Good intentions cannot overturn the laws of physics.

How Worthless Can They Be?

By Ross Kaminsky on 6.16.10 @ 11:46AM

Fannie Mae (FNM) and Freddie Mac (FRE), the unholy devourers of taxpayer money in service of liberals' utopian visions of letting people with low incomes own homes they can't afford, are to be delisted from the New York Stock Exchange because of stock prices trading under $1 per share for more than 30 trading days. This despite the fact that the two have swallowed more than $145 billion of taxpayer money with expectations for further losses ranging from $160 billion to $1 trillion more, according to a must-read Bloomberg News article.

Both stocks fell a further 40% on Wednesday morning in response to the news.

At 55 cents per share, the market capitalization of Fannie Mae (based only on outstanding common stock) is just barely over $600 million. At 67 cents per share, Freddie Mac's common shares are worth about $435 million However, those numbers massively overstate the value of the firms: as the WSJ notes, the combined equity of these firms is estimated to be "negative $146.9 billion." If they weren't on the heart-lung machine that is the American taxpayer, the plug would have been pulled long ago.

Since the beginning of 2008, investors who owned stock in FNM and FRE have suffered combined losses of about $60 billion, despite the companies sucking more than twice that amount from the federal Treasury, which is to say from all of us. If you start counting just six months earlier, in mid-2007, the losses are over $100 billion.

There has perhaps never been a more expensive demonstration of the horrendous unintended consequences of do-gooder Progressivism and a pursuit of "social justice" combined with a Republican Party without the backbone to do anything about the march to bankruptcy for fear of being called "mean." (my emphasis)