Plunger Alert

How does a $5 per share mortgage company with $5 billion worth of unsaleable homes raise $10 billion big on a rights issue? Moreover Who For? The answer to the first question is, easy if you have the keys to the money printing press.

Paulson will get power to make unlimited equity purchases in and lend to Fannie Mae and Freddie Mac to prevent a collapse in the firms that account for 70 percent of new U.S. mortgages. The bill also provides for a federal agency to insure up to $300 billion of refinanced mortgages for struggling homeowners. Stocks rallied.

The answer to the second question is China for the most part who holds extreme piles of US mortgage trash (about $400 billion) along with well connected US insiders holding shares of Freddie and Fannie. See a $10 billion distribution at of Freddie at $5 is not just dilutive, it's disastrous, so the solution is to turn on the printing press and ramp up the shares.

As Hong Kong's financial situation is closely tied to that of the United States', the PPT appears not only to have eased the financial situation in the West, but also here.

This seems a far cry from earlier this month when, with the crisis in the US housing market sending shares of Fannie Mae and Freddie Mac tumbling, the PPT was called in.

Paulson, as leader of the team, quickly drafted plans to help them. He sought approval from Congress to extend the Treasury's credit lines for the pair, with the option to buy their shares if necessary.

I sure am glad that someone reminded Paulson to ask congress just to make it look good, aren't you.