Fed News Friday: Fannie Mae and Freddie Mac Spend $640,000 to Send Employees to a Fancy ConferenceDecember 9th, 2011
This country is in a time where the majority of Americans can not take a vacation, not because they are completely devastated financially (although it’s getting close), but because their leaders are taking their financial futures to the casino. No longer can Americans put there whole-hearted trust in things like 401K’s and government pension plans because from what they’ve been reading, there might not be anything for them to partake in when the time comes to settle into their retirement rocking chairs. Before the massive bailout plans of the past five years, workers could put money into investments, even into a savings account with little fear of losing their life savings, statistics now show this wasn’t and will not be the case. Now with things like quantitative easing, Operation Twist, and global economic fury, inflation is moving faster than interest rates and a new business is on the brink of bankruptcy every day. People are saving in fear. In fear of a day where they might not only have to scratch their family vacation, but dinner off the table.
This is the reality we live in. However, there’s an another level of reality where people get to travel luxuriously, rent private jets, eat exquisite food. They are supplied with funds to do so from our “stay-cation” Americans mentioned above. The complexity of how it all can happen and has happened is garbled into 1,000-page pieces of legislation and Federal Reserve reports that are, in fact, available to the public. The massive bailouts that kept huge entities like CitiBank, Sallie Mae, GE, Freddie Mac and Fannie Mae, as well as Harley Davidson afloat have also allowed them to partake in the finer things in life while the rest of the people slave away for an ever-inflating dollar.
The well-known story of Freddie Mac and Fannie Mae takes me back to a time when bailouts were a newly devised plan (although many can say that these ideas are anything but new, if you research the EU’s banking history as well as Ayn Rand’s prophetic writing in the 50′s). Government found out in 2007, regardless of predictions and claims prior, that the economic comfort known to Americans was at stake. Businesses were uncovering problems that could never be handled themselves unless they decided to close their doors. They needed the government to step in and help them weather the storm.
Freddie Mac and Fannie Mae, although two different companies, faced a multibillion dollar loss after the housing bubble burst. This caused paranoia as investors and government officials worried of a ripple effect throughout the entire economy. I’ll let my man Peter Schiff guide you through what happened regarding the housing bubble. Riding the coat tails of this delusion that their loss must be socialized for the greater good of the country, the government and the Federal Reserve Bank put together a bail out plan to “save” Freddie Mac and Fannie Mae. This was only the beginning to a long, drawn out love affair. An elastic currency in bed with a failing, unethical business.
Five years later and where is this “Government Sponsored Enterprise”? Well this Fall they sent 100 employees to a “lavish” mortgage conference in Chicago that totaled up to $640,000. Mind you this news broke after just hearing that the top 10 executives of the companies have received almost $50 million in bonuses. Now that the information is public, no arrests have been made, no one has been fired, all the while Rod Blagojevich is sentenced to 14 years in prison because they caught what he was saying in a wiretap. No I’m not suggesting his crimes were less, just mentioning corruption taken care of in one situation, but not another.
The two companies have outstanding mortgaged-backed securities equaling $3.4 trillion, and their debts arrive at $1.6 trillion. The government has agreed to pour more than $200 billion in credit to the company. When I say credit I mean they talked to the Federal Reserve, and the Fed agreed to print it up out of nowhere, indirectly taxing the American people’s wages while also charging interest. If you do the math correctly $50,640,000 of that $200,000,000,000 went straight to luxuries that whom is was taken from can not afford. So here’s this week’s lesson from the Federal Reserve and their partner in crime – the Federal Government. Take a failing business, save them, pump large amounts of money into their accounts to keep them from going bankrupt, watch as unethical spending occurs on the tax-payer’s watch, and do nothing.
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