I usually enjoy Todd Harrison's articles, as they are thoughtful and informative, but this article is pretty weak.  I'm not sure where to start:

"the September 1998 low was a good time to be buying stocks... for a trade"

a- September 1998 wasn't the low.  By September 28th, the S&P had already rallied 9.5% from its August 31st low.

b- only if you sold in early 2000 (I guess that's what Todd means by trade).

"Since September, 28, 1998, the S&P 500 has returned 19.5%, excluding dividends. Adding dividends makes the return of stocks over that nearly 10-year span almost competitive with Treasuries, albeit with significantly more risk."

a- wow, 19.5% cumulative return = less than 2% compounded for 10 years.  Seriously underwhelming

b- even if you include dividends and go back to the actual low of August 31st, one's compounded annual return would still only be 2.6% - - not even enough to keep up with inflation.

"Fannie and Freddie, despite their massive size, are still merely symptoms of market dislocations that began a little more than a year ago."  At some point there's a feedback loop and Fannie and Freddie, although symptoms of the current market dislocations, become a serious problem going forward.

"The real virus is two-fold: excessive debt combined with excessive leverage."  Debt = leverage. . . a little redundant, no?

The above being said, I do think that he points out two very important points:

"it is tempting to think we may be finally have reached an important capitulation point in equity markets, especially with many technical indicators and sentiment indicators at negative extremes."  This is probably true, from a short-term oversold basis.  The bounce could last a few weeks to a few months, but then look out below.

"The process of deleveraging will be a long one. There will be periods of market rallies, but they will be followed by periods of severe market declines."  The most important point he makes.   The main stream media, stock market cheerleaders continue to deny.

Is it time to buy into fannie and freddie mac?

Time to Buy? If the govt. does a "take over" and absorbs these 2 entities the shareholders will be the biggest losers(as if they haven't lost enough already). Then again, we could see some other type of bailout and the stocks could see a short term bounce. I'd rather be playing craps in Vegas.

This whole economic mess isn't going away in any near timeframe. (<3 - 5 months) If any Mideast conflict erupts the effect will be drastically worse. The only way to play momentum short term is buy the dips and sell the blips. I have never been short (put options - NOT security shorts) in so many positions as I am presently. The current number of viable and reasonable long term equity investment choices is extremely low and unpredictable.  I think trying to pick a bottom at this time is extremely unwise and not prudent. The market needs equity to thrive and I don't forsee much infusion short term.  

We are at the very beginning of a long term deflationary period that could last 5 to 10 years.I just read the 78th annual report from the Bank of International settlements a 270 page document.If you were not scared after reading that you do not understand how globaly we are connected.

If You Want to know the truth of whats going on i highly advise you folks go to youtube and punch in zeitgiest the federal reserve 5 parts then you shall understand just watch it...

How can investors have any faith in the Government when they took over Fannie and Freddie and stop paying dividends?  Preferred Stock is suppose to be a contractual agreement between the company and the investor.  It was not the investors who had bad mortgages that they could not afford or pay.  Why should they receive the punishment?  The managers of the companies should all be fired and face crimminal charges.  Also look at at the political contributions which caused a cover up of the real condition of Fannie and Freddie.  Nobody seems to have the guts to do what is right!  Greed, Greed, Greed has to be controlled!