Crumbling. . . Crumbling

Lot;s of economic news today, all of it horrid.

Bloomberg: Freddie, Fannie too big to fail

July 10 (Bloomberg) — Fannie Mae and Freddie Mac, the largest buyers of U.S. home loans, are too big for the government to let them fail, leading Republican and Democratic lawmakers said.

The government-chartered companies, which own or guarantee about half the $12 trillion of U.S. mortgages, can count on a federal lifeline, said Republican Senator John McCain, of Arizona, and Democratic Senator Charles Schumer, of New York.

The remarks by the presumptive Republican presidential candidate and the head of the congressional Joint Economic Committee followed a slide in the firms’ shares to the lowest level since 1991. They indicate Congress would push the administration to use government funds to prevent the companies from failing and threatening a deeper housing recession.

“They must not fail,” McCain said today during a campaign stop in Belleville, Michigan. Fannie Mae and Freddie Mac “are vital to Americans’ ability to own their own homes,” he said at an earlier stop in the state, one of the worst affected by the surge in foreclosures.

Central banks, pension funds and other investors hold $5.2 trillion in debt sold by the companies.

While bondholders can count on a backstop, equity investors can’t expect the government to halt a tumble in the companies’ shares, Representative Spencer Bachus, the senior Republican on the House Financial Services Committee, said today.

Wonderful. And they said Bear Stearns was too big to fail as well.

This is why I always wonder why right wing “free market” bloggers like Nix Guy and Bizzy Blog never own up to the phony capitalism practiced by the oligarchy in this country.

There is no “free market.” There is no “capitalism.” There is only a moneyed oligarchy that looks out for itself and all the little people can go pound salt. The game is fixed and rigged and anyone with half a brain knows it.

But think of this: how many other ‘giants’ are too big to fail? And ask yourself how long this bankrupt government can continue to bail out failed enterprises that are ‘too big to fail’ before the entire economy collapses?

Breitbart: meanwhile its ‘black friday’ for Freddie and Fannie

Shares of US mortgage finance giants Fannie Mae and Freddie Mac were in a freefall Friday on heightened concerns the trillion-dollar firms may face insolvency or a government takeover. Freddie Mac plunged 47 percent to 4.23 dollars at 1450 GMT following a 22 percent slide on Thursday and Fannie Mae lost 44 percent to 7.40 dollars after a 14 percent drop in the prior session.

The shares of the two firms have lost around 80 percent since the start of the year.

Brietbart: Dow under 11,000 and falling

NEW YORK (AP) - Stocks tumbled Friday as investors focused on troubles at mortgage companies Fannie Mae and Freddie Mac and watched oil prices climb further into record territory. The Dow Jones industrials fell more than 200 points and slid below the 11,000 mark for the first time in two years. Investors seemed unimpressed by a statement from Treasury Secretary Henry Paulson, who said the government’s focus is ensuring that Fannie Mae and Freddie Mac remain as presently constituted to carry out their mission.

The government-chartered companies at times each lost more than 40 percent on growing speculation that a government bailout is needed. A collapse of the two financiers would cause further shock to the financial system, and trigger more losses to banks and brokerages with significant holdings of mortgage-backed securities.

The troubles at Fannie Mae and Freddie Mac are just the latest depressing turn in a year-old credit crisis that shows no sign of ending, disappointing stock traders who just months ago who thought the worst was perhaps over.

Global banks and brokerages have scrambled to sell assets and raise capital in an effort to offset nearly $300 billion of write-downs linked to the credit crisis. Citigroup Inc. announced Friday it will sell its German retail banking operation to France’s Credit Mutuel for $7.7 billion.

Meanwhile, oil continued its ascent on supply concerns. A barrel of oil vaulted to a record above $147, raising more concerns about the impact of higher prices on inflation and in turn, the overall economy.

Oil Soaring Again

Oil prices spiked to a new record above $147 a barrel Friday, as rising hostilities between the West and Iran and the potential for attacks on Nigerian oil facilities gave investors reason to rush back into the energy markets.

Another drop in the U.S. dollar also lured buyers.

The resurgence in crude prices not only raises the concern that $4-a-gallon gasoline is here to stay for U.S. drivers — it also means that heating homes could get significantly more expensive this winter. Heating oil futures surged on the New York Mercantile Exchange to a record of more than $4.15 a gallon, and natural gas also rose.

“If you think your gasoline bills are expensive now, wait till you get your home heating bill this winter,” said Stephen Schork, an analyst and trader in Villanova, Pa.

In my opinion, we’re on the verge of a total collapse.