– The government’s bailout of Fannie Mae (NYSE:FRE) and Freddie Mac (NYSE:FNM) may be bad news for American taxpayers, but Wall Street is feeling the love. The Wall Street Journal reports that US markets look set to extend the previous day’s gains on the rescue. Dow and S&P 500 futures are up.

– Fannie and Freddie shareholders, of course, are royally screwed. This from Addison Wiggan and Ian Mathias at The 5 Min. Forecast: “Sorry, but if you were crazy enough own these “businesses,” you deserve it. We give a particular pat on the back to “smartest guys in the room” like Bill Miller, Rich Pzena, David Dreman and Marty Whitman. These famous fund geniuses bought tens of millions of Fannie and Freddie shares this year on behalf of their loyal.”

– Fannie and Freddie bondholders can breathe easy, however. The Treasury isn’t stupid enough to piss off foreign investors like China and Russia. Eric Roseman has been recommending following PIMCO boss Bill Gross and buying Fannie and Freddie debt.

– Andrew Gordon in Early to Rise says Andrew Gorden says not everyone comitted the gross mistakes made by Fannie and Freddie top brass. Andrew says Wells Fargo (NYSE:WFC) chief John Stumpf refused to follow Wells’ rivals in selling subprime loans and their derivatives. As he puts it, “It is more difficult to attend a party and leave before the trouble starts than not to attend the party at all.”

– Crude oil prices are down on news that hurricane Ike is unlikely to strick the Gulf of Mexico. According to AP, “Light, sweet crude for October delivery dropped $1.92 to $104.42 in electronic trading on the New York Mercantile Exchange by afternoon in Dubai.” This means oil is below the $106 support level. Last weeek, Global Commodities Alert editor Kevin Kerr wrote: “We may see more evidence of the impact of [Hurricane] Gustav in next week’s data, but overall we see strong support at $106 in the oil and it’s likely we will see prices rally once we get to that level.”

– The dollar is also down. This from MarketWatch: “The dollar traded mostly lower Tuesday as investors took profits following a sharp rally in response to the U.S. government’s massive bailout of Fannie Mae and Freddie Mac, strategists said.”

– All the fun and games on Wall Street isn’t doing much for gold prices. The yellow metal is flirting with a nine-month low at around $800.

– Gold bug Bill Bonner says this makes gold a bargain and a much safer bet than US bonds.

– Al Robinson at The Daily Reckoning Australia agrees. He says the gold sell-off is irrational and won’t last much longer.

– Barack Obama’s stock is feeling left out. The smart money has been rushing into his rival John McCain since the Republican nominee unvieled 1950s hockey mom Sarah Palin as his running mate. Irish futures trading outfit Intrade shows investors now favor an Obama win by a slim marin of 52.4 to 47.9.

– This is bad news for US gas prices, says Andy Carpenter at Investor’s Daily Edge.

But, doesn’t US foreign policy – that will continue under McCain… and in a year or two under Palin – make a strong case that the US is trying to isolate itself from the rest of the oil-producing world?

The US will get little or no oil or gas from Russia. None from Iran. There’s a chance it could get some from Iraq, but turn your back on that mess for a second and fugetaboutit!

On top of that, Saudi Arabia needs to manage its reserves to make them last. And, finally, McCain/Palin won’t kiss OPEC darling Hugo Chavez’s butt, so don’t count on much more than a dribble from Venezuela.

 Andy says only Obama can save America from a future of petro isolation.