This article on Yahoo Finance is severely wrong (cited many other places). The Federal government estimates the cost of the FRE and FNM bailout to be $25B. They're only off by a factor of 200x.
The debt of FRE and FNM is backed by the Federal government. Their entire balance sheet of $5T should be counted as part of the national debt. The figure of $25B is merely the amount required to provide some mark-to-fantasy illusion of solvency.
If you evaluate the cost of the FRE and FNM bailout at $25B, figuring 300M Americans, that means I'm personally paying approximately $100 to finance the bailout. If you properly evaluate the size of the bailout at $5T, then I'm personally paying over $16,000 to finance the bailout of FRE and FNM.
You should count FRE and FNM's entire balance sheet as part of the bailout.
THE FRE AND FNM BAILOUT IS DIRECTLY COSTING EACH AMERICAN OVER $16,000!
This makes the Bear Stearns bailout seem like pocket change.
The profits of FRE and FNM aren't free. Everyone else pays the cost as inflation. The Federal Reserve prints more money to bail out banks, via interest rate cuts. This isn't free; it's paid as inflation. You can't create wealth by printing more money. All you accomplish is that you steal from everyone and give the proceeds to a small handful of people.
Whenever one person receives a dollar without working for it, someone else did a dollar's worth of work and was not paid.
When you pay $5/gallon for gasoline, remember that you're subsidizing the profits of financial industry insiders!
Tuesday, July 22, 2008
FRE and FNM True Bailout Cost
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"Whenever one person receives a dollar without working for it, someone else did a dollar's worth of work and was not paid."
Bill Haywood (quasi-anarchist labor advocate) came to that same conclusion in the 19th century.
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