if only it was fanny may, the chicago based confectionery

The first website I see whenever I go online is the New York Times. I'm a big fan of newspapers - when my parents were married, I only remember them being consistently happy together is when they shared coffee and the Sunday paper, trading different sections as necessary. I think it's pretty important to stay informed in this day and age. I mean, if John McCain becomes president, Roe v. Wade could potentially become OVERTURNED, and it probably wouldn't be that hard. Like the difficulty of appointing a conservative justice to the Supreme Court to is analogous to making a twelfth birthday collage card for your friend's sleepover party. (I know I'm fucked up because A number 1: I just spelled "twelfth" as "tweltvh", and A number 2: I'm attempting to make a serious statement about politics.)
I feel like Sarah Palin is both part moose and also has no fucking clue what she's doing. She is possibly getting her all of her political information from the teacher edition of my seventh grade social studies book.

There are a lot of benefits to having the New York Times as your homepage. A lot of the headlining stories have hilarious accompanying pictures: Like this one:


(This was around the Iowa caucuses, and candidates were hitting up the state fairs.)

Also this one is pretty good too:


(This was in India. Something is definitely up with these monkeys but I can't remember what was happening exactly.)

The New York Times uses html codes to its advantage when there's BREAKING NEWS that's IMPORTANT. The headlining font is like 2.5 times larger than usual, and there's there's opinion pieces under it and usually there's a relatively inspiring picture and caption to top it all off. Tonight, the magnified headline says: "President Issues Warning to Americans" - 'Entire Economy Is in Trouble', He Says.

“Our entire economy is in danger,” he said.

This is the first time in Bush's presidency that he's delivered a speech addressed to the nation focusing exclusively on the fucked up economy.

Ok.

Both the Federal National Mortgage Association (aka Fannie Mae) and the Federal Home Mortgage Corporation (aka Freddie Mac) used to provide loans and loan guarantees and had trillions of dollars in the secondary mortgage market (aka they purchased home mortgages from the original lending banks). They were privately owned by stock shareholders, but were government sponsored enterprises, which means they received credit lines from the US Treasury. They would group mortgages into bonds and sell them to interested investors, which made it easier for banks to distribute loans since these two mortgage giants were taking the risks of loan defaulting or missed payments.

Fannie Mae and Freddie Mac were more or less the politically-empowered HBICs in their market, since they got special treatment from the government. They had pretty low funding costs for their borrowers, but let's remember that this is because they had something like $3 trillion of DEBT AND GUARANTEES backed by the US GOVERNMENT. This means that if they were unable to pay their shit, American taxpayers had to take the fall for it. Yeah. Theoretically.

Last year, both the housing and credit industries started to Epic Fail. Housing prices started to drop and foreclosures (meaning people who had mortgages and couldn't pay their debt had to auction their shit and property to pay it off - think when you're playing Monopoly and all of a sudden, your Utility purchases don't seem that wise when you have to flip that property card over so you can pay off that hotel on Park Place that you just landed on) were up almost 80% from 2006.

Fannie Mae and Freddie Mac NEEDED TO BE RESCUED BY THE FEDERAL GOVERNMENT, because they didn't have the money to cover any losses by all the loans and guarantees they were giving out. For better or for worse, the United States America bought a mortgage company. If the federal government hadn't come in, Freddie and Fannie would've absolutely murder the US housing market. Both of their stocks dropped hardcore. Smaller banks that were involved with Fannie Mae and Freddie Mac will probably fail.

How did this subprime mortgage crisis come about?

Because too many people made flawed borrowing mistakes (they thought the housing market would keep going up the way it was back when Clinty was Prez and took out loans they couldn't afford - the ones who didn't give in to foreclosures decided to default on their loans and had higher interest rates).

There was too much speculation in real estate (i.e. homes bought for investment/vacation purposes and not intended as primary residences - in 2005, nearly 85% of Miami condos were purchased for the purpose of re-selling them) and when housing prices started to drop, speculators dipped the fuck out - there was no profit left there.

A lot of banks lent money out to high-risk borrowers through adjustment-rate mortgages, where the homeowner only pays the interest rate on their loan, not the principal. "Ninja loans" - giving out money to individuals with no income, no job, and no assets - were happening more and more.

The US Federal Reserve (the institution that is supposed to stabilize our currency) lowered interest rates on high-priced houses because five years ago, inflation was low and contributed to the housing bubble, which is currently bursting all over the place along with credit and private investment funds. Housing prices were rising and rising and all of a sudden - they're so effing high compared to incomes that the homeowner is now paying a higher mortgage than their house is worth.

What needs to happen to fix this financial crisis (yes, it is a CRISIS. THIS IS THE WORST BLOW TO OUR ECONOMY SINCE THE GREAT DEPRESSION) is complete deleveraging, - financial institutions have to unwind their way out of this gigantic debt.

Banks and credit unions need to figure out the value of their distressed assets/pay off their debts/rebuild their capital. And this is not going to happen anytime soon, because first of all, hardly anyone is willing to purchase new assets, secondly, trying to sell these assets will lower shares, which makes it harder to increase capital.

Who's gonna pay off this shit?
The government?
Bondholders?
Stockholders?
TAXPAYERS.

Taxpayers might face a $300 billion bill to revive Fannie Mae and Freddie Mac. If we don't end up paying the debt of these failing companies, dollar devaluation will continue to go up.

Our economy is absolutely FUCKED right now.