Seeing as how the nationalization-in-everything-but-name of the GSEs has been covered elsewhere on the blog, it won’t be here.

That being said, the response of the international markets, rising dollar and oil prices falling despite a hurricane pointed at the gulf, appear to be positive.

It comes from the fact that while shareholders will get F$#@ed, the foreign national banks and sovereign wealth funds which bought Fannie and Freddie paper are getting bailed out.

It also looks like the monoliner bond insurers are winners here too, at least that’s how their stocks reacted to the news.

This does not mean that the housing crisis is over, or even that it has bottomed out, which is why foreclosures hit a record high in Q2.

Additionally with the official unemployment rate spiking to a 5 year high, the rest of the economy sucks wet farts from dead pigeons too.

What’s more, as Krugman notes that the U6 numbers are positively grim.

The common reported number is U3, while U6 is:

Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons, as a percent of all civilian labor force plus all marginally attached workers

And U6 is higher than it was in the worst part of the 2001 recession:

It’s not just banking, real estate, or employment though; Paul Volker is saying that the current financial system, which relies on complex securitization, as opposed to conventional loans is very broken.

The best proof of this is that the bank of China is suffering a liquidity crisis, because its investments are illiquid.