The Heat is On: Fannie Mae (FNM) and Freddie Mac (FRE)

Lost in this month long Kool Aid rally off the July 15 lows is the danger that is Freddie Mac (FRE) and Fannie Mae (FNM). Just a month ago we had one of those emergency Sunday evening announcements that now comes every quarter as we reward risk taking institutions with our tax dollars [Jul 13: And Here We Go]. When things go well, they keep the gains and CEOs laugh to the bank. When things go bad, we cannot let any major institution fail - hi Bear Stearns (BSC). This is one time when the inability to short is really going to cost us - while one could argue Bear was a surprise in how quickly it happened this one has looked increasingly obvious for 4-5 months - I think a 100% gain is very probable in Freddie Mac as I oppose Bill Miller on this trade and say it goes to $0. [Aug 13: Bill Miller Continues to Boggle Me - Increasing Stake in Freddie Mac] What has be...