Mild Recession? Another DUH moment from higher education. I read that with the government take-over of Fannie Mae and Freddie Mac the national debt will double. Anther bail-out for the fat cats.
As for blame, the dimmos and repug presidents of late are guilty as hell. No leadership and pandering to the big money contributors caused this. With out regulation the free-for-all is taking it's toll. Enron was the sneeze with the foreboding of the flu about to hit.
The next president, McCain or Obama, will not be capable of adequately handling of this coming disaster.

Not to mention, Fannie Mae/Freddie Mac is rife with Enron-like accounting practices and scandal -- to the tune of $40 billion. Run and staffed by a myriad of ex-Clinton administration members.

Funny how the media pretty much buried that story. It's much more fun to blame Bush for hay fever and bad coffee.

Actually, it was Lyndon B. Johnson who began the privatization of Fannie Mae and Freddie Mac so as to get some of the debt off the federal government's books at the time. LBJ was actually a democrat. The past two administrations have both been asleep at the wheel with regard to these institutions, as the former was asleep with regard to domestic energy supply another big problem currently. Former Fed chief Greenspan warned of the Fannie and Freddie Mac overextended debt situations way back in the 90s even. Of course, Greenspan is kind of a goof too. At the height of the housing boom back in 2005, for instance, he's telling people to take advantage of adjustable rate mortgages versus conventional 30 year mortgages.

Well guess were headed towards more socialism for awhile until we get tired of that. Ying and Yang.

It would be interesting if this managed to double the national debt as the national debt was already on track to nearly double during Bush's term. Quadrupling an already high national debt in that period would be quite an achievement.

A few years ago I believe about twenty percent of federal revenue was spent on servicing the national debt. How long can it be before the government defaults?

Is it time to start converting investments to gold, or just go straight to stockpiling food?

One thing you repugs don't like to remember is that the old jelly bean from California was the great deregulator and less government proclaimer.
He was the great commentator as he spun the wool over the eyes of public.

Its greed that got us and we been had!

If you are looking for the culprit try the bathroom mirror as odds are you will find one there.

It's actually not that bad. If Fannie and Freddie go under, the government just creates another government agency and uses that entity to provide loans.

"another government agency"

Fannie and Freddie are privately held companies not government agencies. Google GSE and read up a bit.

"the government just creates another government agency and uses that entity to provide loans."

Where does all this money come from? Taking on FNM and FREs debt will double total government debt to 11 trillion dollars.

Fannie and Freddie are privately held companies not government agencies.

As is obvious from the day's headlines, that's not really true.

Fannie and Freddie are privately held companies not government agencies. Google GSE and read up a bit.

True. But initially they were government agencies. The U.S. only let the GSE's go public a couple years after creating them.

My guess is the government is willing to let them go bankrupt, wiping out shareholders, and then it will provide them just enough liquidity for them to continue buying "safe" loans. But they won't provide enough money for the GSE's to actually make any type of profit.

I'm guessing it will end up costing taxpayers a couple hundred billion dollars. Which, you know, is what, a couple weeks in Iraq?

"But they won't provide enough money for the GSE's to actually make any type of profit."

Money from the window at 2% being leveraged up 10x to lend at 5% won't make money?

"I'm guessing it will end up costing taxpayers a couple hundred billion dollars."

China and Russia are FNM and FREs largest creditors. Are they going to continue to take a bath in agencies and treasuries? At some point its game over (for living beyond our means).

Got euros?

Brad DeLong's take on fannie and freddie:

http://delong.typepad.com/sdj/2008/07/every-time-i-tr.html

Money from the window at 2% being leveraged up 10x to lend at 5% won't make money?

I don't think they actually got access to the Discount window. I think that was just a rumor, the Fed floated to see how the market would respond. And the Euro promptly shot through the roof. So I'm betting it doesn't happen.

At some point its game over (for living beyond our means).

Agred. But I think this is a good thing.

So, for the moment it's 15 Billion.

http://calculatedrisk.blogspot.com/

But yeah, that number is likely to grow.

The Brad Delong link was the most accurate description of the current "crisis" that I've read. Clearly, Freddie and Fannie have benefitted from their implicit association with the U.S. Treasury without any direct outlay of taxpayer funds(even the cost's of their regulator, OFHEO is charged to the GSE's).

And Fannie and Freddie have paid billions in federal taxes since becoming public stock companies, in addition to being the go to "affordable housing" piggy bank for billions of dollars worth of Congressional mandates.

If the implicit guarantee is going to survive, this crisis of confidence needs a more explicit "backstop" to butress investor confidence during America's mortgage meltdown. Without that, the likelihood of true nationalization is much more likely (Paulson's "squirtgun vs. bazooka analogy is correct, if less than artfully drawn).

The CalculatedRisk author offered this observation (which I agree with):

The irony of the "subprime" situation, it seems to me, is that we probably all would have been better off if the GSEs had gotten into it in a big way. If the GSEs had been able to create a market in "vanilla" subprime--fixed rates, no prepayment penalties, careful documentation requirements, competitive pricing--and forced their seller/servicers into a "subprime box," the subprime loan market would have been a lot better off. The "pseudo-Maes and Macs" have never really been very good at providing the kind of market discipline within their purview that the real Mae and Mac have. But we wanted "innovation" and "choice" and "flexibility," not domesticated subprime and "alt" financing with low margins, uniform loan terms, and front and side airbags.