Jase

Fannie Mae: 'Business As Usual'

Here's the viewpoint from a Canadian. Not all Canadians, just one. We do things differently up here. I'm not saying our organizations don't make bad mortgage loans from time to time. I am saying that our checks and balances are much more rigourous. As a Canadian, you'll even have put up with the fact that I spelled the previous word with an extra 'u'.

Fannie Mae, even its common stock shareholders, will be fine. I've actually purchased shares of Fannie Mae common stock on Monday. I did so with the assumption that they could go to zero, but the knowledge that they won't.

Fannie Mae common stock will not go to zero.

The reason is this: I'm going to give these shares to my grandchildren someday and I want to accompany the gift with a story. I'm going to tell them that the US went through some tough times back in 2008. But a miraculous thing is going to happen. You're all going to wake up someday soon and re-realize that you live in one of the most incredible places on this planet. You will start fixing your education system and you'll chill out on the carbs and win back your waistlines. You will again find your humility on the world stage. Apologize for your past actions, don't carry the past with you. The past is a burden. You will not assume that those outside the US, irrespective of their race or beliefs, are out to hurt you. They are not. Their just a little upset that they've been douched around. You'd be upset too if someone killed your father. In time, that rage, too, will pass. As things heal slowly, you will begin to find the sense of purpose and the energy to sort out your own affairs. And your internal peace, which is the one thing that you cannot buy, will return. And when the internal peace returns, everything else follows. Including--you guessed it--your housing market, the solutions to your energy supply, and your dignity. This is the story I'm going to tell. When the Roman empire fell, no one sent out a memo. It happened slowly, quietly. Your empire if falling. But as an external observer I offer this: it's not broken beyond reproach. Just get back to your roots baby. Start enjoying yourselves again. Everything else will heal.

As far as I'm concerned, Fannie Mae common stock is the single best numerical representation of the entire US mindset. When it heals, so shall you.

I wonder what would happen if each American bought $500 bucks worth of it? (In addition to the $600 or so worth that your government already purchased for you over the weekend, thankyouverymuch). You could actually begin to fix everything just by doing that. Of course you'd have to punish those that got you into this mess in the first place and ensure that it could not happen again. This problem of yours was foreseeable at the very start. Don't blame Wall Street, they play an exceedingly important role. Hell, Wall Street's processes built half your great nation.

So, I'll check the value of my FNM common stock in five years from now, then again in ten years, then in twenty. I'm betting that you guys are smart enough to get back on track. Please don't let my grandkids down.

Wachovia Downgrades AIG, Oppenheimer Downgrades Wachovia [Housing Tracker]

Downgrades are comical. The recent poster child for this mess, Indymac, is up over 300% in one day of trading. Something's brewing over there, it was bad, but not the doomsday scenario that was propogated in the media. I imagine that they will recover at lightning speed as the FDIC has likely found a buyer. It wouldn't surprise me in the least to see their stock price back above $10 within a year.