Pakistan's New Prime Minister  Visits USA, Some Disagreements.

Pakistan says it would continue fighting al Qaeda and the Taliban but would not allow foreign forces to take action in its territory

In recent weeks, U.S. officials have shown impatience over the rising number of attacks in Afghanistan, raising fears in Pakistan that U.S. forces might take action against militant bases on Pakistani soil.

NATO says militant attacks along the border in eastern Afghanistan have jumped by 40 percent this year since de-facto cease fires came into effect between Pakistan's new government and insurgents in the border tribal region, but pledges not to enter Pakistan to hunt Taliban insurgents but only respond to cross-border attacks, details.

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Congress Sends Housing Relief Bill to Bush

Events leading up to the
Fannie Mae and Freddie Mac Rescue

Provisions of housing-mortgage relief bill

Fannie Mae and Freddie Mac
Government Bailouts a Scandal

Actions by Fannie and Freddie management and their regulators this year precipitated the current crisis and the Bush administration lifted Fannie and Freddie's portfolio caps in February and reduced their capital reserve requirements in March.

In this year's stimulus bill, Congress went further and nearly doubled the size of the loans that Fannie and Freddie can purchase or guarantee.

As a result of this reckless expansion, the government-backed mortgage loans now touch nearly 70% of all new mortgages. At the same time, they are insolvent by most measures

Fannie Mae and Freddie Mac Loan Giants Face Downgrade on Bond Rating.

New legislation authorizing a backstop of the mortgage finance companies leaves it up to the Treasury secretary to decide whether to honor preferred dividend payments or to repay subordinated bondholders before the government.

Treasury Secretary Paulson moved to shore up the companies as concern grew that they might not have enough capital to weather the worst housing slump since the Great Depression. Fannie Mae and Freddie Mac shares are down more than 70 percent this year.

US Home Price Slide Quickens
as lending dries up

US home prices fell at the fastest pace of the year in May, compared with the same month in 2007, suggesting no end to the three-year housing slump.

Eight out of nine regions showed declines as the worst housing slump in more than a quarter of a century deepened with banks cutting lending following $US400 billion ($412 billion) in mortgage-related losses and write downs

New Home Sales Still Slipping

he National Association of Realtors reported on Thursday that sales of existing homes - which make up the bulk of the home sales market - dropped by 2.6 percent in June to a seasonally adjusted annual rate of 4.86 million units, the slowest pace in a decade.

Private economists believe that sales of both new and existing homes will remain depressed for much of the rest of the year with prices continuing to fall into the spring of next year as the nation endures its worst housing slump in more than two decades.

As foreclosures continue to soar, 220,000 homes were lost to bank repossessions in the second quarter, according to a housing market report Friday issued by RealtyTrac.

That's nearly triple the number of foreclosures from the same period in 2007.

Falling U.S. home prices will force financial firms to write down $1 trillion from their balance sheets, crimping bank lending and sparking sales of assets, said Bill Gross, who manages the world's biggest bond fund.

About 25 million U.S. homes are at risk of negative equity, which could lead to more foreclosures and a further drop in prices

U.S. regulators took over two banks on Friday and sold them to Mutual of Omaha Bank, the sixth and seventh bank failures this year as financial institutions struggle with a housing bust and credit crunch.

The FDIC said the cost of the transactions to its insurance fund is estimated to be $862 million, adding that the two failed banks represent just 0.3 percent of $13.4 trillion in total industry assets at about 8,500 FDIC-insured institutions.

The proposed bail-out of Fannie Mae and Freddie Mac entails the socialization of risk in which the private sector takes the profits and the public sector bears the risk.