Fannie Mae and Freddie Mac. The twin towers of 2008.

On September 11th 2001 I was sitting in an office at Wells Fargo in San Francisco. It was 5:20am PDT and I was trying to figure out why every news site I was trying to connect to was simply not coming up. Every other site was working just fine. Since I was one of the IT staff I figured we have some kind of weird proxy problem. I had exactly 2 hours to fix this problem before I started getting actual trouble tickets on it. For the next few hours I was sequestered in the third floor server room.

After many fruitless attempts to connect to various news sites, I finally pulled up a single image from msnbc.com. What showed on my screen was a large jetliner flying into a skyscraper. It dawned on me that there wasn’t a problem with the Wells Fargo connection to the internet. Something crazy was going down.

I headed back to my desk on the fifth floor. I did not notice at the time but thinking back the building was all but vacant. The usual assortment of coworkers that should be at there desks were nowhere to be found. In fact my boss was even AWOL.

In the distance I could hear the sounds of a television set. Everybody in the department was crowed around a tiny 12 inch screen. The United States was under attack.

Watching the World Trade Center come down in fiery rubble was one of the most disturbing things that I have ever witnessed. Before that it was the Space Shuttle Challenger exploding on live TV while I was sitting in a classroom still half asleep.

I have known that Fannie Mae and Freddie Mac were in trouble for some time. Everybody that has been watching the financial markets knew it. To some extent it overshadowed some of the other things happening on the world stage. The troubles with Russia seem like so much saber rattling rather than anything like a serious challenge at the moment.
Today when I saw that Fannie Mae and Freddie Mac had been seized I realized that in some sense the events of today echoed those of 2001. The planes have just flown into the towers. The world is holding its breath.

I honestly do not know what the next few days and weeks are going to bring. The Feds are trying to ease fears but commodities like gold have shot up over $15 in the last 12 hours. (Gold is seen as a hedge against inflation). We might see a short term rally in the markets on Monday. We might also see a complete collapse of our financial system. Think October 1929. Good luck trying to buy anything with gold if there is a complete financial collapse.

For a long term investment my money is on ammunition and vegetable seed. The best hedge against anything for the next few months is going to come in a can will still edible in a few years.

David