right, wrong or indifferent, looks like fnm and fre are on a collision course toward full-scale nationalization. removing the portfolio caps on the day fnm reports a big loss probably makes no sense unless these companies can count on endless - literally - sources of capital. without fresh capital, and lots of it, fnm and fre can't otherwise buy more mortgages.
even if one embraces the nationalization theory however, it hardly clears a path toward clearer trading. so, i'm buying 2 year leap calls. many don't like the idea of this pending nationalization, but i think it's a matter of accepting reality; of accepting the world we live in - imperfect as it is. now we don't know the timing of it, although the pace is accelerating; and we also don't know the form the government takeover will take, which will likely shape some violent reactive moves to the news.
longer term however, the hyperinflation thesis is getting stronger by the day: when borrowers stopped borrowing, the government borrowed for them (the stimulus package); when fnm/fre can't raise capital, the government will borrow for them and shove the capital down their throats. our "leaders" have seen one deflationary depression this century and they are not likely to allow a second one; "inflation will take care of itself over the next several years" is as close as we are ever going to hear a fedhead say that the keepers of our fiat dollars will literally hand them out for free if necessary. apparently big ben's quip about dropping dollars from helicopters was not as much a joke as people thought.