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Anatomy of a Housing Crisis

By: Sol Palha “Freddie and Fannie certainly had a large role to play in the housing crisis and many may claim that they were the main contributors of the housing crisis which eventually resulted in a market meltdown.

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Anatomy of a Housing Crisis

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By: Sol Palha

“Freddie and Fannie certainly had a large role to play in the housing crisis and many may claim that they were the main contributors of the housing crisis which eventually resulted in a market meltdown.

Before we proceed, let’s get some background info on these two chaps.” Palha takes a look at the two government-sponsored entities and weighs in on their involvement in the housing crisis. In conclusion, he finds that individuals were to blame as well; they wanted to have their cake and eat it too; they thought they could take part in the housing market without taking on any risk.

Unfortunately, however, if something appears too good to be true, it usually is. Meanwhile the US government is bent on pouring good money after bad with respect to these two completely useless companies, while finding it easy to turn down individuals that really need a helping hand. To make matters worse, it creates money out of thin air to pay for Fannie and Freddie, thereby further devaluing the dollar and indirectly imposing a silent tax on the population - inflation. Taxpayers have pumped more than $125 billion into the failed firms, and are on the hook for much more. Treasury Secretary Tim Geithner has said they will do everything necessary to ensure these institutions have the capital they need to meet their commitments. Geithner acknowledged that taxpayers are likely to face “very substantial” losses on the government's takeover of Fannie and Freddie. The best way to protect against inflation is with hard assets – things that cannot be mass produced and are in finite supply. The easiest way to protect against the harmful effects of inflation is by purchasing gold and silver bullion.