miércoles, 10 de septiembre de 2008

The Freddie & Fannie takeover, or on how to clothe the naked king… again

On Sunday, before on Monday the Asian markets were pronouncing his judgment, american government decided to rescue the two mortgage giants, Fannie Mae and Freddie Mac, “investing” some plumbers’ $200 billions. And they're the 'world's plumbers', I would add, since bucks’re printed in the States but stockpiled worldwide.

For sure, that not solve the problem of rising foreclosures and falling house prices, but maybe can add some slowdown to the final landslide.

With a weaky dollar and rising prices of commodities, a huge amount of money flooded the emerging markets during the first six months of 2008. However, and due to a bunch of reasons, emerging markets’re plummeting nowadays.

Those reasons can be named as “geopolitical worries” in Russia, “fears of a bubble” in China, “overgrowt” in Hungary, “political turmoil” in Ukraine and Pakistan, “rising inflation” in Viet Nam, “muckraking” in Argentina, and so on. All those markets plummeted from 46 to 60% from then on, and emerging market sovereign bond yield spreads have risen to 330 basis points over Treasuries.

But, wait a minute… where they’re heading for? To the States. And as in an argentinian motto for a former presidential campaign, I can tell you “Follow me, I’m not going to screw you!”.

Yes. They’re “quality flying” right to the wolf’s mouth. Few months ago, to say Baring, Bear Stearns, Lehman Bros., Mac, Mae, Washington Mutual, Merryll Lynch, AIG, and etc. were “blue chip” equivalents. And what now? Either they’re selling most of its prized asset or they’re being rescued right from their ashes by the representatives of the world’s plumbers. World keynesianism. All to be charged "democratically" on them. How much the chinese golden card will support to be charged that way?

If capitalism was a religion, I would say that his followers ate up already their own bishops and now they go for the cardinals. When the Pope? Are the own capitalism's foundations who are rattling.

In 2001, an oil barrel was costing U$S 20-25. Today it costs U$S 114-140. In 2001, gold was costing U$S 150; today it costs U$S 800. And similar remarks can be drawn from the 23 remaining staple products of the S&P Index. That is to say, more than 550%. Does anybody believe seriously that the American inflation is 3-4%/yr? I repeat: SERIOUSLY? Or will it be that to say 'the king is naked' would uncover the hell's doors?

Either the world pundits lost their compass and should be fired right now, or they need to visit a psychotherapist in a hurry, or simply they´re trying to screw us through an hand oiled, blind-eyed, and/or a well spin-doctored press.