Bloomberg tallies that investment banks and commercial banks worldwide have taken $501 billion in credit writedowns since the subprime mortgage debacle began to unfold early in 2007.

The whole mess is is far from over, according to Dan Denning in The Daily Reckoning Australia.

You only have to look at the desperate actions of the Fed. Yesterday, Bernanke & Co. auctioned another $25 billion in loans to the nation’s banks, this time giving them more time to pay the money. This from Dan…

Global banks have written off nearly $500 billion in bad mortgage debt. But it’s not over yet. Not only do you have alt-A and Option ARM loans getting ready to take center stage in the credit crisis, but also falling house prices are…

Banks have so far written off $500 billion in bad debt, thanks to their exposure to the subprime mortgage market.

But now, despite a continuing credit crunch, bank stocks are bouncing back up. Is this a signal that banks have bottomed? Or is there more pain to come in this beaten-down sector?

Andrew Gordon in Investor’s Daily Edge is bearish on the outlook for the sector. He says banks are still running on empty. And with the rate of foreclosures rising in the US, this is no time to buy in. Steer well clear until the economy picks up…

New York University Professor of Economics Nouriel Roubini is extremely bearish on the US economy. And he didn’t just join the cause after the going got tough. Two years ago, he correctly predicted the collapse of the US housing market. So, when a bear like Roubini is bullish on emerging markets, investors should prick up their ears says Taipan Daily editor and fellow emerging-markets bull Justice Litle…

If you think subprime was bad, wait until “prime” hits. The whole mortgage market mess is going to get much, much worse, according to a report in The New York Times.

The paper reports today that although the first wave of subprime mortgage defaults is peaking, a second and far more damaging wave of defaults in building – this time in the alt-A and prime mortgage brackets.

Alt-A mortgages in arrears quadrupled to 12 percent in April from a year earlier. And delinquencies among prime loans, which account for most of the $12 trillion market, doubled to 2.7 percent over the same period.

The housing rescue bill looks like it will pass into law before the November presidential elections. This marks the beginning of the nationalization of American housing. It also means the raising of the US national debt ceiling. But is the bailout justified if it delays or helps avoid an economic day of reckoning?

Yesterday, the wind come out of Wall Street’s sails.

After gaining nearly 670 points in little over a week, the Dow slumped more than 280 points. Financial stocks made up five of the six biggest decliners. Citigroup (C) dropped nearly 10 percent. American International Group (AIG), Bank of America (BAC), American Express (AXP) and JPMorgan Chase (JPM) all fell more than 6 percent.

This comes as little surprise to Taipan Daily editor Justice Litle. He says the latest rally in financial had no substance – except another shorting opportunity when the time is right. Wachovia (WB) is a case in point, says Justice… 

The eurozone is sliding into recession, and the US financial crisis is a major contributor.

In particular, the slide of twin mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) is spooking foreign investors. This is because one in ten US mortgages are essentially held by foreign institutions and governments.

Foreign investors looked on securities in Fannie and Freddie as just as good as US government securities, says Kate Incontrera. So to keep foreign investors in the country Congress has little choice but to back the US Treasury’s Fannie and Freddie bailout plan…

Fannie Mae (FNM) and Freddie Mac (FRE) are about to go bankrupt, says 12% Letter editor Tom Dyson.

The bottom line is they are both over leveraged. Waaay over leveraged. They bought $1.7 trillion in assets using only $70 billion of investors’ money. To wipe out investors, mortgage values only have to decline by 1.4 percent. And this has already happened. 

Tom says the best way to protect your portfolio from the fallout of a failing Fannie and Freddie is to invest in high-dividend stocks…

Is it rumour mongering to suggest that GSE’s Fannie Mae (FNM) and Freddie Mac (FRE) could default?

If it is, Fed chief Ben Bernanke seems to be listening… carefully. Bernanke said nationalizing Fannie and Freddie is among a number of long-term options.

It depends on who you ask, says Dan Denning in The Daily Reckoning Australia. The SEC has moved to shut down short selling of Fannie and Freddie stock because of such rumors. But there’s a lot more than rumor weighing on U.S. financials these days…

Since the free market didn’t turn out so well, now it’s time for ‘adult supervision,’ says Bill Bonner in The Daily Reckoning.

When Fannie Mae (FNM) and Freddie Mac (FRE) had the wind at their backs they were considered part of the ‘free enterprise’ sector. Their CEOs received pay hikes as the companies laid the groundwork for their own undoing.

Now the mortgage firms’ fortunes have changed the American taxpayer discovers that these were ‘government sponsored enterprises’ all along. They were part of America’s welfare system. And now they’re getting the dig out they always knew would be forthcoming…