What Does the Freddie/Fannie Bailout Mean to You?

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.

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Netflix's Most-Binged Shows of 2017, Ranked

Netflix might know your TV habits better than you do. Recently, the entertainment company's normally tight-lipped number-crunchers looked at user data collected between November 1, 2016 and November 1, 2017 to see which series people were powering through and which ones they were digesting more slowly. By analyzing members’ average daily viewing habits, they were able to determine which programs were more likely to be “binged” (or watched for more than two hours per day) and which were more often “savored” (or watched for less than two hours per day) by viewers.

They found that the highest number of Netflix bingers glutted themselves on the true crime parody American Vandal, followed by the Brazilian sci-fi series 3%, and the drama-mystery 13 Reasons Why. Other shows that had viewers glued to the couch in 2017 included Anne with an E, the Canadian series based on L. M. Montgomery's 1908 novel Anne of Green Gables, and the live-action Archie comics-inspired Riverdale.

In contrast, TV shows that viewers enjoyed more slowly included the Emmy-winning drama The Crown, followed by Big Mouth, Neo Yokio, A Series of Unfortunate Events, GLOW, Friends from College, and Ozark.

There's a dark side to this data, though: While the company isn't around to judge your sweatpants and the chip crumbs stuck to your couch, Netflix is privy to even your most embarrassing viewing habits. The company recently used this info to publicly call out a small group of users who turned their binges into full-fledged benders:

Oh, and if you're the one person in Antarctica binging Shameless, the streaming giant just outed you, too.

Netflix broke down their full findings in the infographic below and, Big Brother vibes aside, the data is pretty fascinating. It even includes survey data on which shows prompted viewers to “Netflix cheat” on their significant others and which shows were enjoyed by the entire family.

Netflix infographic "The Year in Bingeing"


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