I have not even begun to list the numbers of things that the CMO's are used for collateral to fund. They also support the CDO's which number in the trillions of dollars, the building projects, the payroll loans and short term financing as well as lines of credit your employer may have.
This is not all wall street, and to be more to the point, it would not matter if it were, because it all will affect you directly in a very short time if not fended off now.
“Much of the 700B, and it may be more, will go to banks all over the country and globally who bought Fanny Mae securities in good faith,or CMO’s based on mortgages and because of severe write downs, are now unable to loan money to anyone.”
And? These individuals invested in financial instruments. There is always a risk of default with any security, including those issued by quasi-governmental agencies. Why should I and everyone else who pays taxes indemnify their poor investments?
“I have not even begun to list the numbers of things that the CMO’s are used for collateral to fund.”
Again. Why should I and other taxpayers fund the liquidity that the market temporarily will not? And let’s be clear. Liquidity hasn’t taken a permanent holiday regardless of whether the government intervenes. The banks and brokerages have a lot of trash securities on their books. Eventually they’ll need to be valued at what they’re really worth. This fraud being perpetuated on the taxpayers is simply a scheme to push those devalued assets onto the taxpayer at a higher price than they would ever garner on the market.
The threat that the banks and brokerages are using is that they’ll go out of business. So what? There’ll be someone to purchase the assets that are actually worth something. And perhaps those who take over will be more conservative in their investment strategy. In the mean time there will be a very painful correction. Perhaps even a panic. But it will correct itself.