Jim Rogers Hates Fannie-Freddie Rescue
Jim Rogers isn’t happy with the Fannie Mae and Freddie Mac rescue plan:
“I don’t know where these guys get the audacity to take our money, taxpayer money, and buy stock in Fannie Mae,'’ Rogers, 65, said in an interview from Singapore. “So we’re going to bail out everybody else in the world. And it ruins the Federal Reserve’s balance sheet and it makes the dollar more vulnerable and it increases inflation.'’
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“These companies were going to go bankrupt if they hadn’t stepped in to do something, and they should’ve gone bankrupt with all of the mistakes they’ve made,'’ Rogers said. “What’s going to happen when you Band-Aid and put some Band-Aids on it for another year or two or three? What’s going to happen three years from now when the situation’s much, much, much worse?'’
But what would happen to the housing market if Fannie and Freddie went bankrupt? They’re financing a huge portion of the mortgages out there. This situation is much like the Fed rescuing Bear Stearns. Letting these firms go bankrupt would freeze financial markets making things worse. Want to see a housing market in even worse shape? Shut off the ability of even credit-worthy people from getting mortgages. We’re no where near a situation where we can be intellectually pure. A lot of bad policy has lead to this situation, and thing will get messy getting us out of it.
On the debt markets Freddie Mac’s sale of $3 billion in short term debt indicates institutions had some faith in the Treasury’s rescue plan.
“Fannie Plan a `Disaster’ to Rogers; Goldman Says Sell”
