Welcome to the Government's Version of Russian Roulette?

Posted by Monty Pelerin at 9:10 pm Fed, Government, Insolvency, banks

Oct 302009

: Image via Wikipedia

russianroulette Would you invest in a financial company that is going bankrupt? Actually, you already have! While you may have been an unwilling investor in FNM, you are continuing to invest every day, like it or not. Your “investment” is also increasing every day in Freddie and the FHA, both on similar trajectories. Welcome to the world of Alice in Wonderland where the solution to a credit-caused bubble is more credit.

The pressures from this nonsense continue to build. The fact that the US government is insolvent doesn’t seem to matter. Our government, the wounded and cornered animal, will do anything to survive. In this case, survival is keeping the game going as long as you can. But this game is Russian Roulette and taxpayers, knowingly or not are participants. No one knows whether the next revolution of the chamber will produce a click or the FINAL BANG.

It is unlikely that the government will change policy actions. It is even more unlikely that doing so would have any effect on the outcome. At this point, all one might get is less noise when the final bang happens. The outcome for taxpayers will be the same.

The government has morphed into the worst of WAPO, Enron and Worldcom, and on a much bigger scale. When the bills come due, the stockholders will be wiped out. We are all stockholders, whether we like it or not.

Look at the shocking graph presented below by ZeroHedge below.

Fannie Mae Seriously Delinquent Rate Hockeysticks to 4.45% From 1.57% In Prior Year

Submitted by Tyler Durden on 10/30/2009 17:31 -0500

The FNM “seriously delinquent” rate has gone parabolic, increasing by roughly 5% sequentially and just under 300% YoY. As mere text will simply not do this metric justice, please enjoy this chart of the dataset from Blytic. It tells you all you need to know about the Fed’s containment of the housing problem.

The August seriously delinquent single-family number comprised of a 2.87% non-credit enhanced delinquencies and a very bothersome 11.52%, consisting of credit enhanced loans.

The deterioration of FNM’s book however did not stop it from increasing the size of its book. In September Fannie’s total book of business hit $3.242 trillion, up from $3.229 trillion in August and $3.079 trillion in the prior year.

This trend should bother you, dear taxpayer, because it is your money on the hook here, which is not only massively mismanaged by Bernanke & Co., LLC, but which sees another $80 billion of free funding every month courtesy of the dollar printing press to onboard even more toxic garbage onto your balance sheet.