Buy Or Don’t Buy

I can’t wait for shit to hit the fan with this one

Fannie Mae and Freddie Mac are two ridiculously named banks that got wrapped up in the whole subprime mortgage lending crisis. For the past 5 years, banks have been lessening their standards and providing finance for people who wouldn’t have normally qualified for mortgages. Like clockwork, these unqualified loan recipients started defaulting one by one, and the banks were forced to foreclose on their homes.

But wait! Aren’t we in a housing crisis as well? Yes, we are. Houses that were financed within the previous 5 years aren’t worth NEARLY as much in today’s market. So trillions of dollars have just. Well. Disappeared. And no one can collect on the money that’s owed.

The fun part is the ripple effect this will most likely have on the entire banking industry in the months to follow. Banks are shuttering their doors. The Federal Government is stepping in. People are losing their life savings. The FDIC (Federal Deposit Insurance Corporation) will insure personal deposits up to one hundred thousand dollars, but they’re warning people who have more than that squirreled away that they might not see it any time soon.

Why is this a buy? I’m not really sure. Cuz I’m poor and have a monumental case of schadenfreude? That, but I also think this will be a good test of fortitude for our economy. Everyone agrees we are in for some rough roads ahead (think long term, 5 year projection). This is a major pothole. Right now there’s talk that the Federal Government will throw down some of its pretend money to pave that hole over in an attempt to save the banking world as we know it. Personally, I wouldn’t mind going back to the barter system. Can I interest you in a plug for my new blog tradeordonttrade.com?