Fannie/Freddie they can go out and keep assuming more of these bad instruments.

Corporate America, in fact global corporates, have just got a huge infusion of cash.

They thank you.

[Newsjock]

10. I have to keep reminding myself

The stock market has become a contrary indicator to the economic well-being of most Americans.

[onethatcares]

5. what happens if it doesn't stabilize the housing market.

and which part of the housing market is it stabilizing? The people that are in foreclosure or the suits that need 98 million dollars a year to buy yachts? I can't figure this hsit out(yeah, I know that's mispelled).

[Robbien]

11. It won't stabilize the housing market. The only thing that will stabilize

the housing market is that you and I and the rest of the non-wealthy go out and start buying up houses at a frantic rate.

However, You and I and the rest of the non-wealthy are holding jobs that are decreasing in value and we have just been handed a trillion dollar Fannie/Freddie debt which we need to pay.

[skooooo]

6. probably is better than the alternative....

??

[Robbien]

12. The alternative is that the wealthy are on the hook for their bad investments

Instead we are picking up the tab for their folly.

How is this better?

[skooooo]

13. A lot of middle-class and lower-middle class...

..people use Fannie and Freddie. This just makes no sense. Either way they get screwed. At least maybe they'll be able to keep their homes.

[Robbien]

14. This bailout is not a bailout of homeowners, it is a bailout of lenders

There will be no change in the status of homeowners. If there is a bailout or no bailout, homeowner status doesn't change.

What changes is the status of people who hold the mortgages and the debt instruments created from the mortgages. They are the ones getting the bailout. If there is no bailout, these very wealthy people and corporates and governments are out money. Can't have that, can we. No. We the middle classes have just said we will make their investments good and have turned over our money to them. We still of course are on the hook for our own mortgages and now we also have to pay higher taxes so that money can be turned over to holders of Fannie/Freddie debt.

[arcadian]

7. Yeaaaa!!! Socialism works in America!

Corporate socialism really works in the United States! Fuck the citizenry, they can stand in bread lines and soup kitchens.