The government’s bailout of mortgage giants Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) has Wall Street on a roll. After yesterday’s rally, US stock futures are pointing up again today.

For legendary investor Jim Rogers, however, the government’s intervention is “socialism for the rich.”

One big issue is the Treasury Department’s agreement to make secured loans to the companies if needed and even buy some mortgage-backed securities itself.

On Friday, news that Bank of China has significantly reduced its exposure of Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) spooked investors and triggered a drop in Fannie and Freddie shares.

It’s only the latest in a long series of bad news stories concerning the stricken giants.

However, Andrew Gordon says preferred shares in Fannie and Freddie still represent some of the best value to be had in the market right now.

Last week, analysts got all excited about a possible “bottom” in the US housing.

This was thanks, believe it or not, to last Tuesday’s Standard & Poor’s/Case-Shiller report. Despite showing that home prices dropped a record 15.4% during the second quarter, it revealed that the rate of single-family home price declines slowed from May to June.

“Once again, real estate market watchers have pounced on a shred of seemingly positive news to proclaim that the long sought ‘bottom’ is in sight,” says Peter Schiff. “The routine is becoming extremely stale, but somehow the media never seems to tire of it.”

Yesterday’s existing-home sales news was mixed.

Existing-home sales were up 3.1% in July. But the sales rate was still 13.2% below a year ago. Meanwhile, inventories spiked 3.9% from last month to a record 4.67 million homes for sale at the end of July – 11.2 months of supply at the current prices.

The sector’s drubbing could be a great opportunity for value investors. But Ian Davis in The Growth Stock Wire advises investors to hold off on bottom fishing for homebuilders…

“The U.S. banking system is in trouble,” wrote John Maudlin last Friday.

Maudlin said the problem goes far beyond GSEs Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE). He also predicted that “we will have to deal with the aftermath of a rather large number of bank failures over the next year, which is likely to overwhelm the ability of the FDIC to insure your bank deposits.”

Later that day, Reuters reported that small Kansas bank Columbian Bank and Trust Company had become the ninth U.S. bank to fail this year as the weakening economy and falling home prices take thei toll on financial institutions…

The Era of Peak Greed is over. The Era of Caution is upon us. The Rude Awakening’s editorial director Eric Fry, says the credit crisis has taught investors important lessons. Like how to avoid excessive risk. This is why Eric advises readers to stay away from bottom fishing in the financial sector. There’s too much complexity. Sell risk, buy caution. Sell complexity, buy simplicity, says Eric…

It’s worth repeating: “The U.S. is not out of the woods.”

These are the words of Harvard professor and former IMF chief Kenneth Rogoff, who warned investors this week that “the worst is to come” in the credit crisis. Rogoff predicted a “whoppper” of a bank is going to go under, probably one of the toxic twins, Fannie Mae (NYSE:FNM) or Freddie Mac (NYSE:FRE).

Bryon King in Penny Sleuth says we are witnessing a “tectonic shift” in national economic policy. The Bush administration has massively expanded government’s role in finance. It will have disastrous consequences for the dollar…

The prospect of a federal recapitalization of Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE) hangs over their stock and the whole market today, says Randall Forsyth today in Barron’s.

Bill Bonner says the Fannie and Freddie means investors can expect more a lot more “funny money” in the US.

Dan Denning in The Daily Reckoning Australia agrees with Bill. Dan says the dollar is about to meet its monetary destiny as the Fed pulls more money out of thin air to monetise the US government’s debts…

Freddie Mac (NYSE:FRE) and Fannie Mae (NYSE:FNM) didn’t behave any worse than other banks, says Andrew Gordon in Investor’s Daily Edge. But they didn’t behave any better either. They succumbed to the same greed and grab for big money that the private-sector gave into, while ignoring the risks. They don’t deserve to be saved, says Andrew…

Everyone has an opinion about the mortgage meltdown in America.

The punching bags are usually Greenspan, Bernanke, Bush or any other numbskull whose butt is parked in a seat of power.

But the one culprit that has gone unnoticed so far is the advertising machine on Madison Avenue.

Now, an article in today’s New York Times reveals the real candy man of the mortgage industry.