I need to make this short so I can get it out quickly.  We have no time to lose.  In about 2003 I started to notice a drumbeat building among the talking heads on financial oriented cable news networks like CNBC and CNN.  Stock analysts would come on one after the other and forecast a huge housing bubble and insist that it was about to burst at any second.  For about two years there was no burst but the drumbeat got louder and louder.  Stock analyst after stock analyst would come on the screen and beat the drum. 

I am not going to pretend that the drumbeat actually caused the housing correction we are now in.  A correction almost always follows a long period of expansion in any market.  I am absolutely convinced however that this concerted campaign by the financial “talking heads” served to build a sense of anxiety and greatly amplify the inevitable correction. They continue to do something similar with the subprime loan problems, to the point where they are now feeding off each other and  jeopardizing the fundamental strength of our national economy. 

I admit this is old news. Cable News will certainly deny any role in the situation we find ourselves in. There is really nothing we can do to change what happened anyway.  The only reason I bring it up is that they are doing it again.

Over the past several days I have observed a string of “financial experts” beating the drum and predicting the seemingly inevitable failure of Fannie Mae and Freddie Mac.  We can’t let them do it again!

Look, I don’t know what possible motivation they had for campaigning for the destruction of the housing market.  Perhaps they watched as capital flowed out of the stock market into real estate when the last stock market bubble occurred.  Perhaps they felt the capital would flee real estate and flow back into stocks.   I don’t know but I am sure they did not expect their hype to cause so many brokerage houses to go down with the housing market.  They can’t be very happy with the way this has turned out for them either.

I wonder if they understand the ramifications of talking Fannie Mae and Freddie out of business.  Fannie and Freddie, and FHA are just about the only game in town right now for all loans up to about $700,000 in this country.  The analysts that I heard this morning seemed to suggest that in spite of encouraging words from management it was only a matter of time before they failed.  They went on to suggest that it was not fair to tax payers to have to provide assistance.  This leads me to believe the “financial experts” believe it would be cheaper for us to simply kill them off. 

Once again I don’t think they would be very happy with the outcome that they are campaigning for.   Without Fannie, Freddie, and FHA, the ability to finance a home purchase in this country would be pretty close to zilch.  FHA can’t handle the load alone. 

In order for an asset to have value it must be able to be bought and sold.  Without the ability to finance the purchase of your home, along with all the others, your home would have little value.   If Fannie and Freddie were to be allowed to fail, the results will be painful whether you own a home or not.

The effect of the media campaign is already being felt.  FNMA and FHLMC stock has traded sharply lower in eight of the nine trading sessions as the drum beat gets louder.  They need your help before it’s too late.  

·          First, I need you to spread the word to everyone you know.  Particularly if you are involved in the housing industry in some way, forward this information to everyone who cares about housing.

·          Contact your elected officials and the media.

·          If you are involved in the housing industry in any way, I strongly suggest that you show your support for Fannie and Freddie and buy stock.  Buy as much as you can afford.  Consider it an investment in our livelihood.

 

This country simply can’t afford to let the talking heads kill Fannie and Freddie.  Hey thanks for listening.