Freddie n Fannie

US Govt. today adopted financial orphan twins Freddie Mac and Fannie Mae. In other words poor taxpayers will have to share their bread with their now half brothers, shareholders of the two firms.

The twins bear their signatures on more than $5.3 trillion of mortgages across USA. Last year together they posted a book loss of usd 14 billion. Not a ghostly figure in relative terms (considering the mammoth aggregate on roll) yet enough to evaporate trust and faith from the markets in realty. Eventually this distrust would have rendered them insolvent .

Think of the sum equal to six Indian economies going down the drain. It would have broken the back bone of the financial system across the world. So grave was(?) the danger.

For the moment, the move by the US govt. is like a shot in the arm for financial world and we may see the euphoric reaction until realty when faced with stark reality.