The big news this morning is that President Bush has dropped his threat of a veto for the housing bill that will bail both Fannie Mae and Freddie Mac out, and also offer relief to homeowners that have gotten in over their heads and now run the risk of foreclosure. CNNMoney.com reports that the legislation would allow the Federal Housing Agency to insure up to "$300 billion in new 30-year fixed rate mortgages for at-risk borrowers in owner-occupied homes if their lenders agree to write-down their loan balances to 90% of the current appraised value of their homes…The cost of the FHA program - which would begin on October 1 and be in place for just a few years - would be funded by fees from Fannie and Freddie."

And of course, since Fannie and Freddie are seriously ill-equipped to offer up those kinds of funds at the present moment, the bill would allow the Treasury broad powers that would provide the mortgage giants with liquidity and a "capital background" - basically an unlimited line of credit. It is generally understood that this will leave U.S. taxpayers with a gigantic bill to pay - in fact, yesterday the CBO estimated the cost of the "rescue" at $25 billion, and said there is a chance that it could end up costing the U.S. government $100 billion in the long term. Does the term "hemorrhaging money" mean anything to you, dear reader?

*** Zimbabwe is just a mess. Due to the nationalization of their agriculture sector and food shortages caused by hyperinflation, millions of the country's citizens face starvation. The inflation rate in this southern African country is at an unbelievable 2.2 million percent - and economists think that this is actually understated, and that the actual inflation rate may be running between 10 million and 15 million percent. Because of this, and a major cash shortage, the Zimbabwean government has introduced a $100 billion bank note.

In the United States, points out Bill, we look at countries like Zimbabwe and shake our heads in disbelief. It seems almost like slapstick comedy to us.

As Milton Friedman once said, "If you let the government run the Sahara Desert, soon there will be a shortage of sand." And in the U.S., we have Fannie and Freddie, who represent a huge nationalization event in the United States.

"This is a remarkable thing for the supposedly most 'free market' country in the world," continues Bill. "Nationalizing their biggest industry, the mortgage industry. Johnson trying to pretty up the nation's account, so he took Fannie and turned it into a private business."

This added a whole new innovation to the history of nationalizations. The United States created a company where the profits were private, but the losses were to be funded by the government.

"Nationalization is a great milestone in our economic lives," Bill said to the 1,000 attendees. "Adjusted for the price of gasoline, no one has made money in stocks for 40 years. When you adjust American wages for inflation, you'll see that they've gone nowhere for the past 40 years, either. No one has been getting rich. How is this possible? you have to ask this to find out what's going on, where it leads and what we'll do about it.

"We take for granted that economics matter. We have only been thinking of this for the last 25 years. This idea of capitalism brought to us in the 80s was fatally flawed. People got the idea that to be rich you need a free market and free trade. But really, you don't get rich because of those things - those are just the circumstances that allow you to get rich… if you do the right thing. If you do the wrong thing, it will allow you to go broke. You can't get rich on consumption, as Dr. Richebächer used to say. You need capital formation. Save your money and invest it in productive enterprises."

Bill Bonner is the President of Agora Publishing. For more on Bill Bonner, visit The Daily Reckoning.