OK, so the Fed is planning to buy obligations of the GSEs — as well as securities guaranteed by the GSEs. This is in an effort to lower spreads. The Fed will in effect pay for these purchases by having the Treasury issue U.S. government debt.OK, This is really simple.
But the GSEs have been nationalized. Their obligations are already U.S. government debt. What’s going on here?
[ cf The Fed is confusing me ]
As long as the Bush Administration never actually asserts that the Nationalization of the GSE's has occurred, then it is not like the Bush Administration ever believed that they had Nationalized the GSE, and as such, the GSE's clearly were not nationalized on the Bush Administration's Watch.
Thus, the markets twitter and worry, that this may be symptomatic that the Bush administration is really planning to default on all of the debt. A reality point that may also help explain why folks are moving back out of US Treasuries, since, the President may want to go out in a blaze of glory by defaulting on US Treasuries.
As such the Fed needs to be issuing more US Government Debt, to cover the position, ans show that the Fed is not bogged down in any of the failed Realism of the pre-911 culture, and that it is willing to do what ever it can to saddle the incoming administration with as much debt as can be reconfigurated, just like back in the hey days of the ending of the various dictatorships around the world, where the incoming democratic regimes were sattled with the need for more "structural adjustments" by the World Bank and the IMF...
This way, not only will there be a greater demand for the end to Gay Marriage as a reason for More capital gains tax cuts, but a clear and compelling military reason for more capital gains tax cuts to support the troops winning against the Gay Marriages....
And, yes, those who get to have a Dubya Pardon will be able to reposition their remaining assets in nations with very effective protection against persecution....
You see, is all really very simple.
It's about the need for a war WINNING capital gains tax cuts to protect us from Gay Marriages.