By Dave Kranzler
Taxpayers pumped over $200 billion in to Fannie Mae and Freddie Mac after the financial collapse of 2008. While the Obama Government used taxpayer subsidized loans to move a large quantities of foreclosed housing inventory from the FNM/FRE and in to big investment funds, FNM/FRE were busy ballooning their mortgage holdings – again.
Now the Inspector General’s Federal Housing Finance Agency has issued a warning that both FNM/FRE are headed for another bailout, which is no surprise to me:
“Future profitability is far from assured,” Federal Housing Finance Agency Office of Inspector General said in a report, pointing out that the firms could again chalk up losses on their derivatives portfolios, similar to those they reported in the fourth quarter. “This increases the likelihood of additional Treasury investment,” the report stated. –Reuters (LINK)
Similar to when Fannie was plugged full of derivatives under former CEO Franklin Raines – who by the way had no clue how catastrophic the situation was and should be in jail but instead received a $100 million “you’re fired” severance agreement – the Government has once again looked the other way while Wall Street unloaded another avalanche of derivatives onto FNM/FRE. Once again the Taxpayers will pay for this.
This is not a ‘warning” – this is a “get ready here it comes” statement. The fact is that most of FNM/FRE’s “profitablity” has been driven by the same fraudulent “mark to model” accounting that has generated most the big bank profits since 2009.
And the Government used this fraudulent accounting to suck money out of FNM/FRE. The “improved” balance sheet has enabled both FNM/FRE to issue debt to investors. The money raised has been used reload their mortgage holdings and for dividend “payback” payments to the Treasury.
FNM’s CEO warned of the possibility of another bailout in February, after announcing FNM’s smallest dividend payment to the Treasury in more than four years. This is not a warning – it’s an inevitability. The housing market is set to re-collapse, which will blow-up both Fannie and Freddie – once again
Dear Fellow American,
The #1 financial question I hear from most Americans today is:
Have the problems from 2008 been fixed?
And if not, are we headed for another financial crisis?
Well, the government wants you to believe everything is back to “normal”… that our financial problems have been “fixed” thanks to their bailouts and a few new rules.
But Jim Rickards — who regularly consults with the CIA and the Pentagon, and probably knows more about this subject than anyone — has a very different take.
“We have a misplaced confidence that central banks can save the day; in fact, they are ruining our markets.
“What we are about to experience in the United States will be the greatest collapse in history — it will be exponentially larger than any financial panic of the past.”
Please note: Jim Rickards is not an extremist or fear monger, living in an underground bunker somewhere.
Instead, he might actually be the world’s foremost expert on currencies, world economies, and the international banking system.
You see, today, Jim Rickards is not only a financial lawyer and a New York Times best-selling author, he also manages a hedge fund, and serves as an advisor to the Office of the Director of National Intelligence — which oversees the CIA, the NSA, and 14 other U.S. intelligence agencies. He’s been sought out for his currency expertise by: CNBC, Fox, CNN, NPR, theFinancial Times, the New York Times and the Washington Post, just to name a few.
And right now, Jim Rickards says that although few people realize it — we are on the verge of a huge new “currency crisis” in America. In his words…
“If the currency collapses, everything else goes with it… stocks, bonds, commodities, derivatives and other investments are all priced in a nation’s currency. If you destroy the currency, you destroy all markets and the nation.”
In other words, the way you live, work, travel, retire, invest… everything could soon change. Some of it in ways most people would never expect.
If you believe things are “back to normal”… and everything about the U.S. economy and our financial system are OK, Jim Rickards says you should pay attention to a few simple facts, which rarely get reported in the mainstream media:
FACT #1: Jim says the REAL unemployment rate is actually around 23% in America today — if you calculate it the proper way. Most people don’t realize the government’s “official” rate doesn’t count people who have given up, and are no longer seeking work.
FACT #2: Jim Rickards also points out that in six years, from 2008 to 2014, we increased the money supply in the United States from $800 billion to $4 trillion –a whopping 400% increase! But despite all this money printing, individual incomes and household incomes have essentially not increased one bit.
FACT #3: Lots of people say to Jim, if things are so bad, where are the “soup kitchens” like we had in the Great Depression.
Jim Rickards accurately points out that we do indeed have “soup kitchens” today — they just look different than they did 90 years ago. Today’s soup kitchens are places like Safeway, Kroger, Albertsons, WholeFoods, and other grocery stores — because this is where roughly 50 million Americans use government-issued food stamps to eat. Keep in mind: The number of Americans on food stamps has basically doubled since President Obama took office.
FACT #4: Jim Rickards also says the Federal Reserve–which serves as America’s “banker’s bank” and as the government’s bank–is already insolvent. He says they have about $60 billion in cash, but this cash is propping up over $4 trillion in debt, and concludes: “the whole thing is unstable and it’s ready to explode.”
FACT #5: Jim Rickards also says America today is witnessing its third stock bubble, and its second housing bubble, in the past 15 years. These bubbles, according to Jim, do not help the real economy but merely enrich brokers and bankers. And he says when these bubbles burst, the economy will confront a worse panic than occurred in 2008.
Jim Rickards sums it all up this way:
“We are in a depression… It started in 2007 and it is going to continue indefinitely. Depressions are structural–monetary solutions are cyclical. You cannot solve a structural problem with a cyclical remedy- -monetary policy [printing money] simply will not work.”
So… of course… the big question is… if Jim Rickards is right: When will the next crisis hit, and what can you do about it?
According to Rickards, “Using science, we can’t say very much about the timing, but we can say a lot about the magnitude. This will be the greatest financial collapse in history. I am quite sure about that, but I am not sure about the timing… People think I can call them up at 3 o’clock in the afternoon and tell them tomorrow’s that day, sell your stocks and buy some gold. I can’t do that. I don’t know what day it will be. If we get to that point, it would be too late to act. So, the time to act is now.”
And while Jim Rickards says he isn’t sure exactly when this next crisis will hit, he is fairly confident about how the next crisis will first appear…
“I expect the first phase will appear as a nearly instantaneous 70% stock market crash. From the outside, nobody will see it coming. Once it becomes clear that it’s not a flash crash–it’s a systemic meltdown in the economy itself–that’s when the gravity of the situation will sink in. And there will be no digging out from it.”
The point of all this, of course, is that if you live in America or own any assets priced in U.S. dollars, this is probably the most important financial topic in the world for you right now.
As Jim says, this is an entirely foreseeable event. It’s happened before and it is happening again now. In his words…
“The international monetary system has already collapsed three times within the last 100 years–1914, 1939, and 1971–and another collapse would not be at all unusual. But it’s not the end of the world.
“You just need to understand what will come next, and what the future international monetary system will look like.”
The point is, even if the crisis is only half as bad as Jim expects, it’s going to have a major, major impact on your life in the next few years.
That’s why I’m urging you to take the necessary steps to protect yourself.
And I firmly believe that the best first step you can take is to read Jim Rickards’ new book on this subject, called The Death of Money.
There are huge potential changes in store for our currency and our financial system–and no book out there even comes close to helping you understand and prepare for these changes.
This book is crucial for EVERY AMERICAN to read as soon as possible. It’s essentially a “playbook” for America’s next–and imminent–financial crisis.
* In fact, I like this book so much, I contacted Jim and his publisher, and arranged a way for you to get a free hardback copy (you’ll pay just $4.95 to cover our costs of shipping and handling).
THE REST IS A SALES PITCH FOR THE Stansberry Research NEWS-LETTER, BUT YOU MAY BE INTERESTED. IF SO, GO HERE AND READ THE REST.