Financial Communism


Whoever will be at the White House. Although:

Lex, FT on  Friday 18.

Better Fed than dead
This was the week that socialism came to Washington. The US government had to firm up its “implicit” support of the government sponsored enterprises, Fannie Mae and Freddie Mac which between them own or guarantee 22 per cent of the $24,300bn borrowed by US households and non-financial businesses.

So Fannie and Freddie, traditional tools of the debt-based US housing policy that lead to the subcrime crisis, own or guarantee up to $ 5.2 trillion. Although it was well  known they are a target of foreign investment,  few had in mind that F&F are MORE THAN 10% IN COMMUNIST CHINESE HANDS.

Brad Setser on Sat. 12

Too Chinese (and Russian) to fail?

Brad corrects official data, estimating that China holds NOT JUST $ 422, BUT $500-600 bn of Fannie and Freddie GSE (Gov. sponsored ent.s), i.e. 10% of the outstanding stock (5.2 trillions) and almost 15% of China’s GDP. Russia has $156 bn, more than 10% of its GDP.

I would certainly expect that Vice Premier Wang is on the phone to Paulson this weekend, politely asking how exactly the US plans to backstop the Agencies. (…)

MORE IN SETTSER’s BLOG, quoted this morning July 17th by LEX, FT: “China and Fannie Mae”, and in our static page: AAA Updates on subcrimes.

Published in: on July 20, 2008 at 11:05 am  Leave a Comment  
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