James Howard Kunstler has these words of wisdom to share about the F & F implosions:

"There's a particular moment known to all Baby Boomers when Wile E. Coyote, in a rapture of over-reaching, has run past the edge of the mesa and, still licking his chops and rubbing his front paws in anticipation of fricasseed roadrunner, discovers that he is suspended in thin air by nothing more than momentum. Grin becomes chagrin. He turns a nauseating shade of green, and drops, whistling, back to earth thousands of feet below, with a distant, dismal, barely audible thud at the end of his journey. We are Wile E. Coyote Nation.
Is there anyone in the known universe who thinks that the US financial system is not fifty feet beyond the edge of the mesa of credibility?"

It goes without saying that cleaning up this mess will involve picking between several bad outcomes.

If we become major shareholders of F & F, we suddenly come into possession of $770 billion worth of garbage (all those subprime and Alt-A mortgages that will never be repaid). Do we foreclose on the 'owners' leaving us with all those future slums, I mean property? Do we throw all this unwanted housing onto the market at fire sale prices, thus causing an even greater decline in the value of homes and putting even more 'homeowners' under water? Do we just continue the charade that some day, somehow, they'll be repaid, thus leaving the housing market as a festering, sick sector for decades? Do we 'pay off' the mortgages with a huge injection of cash, courtesy of the Fed, thus guaranteeing that nobody, but nobody will want to hold any US bonds?

Ah, the wonderful choices! A few more bargains like this and... well, I'll leave it to your imagination how to fill in the blanks.