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Monday, August 25, 2008

Fannie and Freddie Failure, China Says, "BOHICA!"

Freddie, Fannie Failure Could Be World `Catastrophe,' Yu Says: "A failure of U.S. mortgage finance companies Fannie Mae and Freddie Mac could be a catastrophe for the global financial system, said Yu Yongding, a former adviser to China's central bank.

"If the U.S. government allows Fannie and Freddie to fail and international investors are not compensated adequately, the consequences will be catastrophic,'' Yu said in e-mailed answers to questions yesterday. "If it is not the end of the world, it is the end of the current international financial system.""

The Chinese are getting a little feisty as their losses continue to mount.

"China's $376 billion of long-term U.S. agency debt is mostly in Fannie and Freddie assets, according to James McCormack, head of Asian sovereign ratings at Fitch Ratings Ltd. in Hong Kong. The Chinese government probably holds the bulk of that amount, according to McCormack."

Well, sitting on a $376 billion time bomb just ticking away would make just about anybody more than a little nervous.

I bet Hank Paulson and Ben Bernanke are staring at a Chinese dictionary surprised to be translating certain choice curse words and threats...

""The seriousness of such failures could be beyond the stretch of people's imagination,'' said Yu, a professor at the Institute of World Economics & Politics at the Chinese Academy of Social Sciences in Beijing. He didn't explain why he held that view."

I know why he held that view. You see, that is the view of the Chinese government, and the command came from up high to make crystal clear that the powers that be would not tolerate any loses...

Translation: China says BOHICA* U.S. taxapayers!

*Bend Over Here It Comes Again

13 comments:

John said...

Hey, you don't need to translate BOHICA. Common knowledge.

Don't you guess that this fellow was responding to something?

I.e. something like, "Look, my good Communist friends, you're going to take a haircut here, because there's only a certain amount of crap the American citizen will take before General Ripper dusts off the code for Plan R."

I think they have discovered over in Olympic-land that they are living in interesting times.

All that slave labor gone to waste. What a pity.

Perplexo said...

hey John it's just like the friendly letters sent out by Credit card cos. to remind people to pay promptly.
Threatening your creditors will not do the USA any good at all. nor will nuclear suicide...and it isn't China that will suffer...as their people are more used to living on nothing...

Anonymous said...

... would you like a "Little Red Book" with those fries?

A Proletariat

Anonymous said...

Like Perplexo said....

The US will have to set up a "Payment Plan" to China.....

What collateral will we use?...the Grand Canyon, NYC, Niagra Falls, Mt. Rushmore.

I can only imagine what the US will have to give up to pay off its debts.

Ben Bittrolff said...

EconomPic has a great chart for this post...

United States Balance Sheet / Dependence of Foreign Capital

Anonymous said...

I for one didn't know BOHICA. Thanks for edumacating me Ben.

James said...

all I have to say to the chinese is thats what you get for manipulating your currency. In true stupid communist fashion they think they can manipulate there way to prosperity. stupid

Anonymous said...

Hey, US taxpayers elected their politicians and then ran out to buy overpriced boxes called houses with Chinese cash in hand. Nobody likes to pay, but they have to. There is no free lunch.

dougiefreshhh said...

Ben:

SKF and DUG are looking 'insulated' and 'irrational' and aren't showing the real big logical swings like they did 3 months ago.

What field you playing on these days?...SKF and DUG are getting a bit long in the tooth, no?

Ben Bittrolff said...

dougiefreshhh,

Post pending on SKF, DUG and SMN.

dougiefreshhh said...

10-4 Ben. Thx.

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