The problem right now is that the Bush administration remains, understandably, reluctant to saddle US taxpayers with the US$5tn liability represented by Fannie and Freddie. Yet continuing to pretend that there is not a fundamental problem of solvency is serving only to damage further the fast diminishing credibility of Federal Reserve governor Ben Bernanke and US Treasury Secretary Hank Paulson. This is clear from the renewed weakness in the dollar and the renewed surge in the price of oil. The latter market action is further evidence, if it is needed, that oil is trading as a non-dollar proxy. It is clearly possible that the administration may be able to come up with some fudge which allows Fannie and Freddie to continue to function in their present anomalous status for another few months until the November presidential election. But GREED & fear would not bet on it. The housing market is deteriorating too fast as is clear from Fannie and Freddie's rising delinquencies……