Turning points in bear markets are more often than not signposted by big U-turns in government policy. The de facto nationalisation of Fannie Mae and Freddie Mac by a pro-market Republican administration is a U-turn of huge proportions. The question, nonetheless, is whether it will be enough to put a floor under both credit and equity markets.

Ending Fannie and Freddie’s ability to operate as wildly over-leveraged, subsidised hedge funds in short order clearly helps stabilise the financial system both domestically and globally. It also confirms once again that the US will throw everything that can be thrown at the problems arising from the bursting of the credit bubble and the threat of deflation, even at the cost of turning itself into something that looks unfashionably like a socialist country.