At what point do we become Russia?

Now that American's own Fannie and Freddie, more than 1/2 of all U.S. mortgages are property of Uncle Sam.  How can this be good? Better yet, Russia holds about $75 billion of Fannie and Freddie securities, Luxemburg and Belgium hold $39 billion and $33 billion respectively. British investors hold about $28 billion of securities in the nearly doomed duo. Isn't anyone worried?

All of us here at the Masters are in awe that the talking heads don't seem to be concerned about the long term impact about what went down this past weekend, what the hell is the U.S. Debt at now? U.S. government's commitment of up to $200 billion to support the two giant mortgage lenders, which together back about half the country's $12 trillion in mortgages impacts us in a way that is down right scary.  In the end, how much will this cost us, do they know, does anyone know?

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First off, Fannie Mae and Freddie Mac have $1.6 trillion in debt outstanding.  Remember we are on the hook for Bear Stearns, then there was IndyMac and by the end of the week we could add Lehman (LEH) to that list, how much can the government add to its $9.6 trillion debt before it too cannot handle its own liabilities?

When will foreigners refuse to let the US government borrow money?

Don't forget about China.  China owned $376 billion of debt issued by U.S. government agencies, principally Fannie and Freddie, as of mid-2007.  How much U.S. currency are they holding?  Does anyone know? Imagine what they could do to us overnight, Sovereign-Wealth Funds my ass.

Fellow Masters, before you go throwing all your money back into the market or buy another house, consider what's going on in America.  We could be months away from standing in a line to get bread:

 Que the Fly:

 Do American capitalists still exist?

All of this jargon, discussing the “greatness” the government bailout of Fannie Mae /Freddie Mac, is making me sick and ashamed to work on Wall Street. As a matter of fact, I would like Hurricane Ike to make a quick turn and come up here (NYC), in order to wipe out the exchange. Wall Street needs a good category 5 hurricane to “clean up” the garbagio.

How is it a “good thing,” when the U.S. government is now the proud owner of your house? Directly, they now own more than 75% of the mortgages, implying they own the land too. So, has anyone thought through the long term ramifications of this? Anyone?

Abuse of powers, land grab, you name it—it stinks to high heaven.

On top of that, no one is going to want to work at Fannie anymore. From here on, Fannie and Freddie will be operated by the same bureaucrats who run welfare, medicaid and social security: fargin’ losers.

On top of that, President Paulson has subordinated the tax payers money to the GSE bond holders, such as Russia, China and oh yeah Bill Gross and the Pimco pimps. This all sounds like a grand idea, if you are a sovereign wealth fund or have a net worth north of 2 billion.

However, for the average Joey Bag o Mortgages, this is a disaster. In time, Fannie and Freddie will become so corrupt and so gay, credit will seize up—due to unavailability of loans. I wonder if the government will elect to tap the Fannie/Freddie surpluses (providing they will ever have one), just like they “tapped” our social security fund, over the decades?

Heck, if the government is right, and housing bottoms, they can make a fortune owning both agencies. With the profits, they can buy all sorts of stuff and fund exorbitant amounts of “pork barrel” projects.

Fellow Masters, these are uncertain times, hang in there and make the best decision with your money, we suggest easing back into the market and if you are thinking of buying a rental, hang on a few months, housing prices will continue to drop.