Posted by Sada Mosler on April 21st, 2008
(an email exchange)
>Ãƒâ€šÃ‚Â Ãƒâ€šÃ‚Â On Mon, Apr 21, 2008 at 9:55 AM, Russell wrote:
>Ãƒâ€šÃ‚Â Ãƒâ€šÃ‚Â Fannie and Freddie now back 82% of all mortgages in the U.S.,
>Ãƒâ€šÃ‚Â Ãƒâ€šÃ‚Â up from only 46% in the second quarter of 2007. If they need
>Ãƒâ€šÃ‚Â Ãƒâ€šÃ‚Â a bailout ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“ could be a trillion dollars ÃƒÂ¢Ã¢â€šÂ¬Ã¢â‚¬Å“
Funds are already advanced to the homeowners which supports demand.
A ‘bailout’ would only be an accounting entry between the government’s account and the agency’s account – no effect on aggregate demand.
>Ãƒâ€šÃ‚Â Ãƒâ€šÃ‚Â the USA may lose its AAA credit rating.
Like Japan did. Just another sign of incompetance by the ratings agency if it happens.