Suppose you had a negative net worth of $19 billion- Could you make it?

There were very interesting truths revealed in the July 30th edition of MoneyMorning in an article written by Shah Gilani entitled, "Why Ben Bernanke's 'Exit Strategy' Could Lead to a Decade-Long Downturn."

Basically the article was about the fact that unless the FED in their exit strategy to unwind these bailouts and stimulus packages, include Fannie Mae and Freddie Mac in them the recent gains in the market will be reversed. And they are not in the plans.

That means the US taxpayer is on the hook for over $5trillion of GSE debt. According to the 2008 Congressional Research Report on the Fannie Mae and Freddie Mac Conservatorship, " the US Treasury has put in place a set of financing agreements to insure that GSE's continue to meet their obligations to holders of bonds that they have issued or guaranteed."

Fannie Mae and Freddie Mac have become huge fiscal and monetary policy levers and are indispensable. They act as a sponge. The only hope the US government has for wholesale purchase of new mortgage pools and in stimulating and accelerating the velocity of mortgage money is these two monsters. They are levers.

The problem is they are both broke as in DEAD. The US government is their "life support." Fannie and Freddie both draw on the US government to function. Fannie Mae lost $23billion in the first quarter, their 7th straight quarterly loss. They have a negative net worth of $19billion. Freddie Mac lost $9.9billion in the first quarter.
They pay a 10% dividend on all money drawn down from the government pool and now totals $51.7billion. That means they pay interest every year of $5.2billion which is more than they earned in 9 of the last 10 years.

Taxpayers are being tricked into believing the mortgage market is recovering and that money will be flowing when the time comes that they want to buy another house again. Alright, Fannie and Freddie are not making it now. Can you imagine what will happen if interest rates were to suddenly spike? Then it will be MEGA BAILOUT TIME.

"Unless the government weens itself off its own tainted tonic and makes a concerted effort to create a financially viable private sector mortgage organization and investment outlet- the US stock market will remain weak for decades" so states the author.

Based on what is going on in the stock market now, and after reading these FACTS, it makes you wonder who is in charge of the storehouse doesn't it? What is going on?
What do you think?