Here is a sneak peek at some links from my weekly weekend reading column over at TheStreet.com:

• Magazines report dwindling ad-page numbers (Advertising Age)
• Ratings in structured finance: what went wrong and what can be done to address shortcomings? (BIS)
• IndyMac messed up: Turned down buyout only eight days before being seized by FDIC (New York Post)
• If the market thinks it will happen, it likely will (Reuters)
• The U.S. is practicing capitalism lite in the housing debacle (Bloomberg.com)
• Ex- Intel Chair Andy Grove on our electric future (The American)

Interesting EIA chart showing how commercial jet fuel consumption has responded to price changes over the last decade.

Will the pre-9/11 peak every be reached again? Hard not to think that may have marked the top.

So much for the rumored $15b Treasury infusion into Fannie Mae and Freddie Mac. That is one message you could take from a story on the WSJ front page right now, essentially saying that later today Treasury will instead make a "statement of facts designed to reassure markets".

What is Treasury Secretary Henry Paulson, a lapsed Vulcan? He thinks logic and carefully-reasoned argument are just what the market has been waiting for. While I applaud his optimism, the market's response to reason will be anything but predictable.

The FT has more, with Paulson, NY Fed head Tim Geithner, and Fed chair Bernanke  having met over the weekend to come up with a firm U.S. government stance in advance of Asian markets opening Monday. Trouble is, according to the FT, the situation remains "fluid", and while some sort of agreement has been reached, it could all change before the day is done.

According to the NYT, the Bush administration is going to announce shortly that it is taking to Congress a multi-billion dollar deal to shore up failing mortgage financing firms Freddie Mac and Fannie Mae. The key points are allegedly the following:

• A two-year deal to buy an unspecified amount of stock in Fannie/Freddie. I'm assuming this is some sort of dilutive preferred stock structure.
• Greater Freddie/Fannie access to Treasury, in particular by expanding their $2.25-billion credit lines. So much for the "arm's length" protestations.
• More Freddie/Fannie oversight for the Fed, including a role setting how much capital the two must hold.

The proposal is to be announced shortlyhas now been announced, and the Administration wants Congress to take it up immediately as part of the current housing bailout package.

So, is it enough? It depends on what you mean by "enough". It will let the market know that the U.S. government is going to let Fannie/Freddie fail, but the market knew that already. Or at least it should have. Beyond that it's awfully hard to say, because markets will mostly read in this what they want to: Bulls will see the U.S. backstopping things, and bears will say the last plank just fell out of the U.S. economy and Dow 8,000 is straight ahead.

These are tough times, folks, and we're headed to a whole new place that has never been explored.

[via NYT]

FannieMae CEO Daniel Mudd is already out with a statement on the U.S. government bailout proposal. I'm particularly fond of the part where Mudd thanks Treasury for bailing him out, but then goes on to insist he doesn't need to be bailed out:

Statement by Daniel H. Mudd, President and CEO

Last update: 6:13 p.m. EDT July 13, 2008
WASHINGTON, July 13, 2008 /PRNewswire-FirstCall via COMTEX/ -- Fannie Mae appreciates today's announcements and the expressions of support for the GSEs as shareholder-owned companies that play a critical role in the U.S. housing finance system. We are grateful for the leadership of Secretary Paulson and Chairman Bernanke. We look forward to working with Treasury, OFHEO and Congress on swift passage of the new legislative proposals, as well as the important initiatives underway to assist homeowners and help restore stability to the housing market. We continue to hold more than adequate capital reserves and maintain access to liquidity from the capital markets. Given the market turmoil, having options to access provisional sources of liquidity if needed will help to strengthen overall confidence in the market. We will continue to do our part to provide liquidity, stability and affordability to the housing market now and in the future.

And while I'm citing releases, there is nothing yet out from Treasury on its site -- Paulson's likely out for dinner with Goldman buddies -- but the Federal Reserve has its statement out too telling Fannie/Freddie to start feeding at the discount window:

For immediate release

The Board of Governors of the Federal Reserve System announced Sunday that it has granted the Federal Reserve Bank of New York the authority to lend to Fannie Mae and Freddie Mac should such lending prove necessary.  Any lending would be at the primary credit rate and collateralized by U.S. government and federal agency securities.  This authorization is intended to supplement the Treasury's existing lending authority and to help ensure the ability of Fannie Mae and Freddie Mac to promote the availability of home mortgage credit during a period of stress in financial markets.

**************************

Just because it's really bugging me, I'll just say this once to get it off my chest: What a fucking travesty that in the world's most supposedly free capital market this toxic government-sponsored duopoly exists. I wish I felt like I would live enough to read history books where people laughed at the absurdity.

Before I forget and get into other things, here is the Treasury statement on Fannie/Freddie:

Treasury Secretary Henry M. Paulson, Jr. issued the following statement:

Fannie Mae and Freddie Mac play a central role in our housing finance system and must continue to do so in their current form as shareholder-owned companies. Their support for the housing market is particularly important as we work through the current housing correction.

GSE debt is held by financial institutions around the world. Its continued strength is important to maintaining confidence and stability in our financial system and our financial markets. Therefore we must take steps to address the current situation as we move to a stronger regulatory structure.

In recent days, I have consulted with the Federal Reserve, OFHEO, the SEC, Congressional leaders of both parties and with the two companies to develop a three-part plan for immediate action. The President has asked me to work with Congress to act on this plan immediately.

First, as a liquidity backstop, the plan includes a temporary increase in the line of credit the GSEs have with Treasury. Treasury would determine the terms and conditions for accessing the line of credit and the amount to be drawn.

Second, to ensure the GSEs have access to sufficient capital to continue to serve their mission, the plan includes temporary authority for Treasury to purchase equity in either of the two GSEs if needed.

Use of either the line of credit or the equity investment would carry terms and conditions necessary to protect the taxpayer.

Third, to protect the financial system from systemic risk going forward, the plan strengthens the GSE regulatory reform legislation currently moving through Congress by giving the Federal Reserve a consultative role in the new GSE regulator’s process for setting capital requirements and other prudential standards.

I look forward to working closely with the Congressional leaders to enact this legislation as soon as possible, as one complete package.

And for those of you who can't bear to read the whole thing, here is the tag cloud version (where larger/bolder denotes importance):

Lots of U.S. residents undoubtedly spent the weekend, post the IndyBank takeover by the FDIC, checking to see if their desposits are FDIC-insured. The upshot: You are, of course, so long as you are with an FDIC-insured bank, and so long as your deposits are less than $100,000 (or $250,000 if it's a retirement account).

Here is the interesting thing. How many people have over $100,000 in their bank savings account? In other words, how many people, despite being at FDIC insured institutions, do not have full account coverage? The U.S. has a $6.881-trillion on deposit with banks, but only $4.241-trillion is insured. In the case of IndyMac something like $1-billion deposits was uninsured.

Here is a graph showing same from the WSJ:

[via WSJ]