Far shrewder observers than I are already characterizing the developing Fannie Mae saga as Enron/Worldcom writ large. “The biggest Ponzi scheme in world financial history” is how one regular in a chat room I frequent -- a money manager who oversees mega-billions -- sees it. For starters, think of all the little people who for decades have been buying Fannie Mae stocks and bonds on the basis of allegedly fraudulent balance sheet numbers. Put them all on the tort bandwagon and the resulting litigation would indeed make the Enron and Worldcom scandals look like petty larceny. And then there are the money managers who may have been taken in, representing a parade of institutional investors that, laid wing-tip to wing-tip, would stretch around the world a dozen times.

Yet, even with the tectonic rumblings in mortgage-backeds, Wall Street barely flinched. In fact, shares moved broadly higher yesterday, and Fannie Mae came roaring back after having shed more than 10% of its immense value the previous day. Mortgage markets and straight debt were largely unaffected, with no appreciable widening of credit spreads.

On Wall Street these days, it would seem, too much of a bad thing is never enough, and no news is bad news. For our part, we welcome the prospect of being able to short Fannie’s shares at higher prices somewhere down the road. We won’t be getting in at the top, as the chart above makes clear. But it also shows that there is still plenty of room for FNM to discount a darkening reality. I wasn’t tuned to CNBC and therefore do not know how their helium-addled, tom-tom thumping varsity may have spun FNM’s snap-back “recovery,” but the trend of the company’s shares remains unmistakably down. Because Fannie Mae is one of the largest financial corporations in the world, someone besides us is apt to have noticed this. But if there are damaging revelations yet to come, you can bet that the world will not hear about them until after the stock’s price has been cut in half yet again.