We'll Always Have Beijing...Or Maybe Not

Foreign markets across Europe and Asia Pacific jumped when the US government took over Fannie and Freddie. The head of equities at a UK-based firm told the FT, "The rally could last a month or two at least, now that the capital position of of a large part of the US mortgage market is backed by the government."

Meanwhile, about eight months ago, Moody's, the agency that issues sovereign nation bond ratings (what, didn't you know that national governments have bond ratings? They're like a national credit score, right now the US has the best possible) said that if bureaucrats keep spending willy-nilly, they're going to have to reassess our rating in 10 years. (China's debt rating, meanwhile, is on the up and up)

A downgrade, of course, means more declines in the value of the dollar, and a possible dumping of US national debt by foreign central banks. This would be disastrous for the United States, but we would have no one but ourselves to blame.

Meanwhile, all those English financial types now reassured about the government backing of Fannie-Freddie will no longer have as much to be reassured about.