Financial Institution Nationalizations About To Start In Earnest – Wall Street Underground

By Nick Guarino | July 11, 2008

Its been a shocking week with two key events occurring (besides the Stock Markets continuing wipe out that most people have not even noticed.

The first was the revelation by a former governor of the Federal Reserve, confirming what we been telling you all along, that Freddie Mac and Fannie Mae the nations largest mortgage bankers ARE BROKE AND ABOUT TO BE NATIONALIZED. One half of all mortgages in America are issued by and or guaranteed by these dead broke entities. They hold 5 trillion dollars in dicey mortgage paper with more and more mortgages defaulting by the day eating their capital. They need an emergency 100 billion dollar infusion in capital. Now here is a dirty little secret that they are not telling you about. With leverage they are tied to over 250 trillion dollars in derivatives that are wiping out as we speak.

The second is the powers of the formerly independent Federal Reserve have been vastly expanded from the keeper of the money supply and controller of interest rates to the super funds charged with nationalizing the Americas biggest financial institutions that in their sole discretion they deem are to big to fail. In essence it now official the concept of financial institutions that are to big to fail has been enshrined as the guiding principle in this derivatives wipe out. We a a nation no longer believe in or allow to function the free enterprise system where you roll the dice and take your chances. Where you win if you right and lose if you are wrong. That now only applies to the little guy. But for the likes of Lehman Brothers. Citigroup, Freddie Mac and Fannie Mae to name a few no matter how bad you screw up the US government will bail you out through the Federal Reserve.

By removing risk and failure from the financial system we remove the mechanism that disciplines the entire economy. By creating these super institutions that are to big to fail we now risk the entire financial system. We have for years warned you about the derivatives time bomb house of cards and the mountain of debt they created that would never be paid back. And we warned you that they would eventually get around to making these golden boys of Wall Street loses your loses. Its now official as you will see the nationalizations will occur faster and faster and they will eventually freeze your money and see to it your wealth becomes their wealth and their losses become your losses.

The next phase of the nationalizations have begun with the coming take over by the Fed Reserve of the nations largest mortgage institutions by the newly empowered no longer independent highly politicized Federal Reserve who in their sole discretion will decide who will be allowed to fail and who will be bailed out. And most important of all who will foot the bill. And as usual the share holders will get nothing and the tax payers will end up paying the bills. And the account holders will get the royal screwing as their funds are tied up until the institution is deemed solvent again. Please make no mistake about it this is the START of the mega nationalizations and money seizures through the mechanism of freezing of accounts.

You got to know two things to survive this, the first is what they will do and the second is you got to know what you will do.

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