I beleive its just a correction in the financial system. People were able to take loans based on the 'future value' of one's property, aka at around 10% increase in yearly value, this was added to their assets so they could take out a bigger loan. The problem in this credit is the fact that there was no real money or income change, and this credit had no real financial backing. This created a false bubble of real money vs paper-trading, and consumers took loans for better cars etc. because of the valuation of one's property. If you could imagine a break-even point where people consumer so much of their homes value on securities that could not fully be considered liquid-assets, then it becomes more clear as to why this 'correction' in the u.s. housing market (reflecting prices), and the fact that it was perceived value being added to one's income-not real value. I am waiting for a credit-card crunch to happen soon, as these companies are the next in line. There's 2 ways of looking at the market from my perspective:
1: Bottom-up: starting from raw materials (commodity markets), as this is the basis of labor, and production (what one would see in added gnp). If consumers are feeling a pinch, or the green-back is sliding, commodities are bound to rise (though a bubble has emerged because of this race-it should burst in the next 6-12 months). Good companies to hedge against the green-back would be co's like Freedom McMoran (FCX), and Agnico-Eagle Mines (AEM). As emerging markets slow down (biggest consumers right now), the cost-of-production will be too high to sustain growth, and a new correction will be in order.
2: Top-down: This reflects the consumption of end-users. Strong economies will always favor the service/ credit sectors. Though a correction is naturally needed (as Buffet said about the Subprime crisis: Poetic justice), a paper-race with no actual growth will be destined to fall (black monday). Banks will take riskier moves (90's-internet bubble, and until subprime)
*Tid-bits
The stocking of precious metals, not available on the public market due to institutions buying and holding these assets, if people start selling gold, platinum etc. these reserves will go through a major correction-as they are sold buy their holders, and flooded onto the market.
FRE and FNM is being over-reaced by investors recently (as proven by the decrease in wages, yet massive drop in foreclosures recently). So don't take info too seriously unless it can be justified through all information that this company is dependant on-weigh it all in (I shorted fnm and fre on after-hours friday b/c of a too-high gain on irrelevant info).
Cheers.