Bear Stern, 85 year old company, does not exists any more. Fed shovels in the hand of JP Morgan. Now it time for Fannie and Freddie going out of business or rescued by the US Government/tax payer.
Both the companies are insolvent and they badly need cash as Housing Foreclosure increases and at all time high.
If government is undertaking this company then there is no or very low value for the share holder. They already have problem raising the money. They have to give 75basis point higher than the treasury bond. They recently raise 7.5B but they probably need 29B. How the company will operate if they need such kind of money. Both company together has 6 Trillion of loan portfolio. (United States total debt is around 8 Trillion) If price goes down they have to write down significant loss. If US government does not help then they cannot buy the commercial mortgage and hence consumer will not able to get loan which further bring down the housing market.
I don't think that this companies has the future nor US Dollar. Be careful.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment