The big bailout of Fannie Mae and Freddie Mac has been big news this week. But what does it mean to you?
GSEs —> TSEs?
Well, the Government Sponsored Entities just became Taxpayer Sponsored Enterprises. The Treasury "bailed" them out, changed their leadership, and is putting Fan & Fred under the management of the Federal Housing Finance Agency. It's the most radical regime change in global economic and financial affairs in decades, and as economist Nouriel Roubini states "the greatest nationalization in the history of humanity." He now likens the USA to the USSRA, The United Socialist State Republic of America.
For you, the borrower:
This could mean (slightly) lower rates and greater availability of credit. F&F will now have the cash to buy mortgages from other banks and create more mortgage backed securities to sell off to investors. That means those other banks will have the money to create more mortgages—that way there's more money moving about the system. So that's good for a borrower. If you're a current mortgage holder with a fixed rate, however, you'll likely see little change.
For you, the homeowner:
Though home prices will continue to fall, the bailout is a potential sign for future stabilization of prices. That's good for the 1 in 3 mortgage holders whose current mortgage is worth more than his home. Some economists project the market to bottom out as early as the first quarter of 2009; most project early-mid 2010.
For you, the F&F shareholder:
We're not sure yet. Though Treasury Secretary Hank Paulson did make it clear that the TSE's "will no longer be managed with a strategy to maximize common shareholder returns." Sure, change the policy now that U.S. taxpayers are the real shareholders...
For you, the national Federal Debt:
The cost of government intervention has yet to be determined, but it will be huge. Upon takeover, we've already immediately injected F&F's $6 trillion into the national debt. Allegedly, a memo that has been recently circulating among economists at the Federal Reserve projects that Federal debt could reach $23 trillion by mid 2010. (It's currently $9.67 trillion.)
For you, the everyday taxpayer:
Uh oh. As a taxpayer, you'll be footing the bill. The bailout basically means Fannie and Freddie will have an unlimited taxpayer-funded credit line. This doesn't mean our taxes will be increased to bail them out—at least not yet. But it does mean that now our government is further in debt—now indebted to hedge funds, domestic and international banks, foreign central banks, etc. The government already put in $1 billion to F&F, and may put in up to $200B more.
And what if the bailout doesn't work?
If the bailout does not succeed—that is, it doesn't help the housing or credit markets—well then we're in big trouble. If our government can't inject liquidity into the market, guess who can?
Be sure to read more of what Diana learned today here.
Talented as individuals and magnificent as a team, the Marx Brothers conquered every medium from the vaudeville stage to the silver screen. Today, we’re tipping our hats (and tooting our horns) to Groucho, Harpo, Chico, Zeppo, and Gummo—on the 50th anniversary of Groucho's passing.
1. A RUNAWAY MULE INSPIRED THEM TO TAKE A STAB AT COMEDY.
Julius, Milton, and Arthur Marx originally aspired to be professional singers. In 1907, the boys joined a group called “The Three Nightingales.” Managed by their mother, Minnie, the ensemble performed covers of popular songs in theaters all over the country. As Nightingales, the brothers enjoyed some moderate success, but they might never have found their true calling if it weren’t for an unruly equid. During a 1907 gig at the Nacogdoches Opera House in East Texas, someone interrupted the performance by barging in and shouting “Mule’s loose!” Immediately, the crowd raced out to watch the newly-liberated animal. Back inside, Julius seethed. Furious at having lost the spotlight, he skewered his audience upon their return. “The jackass is the finest flower of Tex-ass!” he shouted, among many other ad-libbed jabs. Rather than boo, the patrons roared with laughter. Word of his wit soon spread and demand for these Marx brothers grew.
2. THEY RECEIVED THEIR STAGE NAMES DURING A POKER GAME.
In May of 1914, the five Marxes were playing cards with standup comedian Art Fisher. Inspired by a popular comic strip character known as “Sherlocko the Monk,” he decided that the boys could use some new nicknames. Leonard’s was a no-brainer. Given his girl-crazy, “chick-chasing” lifestyle, Fisher dubbed him “Chicko” (later, this was shortened to “Chico”). Arthur loved playing the harp and thus became “Harpo.” An affinity for soft gumshoes earned Milton the alias “Gummo.” Finally, Julius was both cynical and often seen wearing a “grouch bag”—wherein he’d store small objects like marbles and candy—around his neck. Thus, “Groucho” was born. For the record, nobody knows how Herbert Marx came to be known as “Zeppo.”
3. GROUCHO WORE HIS TRADEMARK GREASEPAINT MUSTACHE BECAUSE HE HATED MORE REALISTIC MODELS.
Michael Ochs Archives/Hulton Archive/Getty Images
Phony, glue-on facial hair can be a pain to remove and reapply, so Groucho would simply paint a ‘stache and some exaggerated eyebrows onto his face. However, the mustache he later rocked as the host of his famous quiz show You Bet Your Life was 100 percent real.
4. HARPO WAS A SELF-TAUGHT HARPIST.
Without any formal training (or the ability to read sheet music), the second-oldest Marx brother developed a unique style that he never stopped improving upon. “Dad really loved playing the harp, and he did it constantly,” his son, Bill Marx, wrote. “Maybe the first multi-tasker ever, he even had a harp in the bathroom so he could play when he sat on the toilet!”
5. THE VERY FIRST MARX BROTHERS MOVIE WAS NEVER RELEASED.
Financed by Groucho, Chico, Harpo, Zeppo, and a handful of other investors, Humor Risk was filmed in 1921. Accounts differ, but most scholars agree that the silent picture—which would have served as the family’s cinematic debut—never saw completion. Despite this, an early screening of the work-in-progress was reportedly held in the Bronx. When Humor Risk failed to impress there, production halted. By Marx Brothers standards, it would’ve been an unusual flick, with Harpo playing a heroic detective opposite a villainous Groucho character.
6. GUMMO AND ZEPPO BECAME TALENT AGENTS.
World War I forced Gummo to quit the stage. Following his return, the veteran decided that performing was no longer for him and instead started a raincoat business. Zeppo—the youngest brother—then assumed Gummo’s role as the troupe’s straight-talking foil. A brilliant businessman, Zeppo eventually break away to found the talent agency Zeppo Marx Inc., which grew into Hollywood’s third-largest, representing superstars like Clark Gable, Lucille Ball, and—of course—the other three Marx Brothers. Gummo, who joined the company in 1935, was charged with handling Groucho, Harpo, and Chico’s needs.
7. CHICO ONCE LAUNCHED A BIG BAND GROUP.
Chico took advantage of an extended break between Marx brothers movies to realize a lifelong dream. A few months before The Big Store hit cinemas in 1941, he co-founded the Chico Marx Orchestra: a swinging jazz band that lasted until July of 1943. Short-lived as the group was, however, it still managed to recruit some amazing talent—including singer/composer Mel Tormé, who would go on to help write the “The Christmas Song (Chestnuts Roasting on an Open Fire)” in 1945.
8. THEY TESTED OUT NEW MATERIAL FOR A NIGHT AT THE OPERA IN FRONT OF LIVE AUDIENCES.
With the script still being drafted, MGM made the inspired choice to let the brothers perform key scenes in such places as Seattle, Salt Lake City, and San Francisco. Once a given joke was made, the Marxes meticulously timed the ensuing laughter, which let them know exactly how much silence to leave after repeating the gag on film. According to Harpo, this had the added benefit of shortening A Night at the Opera’s production period. “We didn’t have to rehearse,” he explained. “[We just] got onto the set and let the cameras roll.”
9. GROUCHO TEMPORARILY HOSTED THE TONIGHT SHOW.
Jack Paar bid the job farewell on March 29, 1962. Months before their star’s departure, NBC offered Paar’s Tonight Show seat to Groucho, who had established himself as a razor-sharp, well-liked host during You Bet Your Life’s 14-year run. Though Marx turned the network down, he later served as a guest host for two weeks while Johnny Carson prepared to take over the gig. When Carson finally made his Tonight Show debut on October 1, it was Groucho who introduced him.
10. SPY MAGAZINE USED A MARX BROTHERS MOVIE TO PRANK U.S. CONGRESSMEN.
Duck Soup takes place in Freedonia, a fictional country over which the eccentric Rufus T. Firefly (Groucho) presides. In 1993, 60 years after the movie’s release, this imaginary nation made headlines by embarrassing some real-life politicians. Staffers from Spy got in touch with around 20 freshmen in the House of Representatives, asking some variation on the question “Do you approve of what we’re doing to stop ethnic cleansing in Freedonia?” A few lawmakers took the bait. Representative Corrine Brown (D-Florida) professed to approve of America’s presence in Freedonia, saying “I think all of those situations are very, very sad, and I just think we need to take action to assist the people.” Across the aisle, Steve Buyer (R-Indiana) concurred. “Yeah,” he said, “it’s a different situation than the Middle East.”
As a recurring feature, our team combs the Web and shares some amazing Amazon deals we’ve turned up. Here’s what caught our eye today, August 19.
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