At long last, Federal Reserve Bank chairman Ben Bernanke has something positive to say about the financial and economic situation: Fannie Mae and Freddie Mac won't go belly-up. We can all breathe a collective sigh of relief, now that the housing mortgage market is safe.
Or, no, wait. What happened is that the Federal Reserve Bank, which is not part of the Federal Government, but sets fiscal policy for the entire country, has gotten a promise of more bailout money (that is, tax dollars from you and me) to shore up the very troubled $5 trillion in mortgage holdings owned by Fannie and Freddie - which in turn are independent corporations established by the government to guarantee home loans.
It's like the FDIC, which insures bank deposits in case of bank failings. If FDIC doesn't have sufficient funds to guarantee that magical $100,000 per depositer in a failed bank, the federal government will pretty much have to pony up the needed scratch, because, if they don't, the whole system could collapse (in principle; I'm not suggesting that this is imminent, because, as Phil Gramm has noted, we wouldn't want to become a nation of whiners. That's just like us ungrateful peasants. Housing market collapses, jobs evaporating, inflation booming, energy costs soaring, and we complain about the government not stepping in sooner. What do we expect, anyway? The government has been telling us all along that there's no danger of recession and that the fundamentals of our economy are all strong. Now that they aren't, we have the nerve to start whining. "Waaah! I don't have a job! Waaah! They foreclosed on my over-priced only-chance house and now I live in a tin can! Waaah! Waaah!" Suck it up, America! Go back to work, or, if you don't have a job, go get one. If there isn't one, go back to school to get re-trained. If you can't afford college, get a student loan. Borrow your way out of debt and bankruptcy. It's the American way!).
Saying Fannie Mae and Freddie Mac aren't going to fail anytime soon is like saying the defense department is reasonably assured that they'll get funded next year.
Still, it's the first piece of good economic news we've had in a while, so let's celebrate. I'm thinking of taking out a loan, myself, as nothing more than an expression of my economic and political self-determination. Wooo!