Fannie Mae and Freddie Mac are going under and the economists are surprised. Those of us who actually pay attention to the economy (instead of just getting paid to be "economists") knew that the crash of the housing bubble would put these mortgage giants in danger. (I'm on record from back in October, 2002.)

Okay, we all should know that economists generally don't have a clue, but what should we do about the impending collapse of Freddie Mac and Fannie Mae? Well, it would be a devastating blow to the housing market to lose Fannie and Freddie even in the best of times, but it would really be a disaster to let them collapse in the middle of the housing meltdown, at a point where they directly or indirectly finance 70 percent of new mortgages.

So, we have to keep them going, but we also have to make sure the clowns that wrecked these huge companies feel the pain.

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The Congressional Budget Office (CBO) is not terribly optimistic about the success of the housing bailout bill going through Congress. They project that 35 percent of the homeowners "helped" under the plan, or 140,000 families, will find themselves again facing foreclosure. The reason for the pessimism is that the lenders get to decide which loans enter the program. Naturally, they will pick homeowners who they think will be the least likely to make it.

I wonder what the folks who support this bill will tell those 140,000 families? Many of these families will struggle to make their mortgage payments for 2 or 3 years, sacrificing health care, child care and other necessary expenses in a hopeless effort to hang onto their home. At their end of their struggling, they will end up out on the street, foreclosed a second time.

That is what Washington policy wonks call "asset building."

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