Fannie Mae Reports $23 Billion First Quarter Loss

Have you been thinking about all those “green shoots” of economic recovery recently touted in the not so free press and on cable TV by self proclaimed experts? Do you believe that a “V” green shoots turn out of recession is underway?

Well, you may want to reexamine the evidence beyond that being carefully managed by the government. Fannie Mae, the largest provider of funding for U.S. home mortgages, reported on Friday that it lost $23.2 billion in the first quarter, sending it to the Treasury for a second time for capital to keep it afloat.

In other words Fannie Mae is insolvent and is on a government sponsored life support system. You have to be dreaming when you think that the housing market is bottoming out when the largest provider of funding for U.S. home mortgages is underwater in a big way.

Americans understandability so just don’t want to believe that the present economic woes are a depression, not a garden variety recession that we can work our way out of withing a couple of years. The United States of American has become the not so united Dream States of Denial.

Unless the US government faces up to the problems and honestly communicates with the America people as to how painful a restructuring of the economy will be a total disaster is going to descend upon the USA like a black plague. Problems that are not recognized and confronted can not be solved. So far the government has been on the dead end path of trying to bring the old debt based consumer economy back.

Not even President Obama and all of the President’s men and women can bring back what is unsustainable and quite dead. New ideas are needed and needed fast. Playing accounting games, like marking bad assets to model instead of to market are not going to be helpful other than to kick the growing problems a bit further down the road.

Fannie Mae is a train wreck that has already happened. We need to stop thinking that there are short term fixes at hand. The odds are high that the next three years will bring a huge amount of pain and suffering to the average American citizen. For those who are already over the economic cliff of foreclosure and excessive debt or anywhere near the edge the future looks to be grim.