Thursday, August 10, 2006


Mort, over at Petropest Launchpad, has a good piece about the federal government & its guarantee of much of the mortgage debt in the US:
. . . $2.4 trillion in Ginnie Mae guarantees and a further implied guarantee in excess of $1 trillion for Fannie Mae and Freddie Mac. Of the roughly $10 trillion worth of mortgage debt owed by the citizens of this country I have confirmed that at least a third are insured by the federal government. The banking system further relies on the FDIC for deposit insurance. I wouldn't be surprised if the entire mortgage debt of this country is securitized by [U]ncle Sam in one way or another . . . $8.5 trillion of U.S. government debt coupled with pension fund and lending guarantees. I believe this constitutes an unacceptable level risk to the economy. Had all these lenders been working without a net I doubt we would have had a housing bubble at all. If there is, and there could be, an extended economic downturn, we might see the money supply double within ten years. That is a scary thought. The world is already nearly saturated with the dollar. The only other option would be to default, and while it (the government) may default on some commitments going forward there are a certain number that it must honor. The way things are going now I don't foresee a happy ending to this saga for anyone.
(Emphasis added). There's more, and unlike your's truly, Mort actually substantiates and annotates much of what he says. Give it a whirl, it's informative without being wonkish.

(Well, maybe it is wonkish, but it's not a slog. Hmmm, is that sentence English?).


Anonymous Anonymous said...

This comment has been removed by a blog administrator.

9:15 AM  
Anonymous Mike said...

The gumball?

Oh, and if you ever call me "Mickey" again, I'm coming to Oklahoma to track you down, find you, and kill you.

Otherwise, you're most welcome! Good piece.

9:20 AM  
Anonymous Anonymous said...

Sorry, I certainly meant no offense. That line was from an old television ad. Maybe I should just simply say thanks for the plug, Mike, you da man!

10:23 AM  
Anonymous Mike said...

Awwww, c'mon, Mort! Pulling your comment?

Now my first comment looks ridiculous!

You're devious, man. Devious.

3:50 PM  
Anonymous Anonymous said...

Bwahaha!! ;-) New post up, Monetary squeeze. Almost sounds dirty, doesn't it?

1:04 AM  

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