Freddie Mac and Fannie Mae are to America’s great empire what the East India Company was to the British Empire in the 19th century…and the Louisiana Company was to France in the 18th. Huge, stupid, and probably fatal.
Freddie and Fannie are huge government-chartered mortgage lenders. In 18th century France, speculators bet on the riches of Louisiana, through the government-chartered Louisiana Company. In the 19th century, they wagered their money on the riches of India, through the government-chartered Eastn India Company. And in the 20th century, they gambled on rising housing prices through Fannie and Freddie.
The immediate problem is that the mortgage lenders are running out of money. They need to raise $75 billion. A few years ago, that would have been no problem.
Everybody was ready to put money into America’s go-go, securitized housing market. But then, housing went.
Yesterday’s news tells us that housing prices are falling in 23 out of
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