Taxpayers Take on Trillions in Risk in Fannie, Freddie Takeover
September 9th, 2008WARNING: This is not a recommendation to buy, sell or hold any financial instrument.
I don’t use fundamental analysis to trade, but I’ve been looking at the FOREX charts and I really started to wonder, “How is the dollar continuing to run higher?”
I think one possible answer must be that, with the Fannie/Freddie bailout, investors like the fact that the people (U.S. Taxpayers) who are responsible for backing the dodgy debt have no choice but to pay up.
Well, it’s not quite no choice: My wife and I voluntarily live on a very low income, which doesn’t leave much for the taxman to take from us. And some Americans simply ignore the IRS, or use various “legal” tactics to try to avoid paying taxes, but these options have the potential to yield suboptimal results; such as the government seizing the individuals’ funds and property and potentially pointing guns at them. But these are the outliers.
Most Americans work hard, and pay their taxes on time.
The situation reminds me of those humans who are entombed in containers of nutrient agar in the Matrix movies. Their lifeforce is literally being sucked up to the top of the pyramid by entities who are out of sight, and out of mind. These entities must think something like, “No matter what outrages we carry out against these people, they don’t resist us. Why not turn the screws tighter? They’ll hardly notice, and so what if they do. We’ll just pump some more jelly into their brains and then take from them whatever we want.”
Well, that’s enough lallygagging, Citizen! Back to work!
Via: USA Today:
The unprecedented federal takeover of mortgage giants Freddie Mac and Fannie Mae announced on Sunday is a bold attempt to stabilize financial markets and restore the faltering housing market, but it thrusts trillions of dollars of risk directly onto taxpayers’ shoulders.
“You can call it a bailout, you can call it a safety net or you can call it a rescue package, but the bottom line is the American taxpayer is left footing the bill,” says Richard Yamarone, director of economic research at Argus Research.
I’ve been thinking the exact same, and that’s the best explanation I’ve heard. I’ve given up on hitching a ride on strong fundamentals and am playing intraday swings until October, when the numbers come out.