Fannie and Freddie own or guarantee $5 trillion of debt - 5 times more than India's GDP

HBJ Capital feels that in the near terms, Crude, Gold & all other commodity will rise and effect of this can be seen in global equity markets. US govt. is seriously thinking of ways to save "Fannie and Freddie" which are top to mortagage loan provider in US accounts for more than 50% US mortagage market.

We would suggest all the Indian traders to BUY NIFTY PUT OPTION ONLY, those who are willing to invest for long term can wait for another 5-10% or more fall in the market.

News 2 Use:-

• The federal government, which in March rescued investment bank Bear Stearns to avert a collapse that threatened global financial markets, now faces a similar dilemma at Fannie and Freddie, which own or guarantee almost half the nation's mortgages.

• White House and congressional officials have reportedly been mulling a government takeover of the two agencies, a move that would likely wipe out stockholders' investments but pay off creditors at taxpayer expense.

• Fannie and Freddie own or guarantee $5 trillion of debt. By buying loans, they free up resources for lenders to make more loans. But with $11 billion in losses this year and shrinking values in real estate assets, some fear Fannie and Freddie may be running out of money to pay investors, reimburse lenders on bad loans and keep buying loans. "To not make the payment would risk chaos in the financial system, with a whole cascading of defaults and bankruptcies and disruptions that would have an even bigger cost in the community".

• If there is no bailout, the crisis could snowball, affecting pension and mutual funds; creating layoffs as businesses fail to get financing or have to pay higher rates to borrow; and increasing already escalating prices for gas and other commodities. The real estate market, an economic engine that is embroiled in an extended slump, could stall even more as more house hunters have trouble getting loans.

• If the government doesn't step in, the two agencies might fail. But if it does, the government would be sending the message that investors don't have to be careful about risks because they'll be rescued, White said.

• The government is weighing its options. "Today our primary focus is supporting Fannie Mae and Freddie Mac in their current form as they carry out their important mission," federal Treasury Secretary Henry M. Paulson Jr. said Friday.

- HBJ Capital Team.

• Longua owns a significant amount of Fannie and Freddie preferred stock. "I'm either going to get badly hurt or I'm going to get wiped out," he said. "There's nothing I can do about it now."