Readers suggested a topic on recent developments. "Perhaps we could recap and discuss this historic week. How did we get from 'it’s largely contained' to 'global infusions of liquidity?'"

One said, "If Fannie Mae and Freddie Mac do raise the cap on mortgage portfolios what are some potential resulting scnearios? After all the public could scream loud enough that Congress could force the hand of the 'piper.' There is no easy exit from this mess."

A reply, "And there shouldn’t be… It’s time to pay the piper but our financial engineers are burning the midnight oil trying to come up with a painless exit. However they really have few options, raising the mortgage cap is only putting a band-aid on a bullet wound."

A skeptic, "I believe that it’s all talk from Congress and the presidential candidates. They know it can’t be done. Imagine the field day that the alternative media will have with Fannie and Freddies reporting record. They are a mess already."

"Bailing out FBs will effectively shut a much larger number of people out of the market due to propped up prices bolstered by undeserved interest rates for FBs according to some of the proposals I’ve seen proposed on CNBC." "Can you imagine people who have defaulted on their mortgages being given a 1% interest rate even if it’s just an extended teaser period? They are still stuck with a house no one will buy at these prices."

And another, "I still contend that at least in Cali, Fannie and Freddy can not come in and save the day, even with raised caps…the only thing that can save the day is a 3.5% (or lower) interest rate and no income documentation required or no 'debt to income' ratio."

"Otherwise, by requiring people to actually QUALIFY for loans using ACTUAL INCOME, and ABSURDLY LOW TEASER RATES FOREVER, Fannie and Freddy have very lessened power in Cali."

Another points to the central banks, "Central Bankss are 'injecting liquidity' all over the place. What does that mean exactly? Handing out money? Who’s money are they handing out? Can I have some? I promise I’ll go out and stimulate the economy."

"Who are the recipients and what do they do with it? How does that work? Does it work? What are it’s limitations? How unusual is this?"

One suggests calm. "Ya know, if we just all think positive thoughts, this could all turn out ok."

The LA Times. "Americans are learning a painful lesson from the financial market turmoil: One of the qualities that make the modern U.S. system so powerful, its ability to spread the risk of funding loans across millions of investors around the world, turns out to have a damaging weakness built into it."

"And this uncertainty, brought to the surface by trouble in the sub-prime home mortgage market, is now setting off exactly the sort of panic that the new system of spreading risk was supposed to prevent."

"'We supposed that if we atomized the risk of loan, it wouldn't come back to bite us,' said Robert Litan, a senior economist with the Brookings Institution in Washington. 'What we're learning is that no matter how widely you spread the risk, it doesn't go away. You can divide and divide and divide and divide it, and the risk is still there.'"

The Wall Street Journal. "Fallout from the intensifying credit crisis stretched from a French bank to the largest home-mortgage lender in the U.S., triggering unusual central-bank interventions."

"The troubles demonstrated both the global reach of the crisis and its impact on a widening circle of markets and companies. The first jolt came from French bank BNP Paribas, which said early in the day that it was freezing three investment funds once worth a combined $2.17 billion because of losses related to U.S. housing loans. That prompted the U.S. and European central banks to inject cash into money markets to keep interest rates down."

"The unease accelerated in the U.S. with news that several hedge funds were in the red and selling off assets. Apartment and condominium builder Tarragon Corp. raised doubts about its ability to remain in business amid weak demand and an inability to raise new financing. After markets closed, mortgage-lender Countrywide Financial Corp. said 'unprecedented disruptions' in credit markets could affect its financial condition."

"What started late last year as worry over a sharp rise in defaults on subprime mortgages has mushroomed into a crisis for the entire home-loan industry and investors world-wide."

"Rattled by a constant stream of bad news, investors in recent days have been shunning nearly all mortgages except for those that can be sold to Fannie Mae and Freddie Mac. That has prompted lenders to boost rates on prime 'jumbo' loans -- those totaling $417,000 or more, too big to be guaranteed by Fannie or Freddie -- to as much as 7.25% or 8%."

"'The market for the assets has just disappeared,' said Alain Papiasse, head of BNP Paribas's asset-management-services division. 'Since the start of this week, there are no prices for instruments that carry, directly or indirectly, some types of U.S. assets.'"

The New York Times. "Fannie Mae, the nation’s biggest buyer of home loans, was blocked yesterday from expanding its mortgage holdings by 10 percent in what it called an effort to ease concerns about credit and shore up the struggling housing market."

"The regulator overseeing Fannie Mae, the Office of Federal Housing Enterprise Oversight, or Ofheo, rejected the request, saying the company’s principal market for mortgages was 'liquid and working.'"

"Josh Rosner, a managing director at Graham Fisher & Company, said that it was unclear whether Fannie would be using the portfolio to generate profits for shareholders by buying illiquid secondary market securities or help potential homeowners."

"'They don’t need the portfolios to do business,' Mr. Rosner said. Besides, he said, it would be absurd to increase the size of their holdings until the extent of their exposure to subprime loans and other exotic mortgage products, like interest-only and negative-amortization loans, was better known."

"'We don’t know the true condition of their books, because they still aren’t current in their filings; they still have internal- control weaknesses,' Mr. Rosner said. 'They are sort of saying: raise our cap. Trust us. It wasn’t too long ago, frankly a couple of years ago, that we had them say trust us only to find out they were untrustworthy.'"

The Washington Post. "The Office of Federal Housing Enterprise Oversight has capped Fannie Mae's portfolio at $727.2 billion (the level of Dec. 31, 2005), while Freddie Mac's $712.1 billion portfolio may grow only by 2 percent annually."

"The regulators imposed these conditions because of accounting scandals at Fannie and Freddie, and it seems unwise to tap them for a bailout now, especially when such an action would leave them holding billions of dollars in new assets of ambiguous value."

The Dallas Morning News. "A running-scared Wall Street is impacting business in North Texas, as Dallas investment banker David Mahmood saw this week when he tried to complete $90 million in private financing for a California client."

"'The lender backed out yesterday, so now we're scrambling,' Mr. Mahmood said Friday. 'If we can't raise enough money, [the company] will lose tens of millions of orders.'"

"In today's hyper-connected economy, things can unravel quickly. No-money-down mortgages and low interest rates fueled a borrowing binge over the past six years, as consumers used easy money to buy homes, cars and other goods. Buoyed by rapidly rising housing prices, banks bundled the loans and sold the debt to hedge funds across the globe."

"But Bill Carter, a certified financial planner in Dallas who specializes in helping small business, saw some upside in the shifting lending landscape."

"'It's going to be more difficult – and frankly, it should be more difficult – to get a loan,' he said. 'It just got out of hand.'"