I knew the debt level of Fannie Mae and Freddie Mac was high but I didn’t realize it was that high. Fannie and Freddie both sit on $5 trillion dollars of debt, with about $979 billion of that debt owned foreign countries, especially Asian countries. You better believe that the US Government is going to bail these two enterprises out, and fast.

A failure of these two enterprises would be the beginning of a global depression and spell doom for the US Dollar and our superpower status. Of course the bag holders for this bail out will be the American Taxpayer who’s under a lot of financial pressure right now.

“At the end of the day, the holders of agency debt are significantly in overseas hands and foreign central banks. They had to do this because confidence could weaken further, and that would be very, very bad for the dollar,” she [Sharada Selvanathan] said. [via Washington Post]

So its best to stay short the USD, be long Gold, Oil, and currencies. I can’t believe I’m saying this but I might go long the loony.