Comments for Timer Digest as of Wednesday, September 3, 2008
Fari Hamzei
Reading that FNM & FRE have approximately $223 Billion of debt maturing in September. Warren Buffet, in an interview back on August 22nd, called it as he saw it: "[They] don't have any net worth...the game is over..."
Barron's valued them recently at approximately negative $50 Bils each.
And, yesterday, Fitch Ratings slashed its debt ratings for preferred stock of Fannie Mae and Freddie Mac's from "A" to "BBB-," the lowest investment grade rating.
Balance these with a comment from a former advisor to China's Central Bank (holding some $376 Billion in US GSE debt):
“If the US Government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic. If it is not the end of the world, it is the end of the current international financial system.”
-- Stay SHORT Broad Indices and Financials, this could get very ugly very fast....
