Fannie Mae, Freddie Mac and gasoline
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William Harrington
Published: August 14, 2008
I like to watch the markets a bit. Maybe part of a fantasy I have. As if I had millions of dollars to invest, where would I put it. Two institutions are kinda scary — a year ago Fannie Mae was trading at
$70.57 per share, and Freddie Mac was trading at $67.20.
Today, Aug. 12, Fannie Mae closed out at $8.02 per share, down 89 percent from a year ago. Worse yet, Freddie Mac closed at $5.37 per share, down 92 percent from a year ago. That is totally
frightening. The treasury secretary tells us these two companies are sound and the mortgage bonds they issued are sound. It appears that investors feel otherwise.
Gas prices ... well now that’s interesting too, but in a different direction. Back when crude oil peaked at $147 per barrel, I played a math game based on the highest pump price I heard on TV, basically
$4.39 per gallon. This was back in July and technically pump prices were based on July deliveries. I’m not sure of that, so I just played a numbers game. ($4.39/147=2.99 percent). So, where are prices
heading based on the current trading of September contracts? Based on today’s close on the NYMEX, Sweet Crude’s final settle was $113.01 per barrel. ($113.01X.0299= $3.37 per gallon)
Lordy, and I remember when I was younger, raising cain when gas prices went to 50 cents a gallon. Well, just remember, it’s just a game I play, and these figures don’t mean a thing.
WILLIAM HARRINGTON
Woodbridge
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Posted by ( rafaelva ) on August 18, 2008 at 12:15 pm
My question is Why are these stocks still being traded on the Exchange?
Any other company that lost 90+ percent of it’s value would be pulled from the market. Why did an inventment firm in San Francisco make an SEC Filing on August 8th, stating they had purchased 119 million shares? Approximately 10% of the outstanding Fannie Mae shares. Someone is banking on a BIG Bailout if Fanny Mae goes into default. The planned bailout is a bit questionable, do the mortgage securities issued by Fannie Mae and Freddie Mac assume the same security as a Ginnie Mae Security? Will they suddenly be backed by the full faith and credit of the United States?
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Posted by ( Grant Gary Jacobsen ) on August 15, 2008 at 12:52 pm
In 2007, Fannie Mae President Daniel Mudd earned a $2.2 million bonus on top of his $10 million salary.
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