After discovering the latest omen of the world’s coming demise, the Clog encourages Berkeley students to put down their books and enjoy their short-lived time on earth.

Recession

This Friday was particularly worrisome for the financial world as mortgage firms Fannie Mae and Freddie Mac faced problems on the scale of trillions of dollars. Combined, they manage about half the mortgage debt in the U.S.—that’s five trillion dollars. Allow us to repeat that: $5,000,000,000,000.

But what’s the big deal? Oh, only that they came hair-raisingly close to needing a government bailout or takeover which would—according to the BBC—mean that the taxpayers would take the burden of their mortgages.

Allow us to speculate further in a manner consistent with apocalyptic doomsaying—the only solution would be for someone to buy them with government help, which would mean printing more money, which would cause hyperinflation, which would annihilate the economy anyway.

Luckily, they haven’t been taken over—yet. Shares for both companies rebounded when the chairman of the Senate Banking Committee issued a statement in favor of their strength. But hold on a second … would the government ever say they were going to take over Fannie and Freddie short of actually doing it? That’s what troubles us, this picture is still consistent with a government takeover.

But at least they’re doing better than mortgage lender IndyMac, who was taken over—if having an 80 percent decrease in stock prices (for both Fannie and Freddie) can be considered better.

But if Fannie and Freddie are going down, at least crude oil is going up—Friday saw a spike all the way up to $147 per barrel. At least we Cal students still have public transportation!

And if that wasn’t enough to make anyone glum, the Dow Jones Industrial Average crossed the 11,000 mark—but in the wrong direction. The last time the Dow was this low was two years ago.

So welcome to the future, and the future is 2006.

Image Source: mugley under Creative Commons
Analysis: A new financial crisis at the worst time [Chron]
Fannie and Freddie: A wild ride [CNNMoney]
Q&A: Freddie Mac and Fannie Mae [BBC]
Earlier: McCain Leans to the Left Harder Than Obama



Comments:

No comments yet.