Was the US mortgage market nationalized in Q3? (Roubini Global Economics)

[swag]

Sure seems like it:

http://www.rgemonitor.com/

Iley (BNP): Flow of funds data show that mortgage market was effectively nationalized in Q3: Slump in private label securitization (ABCP, CMOs) was replaced by GSE issuance (total Agency-backed securities issued in Q3 exploded to a record $1.1784 trillion SAAR or 8.5% of GDP), and Federal Home Loan Bank borrowing (FHLB advances totalled an annualized $746bn SAAR in Q3 or 5.3% of GDP). This is why total credit market borrowing did not suffer despite credit crunch but accelerated to record 4.988trillion instead

-->FHLB advances at end Q3: Citibank borrowed 98.5bn (or 12% of total); Contrywide bank 51bn (6.2%), WaMu (43.7bn (5.3%)
--> pace of borrowing clearly unsustainable, more trouble ahead

DeLong: If problem is illiquidity it can be solved with discount window lending at penalty rates (Bagehot). When the fundamental problem is insolvency rather than mere illiquidity at non-inflationary interest rates, the alternatives are either 1) temporary nationalization and restructuring of the financial system, or 2) ultimately inflating the nominal debt burden away

PIMCO: There are 3 circuit-breakers away from current vicious cycle: 1) Interest rate easing despite inflationary pressures; 2) Sovereign Wealth Funds' (SWF) recycling of central bank reserves accumulated through FX interventions; 3) Fiscal policy (e.g. GSE, FHLB)

Mishkin: In times of financial disruptions the optimal monetary policy takes a risk-management approach: insurance is taken out by readiness to reduce rates more aggressively than warranted in normal times.