There have been some expensive clean ups in our world's history. The most costly one was following the infamous Exxon Valdez disaster in Alaska in 1989. Clean up alone cost in the region of $2.5 billion and total costs (including fines, penalties and claims settlements) are estimated at $9.5 billion. The Amoco Cadiz (France, 1978) reportedly cost about $282 million, of which about half was for legal fees and accrued interest. The Braer (UK, 1993) cost in the region of $83 million.

The second most costly cleanup, coming in right after the Exxon Valdez fiasco? Fannie Mae - and its counterpart Freddie Mac - at $800 million. We realize there was no oil to be sopped up, no wildlife to be saved - but it is certainly messy and unnerving...and costly.

And $800 million is just the "estimated" cost for 2006, earmarked for finding out to what extent the mortgage giants fudged their bookkeeping. On top of new computer programs and things of that nature, Fannie and Freddie had to hire 2,500 outside contractors to dedicate the next good chunk of their lives to poring over Fannie's books.

Of course, in keeping with the general sentiment of our government whenever exorbitant sums of money are involved - no one batted an eye at this figure. The Washington Post reports:

"Contrast the $800 million cleanup cost with the $62 million annual budget of the Office of Federal Housing Enterprise Oversight, the agency in charge of 'regulating' Fannie and Freddie. That office, which plans to issue its final report on Fannie Mae by the end of the month, has a staff of 225 people, not one-tenth the number Fannie has hired for the cleanup.

"Congress dares not complain because it is culpable. Fannie Mae's and Freddie Mac's lobbyists have so totally ingratiated themselves with lawmakers that they've been able to fend off regulatory initiatives for the past two decades."

So, not a word from the world improvers on the Hill, but surely Wall Street would have something to say, right?

Wrong. The Post continues, "Wall Street, like Washington, has no choice but to support Fannie Mae and Freddie Mac, no matter what. If they failed, they could take down the stock market, the bond market, the housing market and perhaps the entire U.S. economy because their stocks and bonds are so widely held and they are so essential to the mortgage market. No one can afford to let that happen. That's why Congress is so afraid of grabbing the regulatory reins and why Wall Street keeps touting Fannie and Freddie as good investments.

"Today there are nine Wall Street analysts telling their clients to buy Fannie Mae stock and just two recommending they sell. The opinion on Freddie Mac is unanimous: 11 'buy' recommendations.

"Fannie and Freddie aren't going to fail. Wall Street and the government won't let them. That's the real tragedy. We've created a pair of mortgage monsters, and we can't do anything about it."

*** On the heels of the Fannie Mae undertaking, comes word that homebuilders' sentiment has slumped its lowest level since mid-1995.

The Housing Market Index came in under 50, showing that the majority of builders view the market as unfavorable. This is only the second time that this has happened since 1995 - the other time being directly following the September 11 attacks.

"Based on historical experience, particularly the 1994-1995 episode, the pattern of movement in the HMI is not inconsistent with the orderly cooling-down process we're projecting for home sales and single-family housing starts in 2006," NAHB chief economist David Seiders said in a statement.

Oh, we'd say the housing market is definitely "cooling-off" - housing starts have fallen every month since January. And to think, people didn't even believe there was a bubble.

*** During a time that international currency tensions are at their highest in 20 years, Japan's Finance Minister Sadakazu Tanigaki has resisted American warnings to stop "jaw-boning" the dollar.

EverBank's Chuck Butler reported that Tanigaki told Parliament that, in theory, it is possible that he would sell U.S. Treasuries to fund future currency intervention if necessary.

"The world financial markets are betting against the dollar and against Mr. Bernanke's chances of correcting the imbalances caused by Alan Greenspan," wrote Congressman Ron Paul recently.

"Our creditors, particularly Asian central banks, are losing their appetite for U.S. Treasuries. Our federal government's huge debt and voracious appetite for deficit spending make our economy dependent on the actions of foreign governments and central bankers. Yet few Americans realize the extent to which their own government has sold out American sovereignty by borrowing money overseas."

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