US Banks to be Nationalised - by Asia

[Cael]

IMF chief economist Kenneth Rogoff told a financial conference last tuesaday: "The U.S. is not out of the woods. I think the financial crisis is at the halfway point, perhaps. I would even go further to say 'the worst is to come'."

Rogoff's comments come as investors dumped shares of the largest U.S. home funding companies Fannie Mae and Freddie Mac on Monday after a newspaper report said government officials may have no choice but to effectively nationalize the U.S. housing finance titans.

Rogoff said multi-billion dollar investments by sovereign wealth funds from Asia and the Middle East in western financial firms may not necessarily result in large profits because they had not taken into account the broader market conditions that the industry faces.

"There was this view early on in the crisis that sovereign wealth funds could save everybody. Investment banks did something stupid, they lost money in the sub-prime, they're great buys, sovereign wealth funds come in and make a lot of money by buying them.


See:

http://www.globalresearch.ca/index.php? ... a&aid=9890

[20000miles]

Weren't Fannie and Freddie already effectively nationalised?

[Cael]

Weren't Fannie and Freddie already effectively nationalised?

Appearently not.

[Icemancometh]

They should have been, but they weren't. American government did pretty much the same thing as the UK government did with Northern Rock: step in and cover the liabalities, and not take ownership. It reeks of privatised profits and socialised losses. I'm not a socialist by any means, but it's a load of bollox. Businesses must be allowed to fail, and if the government feels it needs to step in and prevent collapse, nationalise.

[20000miles]

They should have been, but they weren't. American government did pretty much the same thing as the UK government did with Northern Rock: step in and cover the liabalities, and not take ownership. It reeks of privatised profits and socialised losses. I'm not a socialist by any means, but it's a load of bollox. Businesses must be allowed to fail, and if the government feels it needs to step in and prevent collapse, nationalise.

Freddie and Fannie were just extentions of the government. They operated with special priviliges granted to them by the government. They were very politically connected organisations. They were *always* going to recieve a bailout whenever they needed it. It was implied nationalisation.

The market is screaming out to us that these 2 have done some terrible things and they need to fail. Governments like to ignore this.

It's this that allows banks to act recklessly and still come out on top. Moral hazard, if you will.

[nineteensixtyseven]

They should have been, but they weren't. American government did pretty much the same thing as the UK government did with Northern Rock: step in and cover the liabalities, and not take ownership. It reeks of privatised profits and socialised losses. I'm not a socialist by any means, but it's a load of bollox. Businesses must be allowed to fail, and if the government feels it needs to step in and prevent collapse, nationalise.

They were *always* going to recieve a bailout whenever they needed it. It was implied nationalisation.

Exactly. They were so important they knew the government couldn't let them go down and would cover their backs. Although the two of them are shareholder companies they pay no tax and can borrow from the US Treasury. Because people know that their losses will be socialised they can borrow so cheaply and that's why they control so much of the mortgage market. Pretty crazy system- a private plutocracy guaranteed by public money.

[20000miles]

Exactly. They were so important they knew the government couldn't let them go down and would cover their backs. Although the two of them are shareholder companies they pay no tax and can borrow from the US Treasury. Because people know that their losses will be socialised they can borrow so cheaply and that's why they control so much of the mortgage market. Pretty crazy system- a private plutocracy guaranteed by public money.

I'm pleased I agree with an SDLP supporter