Fannie/Freddie and other Falling Knives

Hey everyone, thanks for the invite, I'm interested to hear about your investing opinions/knowledge.

Something I've been trying to understand is what the future of Freddie and Fannie holds. The government obviously has a vested interest in these enormous firms and they have outlined a plan to help out, but the shares are plummetting, down about 20% as I write. Many banking expert's are still speaking of gloom and doom despite the reassuring words that the government will come to the rescue, so that still makes me nervous. Like Andrew mentioned, just about everything financial has been getting destroyed but these seem like two stocks that could be very profitable in the long run as long as they hit that bottom soon...and the bottom isn't zero.

After following IndyMac's decline from about $5 down to $0 these past few months, it's pretty clear that unless your going short financial stocks, you're better off watching this storm pass. I just can't help but feel that this is getting a bit ridiculous. I've heard it said that while defaults on mortgages are very high, about 95% of people still make good on their payments (I think from the Nightly Business Report). Does anyone really understand how we can be in this crisis if those are the numbers?

What are the stocks that you guys are looking at other than financial? Small energy companies like PDO and MXC were obviously very profitable for some, but those opportunities seem to have passed.