Felix Salmon does the heavy lifting. Here’s one tidbit from Felix’s interpretation:
We can’t afford for Fannie and Freddie to go bust, and we’re
Republicans, so there’s no way we’re going to nationalize them. And no
one could conceivably afford to buy them. Which leaves only one option:
somehow maintaining the status quo. Which is not going to be easy,
seeing as how their trillions of dollars in assets are imploding daily
in the biggest US housing crunch since the Great Depression.
Mark Thoma offers more links. James Hamilton likes the plan; I am not sure why though it is easy enough to see that many of the alternatives are worse. Paul Krugman says the share price collapse of the mortgage agencies may not be such a big deal. You also could read through the hundreds of comments at calculatedrisk.blogspot.com; they give a good sense of what people are thinking. Angry Bear wants to punish the CEOs.
The worst case scenario is that the market regards Paulson’s statement as cheap talk and ups the ante sometime this week. I’ve yet to figure out what the best case scenario looks like.
Addendum: Here is an early MR post on Fannie Mae, read this one too.
Second addemdum: Arnold Kling makes many interesting points. Read Sebastian Mallaby too, who calls for "Nationalize — and then dismantle." Here is my earlier post on the N Word.