[plusone]

I have to admit I really don't understand these two GSE's. But from what I read, I think this might be a bigger scandal than the S&L bailout (read: most massive taxpayer ripoff of the century) of the 1980's. Anything gov't backed is open to massive abuse.

[Orangedog]

If there is going to be a collapse on the scale of the Great Depression, this is one of the likely cadidates to trigger it. With all of the money now in mortgages, refinancing and mortgage backed securities, a failure or even severe weakening in confidence, of these GSE's could set off the thermo-nuclear derivatives bomb that Warren Buffet warned about a few weeks ago. And since the fools in Congress gutted the Glass-Spiegel Act, a lot of banks could be in danger a failure.

Too many similarities with the financial plight of Japan over the last decade. Their stock market fell through the floor, prices in Japan have been deflating for years and their real estate market crashed, putting some of their biggest banks in a position where there was serious talk of letting them fail to get the bad loans off of the books. Their central bank has been able to pull a lot of rabbits out of the hat to keep the whole system from crashing (kinda like what our central bank is doing) but all it seems to have done is prolong the misery. Buying gold would not be a bad idea. At least it won't pull an Enron or Global Crossing and become completely worthless like the stock in those companies has.