Host, I can't even claim an amateur knowledge of the stockmarket, but I think it is relevent to your discussion that Freddie Mac is refusing to further participate in the subprime lending that grew out of the "bubble."
If the surviving group of subprime lenders are no longer able to bundle and resell to Freddie using their "creative" financing, they too will be risking their own solvency. I find that preferable to citizen funded bailouts any day.
This might be a useful link:
FreddieMac
Will the economy be a central issue in 2008? Greenspan assisted in the stock drop this week by predicting a likely recession by the end of this year. His successor is now doing the 'happy happy' tour to settle down the market investors. It's the middle class that has faired poorly over the last several years and I expect economic issues to be in the forefront soon.