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MOSLER'S LAW: There is no financial crisis so deep that a sufficiently large tax cut or spending increase cannot deal with it.

Re: Fannie & Freddie

Posted by Sada Mosler on April 21st, 2008

(an email exchange)

>
>   On Mon, Apr 21, 2008 at 9:55 AM, Russell wrote:
>
>   Fannie and Freddie now back 82% of all mortgages in the U.S.,
>   up from only 46% in the second quarter of 2007. If they need
>   a bailout – could be a trillion dollars –

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.

>   the USA may lose its AAA credit rating.

Like Japan did. Just another sign of incompetance by the ratings agency if it happens.

2 Responses to “Re: Fannie & Freddie”

  1. RSG Says:

    What would that mean for the equity in Fannie and Freddie?

    Reply

  2. warren mosler Says:

    sorry, not my strong point! though i do think the congress will try to maintain their earnings ability, but don’t know how successfully.

    Reply

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