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G&G Associates
Tax & Financial Consulting Services
e-Newsletter
Fannie-Freddie bailout: "Hold Tight"
* Will the Fannie-Freddie bailout truly save the housing market? Or will it merely drive interest rates sky-high, causing even greater devastation?
* Will it end the credit crunch and breathe new life into consumer spending? Or will higher rates kill consumer demand — the straw that will finally break the stock market’s back?
* Most importantly: How will the bailout impact your stocks...your bonds...your mutual funds and ETFs?
Dear G&G Newsletter Reader,
In the Fannie/Freddie bailout, as in life, there is no such thing as a free lunch. Someone’s going to pay. The only question is, “Who?”
Right off the bat, we know that the U.S. government’s seizure of Fannie and Freddie is already costing their stockholders a fortune. Tens of billions of dollars were wiped out in the blink of an eye this yesterday morning.
Plus, by seizing the two mortgage giants, Treasury secretary Hank Paulson has effectively elevated their bonds to the status of U.S. treasuries — backed by the full faith and credit of the U.S. government (in a nutshell, that means they are worthless).
It’s almost as if Washington suddenly dumped $5 trillion in new treasuries (fiat money) on the global debt market in a single day and this Mt. Everest of new government -guaranteed debt is already driving Treasury prices down...and their interest rates up!
Now, the question is, how will this unprecedented bailout impact the stocks, bonds, mutual funds and ETFs you own, if you own any at all?
- Will it really save the housing market? Is it time to pick up historic bargains in real estate and real estate stocks? Or should you continue avoiding them like the plague?
- What about companies whose survival depends on the souring commercial real estate, sinking credit cards and other defaulting loans that are not getting a penny out of this bailout?
- What’s going to happen to the thousands of banks and other institutions that are loaded with Fannie and Freddie bonds and stocks? Which ones will benefit? Which ones will lose?
- Treasury rates jumped on the bailout news this morning. Will they continue to rise? If so, how will higher Treasury rates impact mortgage defaults and new home borrowing?
- U.S. retailers and manufacturers are ALSO not getting bailed out. What will happen to them?
- Is today’s euphoric stock market action the beginning of a sustainable long-term rally? Or is it just another bear market trap set to cost gullible investors billions more.
My heartfelt advice: If you value the safety of your investments — and especially if you’re looking for a way to keep it growing in this perplexing environment you need to become a paid subscriber to the G&G Investment Society newsletter and I'll show you how to stop the bleeding of your wealth and answer those questions above.
Visit my past newsletters to see some of the strategies you could implement to protect your wealth from depreciating like the dollars in your pocket every day that passes by as the Federal Reserve continues to bail out scrupulous corporation after corporation.
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Thanks
Gary Gray
Tax & Financial Consultant, RFC
G&G Associates
877-817-6031 toll-free
866-361-3872 toll free fax
www.gngassociates.net
"A Prudent man foresees the difficulties ahead and prepares for them; the simpleton goes on blindly and suffers the consequences."
Proverbs 22:3 -- Living Proverbs
LEGAL NOTICE: This work is based on SEC filings, current events, interviews, corporate press releases and what I've learned as a financial consultant. It may contain errors and you shouldn't make any investment decision based solely on what you read here. It's your money and your responsibility. G&G Associates gets paid a commission from a membership purchase at www.publicgold.com/gngpreciousmetals.
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