Maintaining confidence is the only thing keeping the modern ponzi financial world afloat. Confidence in its backing is the only thing that gives otherwise worthless paper value, e.g. fiat currencies, bonds, etc. If depositors lose all confidence in a bank, that bank pretty quickly goes under (e.g. Northern Rock).

The extraordinary "rescue" of FRE and FNM had to inspire confidence to have any hope of improving credit conditions. I suggested yesterday evening, when gold was up $12 and silver $0.50 in Asia, that the "rescue" would include a coordinated effort to instill confidence, including intervention to effect a rising market (via purchase of S&P futures pre-open), a rising USD, and falling gold, silver and oil. That is exactly what happened, beginning almost exactly when the New York commodity and currency markets opened this morning, eventually reversing previous dollar losses and commodity gains in Asia and London.

BB