China and Chen

Well, this wasn't exactly unforeseen.  Excerpts:

Chen Kegui, nephew of blind dissident Chen Guangcheng, was arbitrarily arrested by police in Shandong. He has been denied access to his family lawyer and his wife has been placed under house arrest. The nephew was taken into custody on 9 May for his role in Chen's escape on 26 April to the US Embassy in Beijing, the China Human Rights Defender (CHRD) reported. The latter monitors human rights in China.

Chen Kegui is accused of "intentional homicide" because during the dissident's escape, he used a knife in self-defence against agents and unidentified people who burst into his uncle's home, slightly wounding some of the attackers. Why he was charged with homicide is unclear since no one died.

Pills from Northeastern China Smuggled Into Korea: "IT'S PEOPLE!"

Well. Your "human interest" story of the...well. Excerpts:

South Korea has seized thousands of smuggled drug capsules filled with powdered flesh from dead babies, which some people believe can cure disease, officials said Monday. The capsules were made in northeastern China from babies whose bodies were chopped into small pieces and dried on stoves before being turned into powder, the Korea Customs Service said. Customs officials refused to say where the dead babies came from or who made the capsules, citing possible diplomatic friction with Beijing. Chinese officials ordered an investigation into the production of drugs made from dead fetuses or newborns last year. The customs office has discovered 35 smuggling attempts since August of about 17,450 capsules disguised as stamina boosters, and some people believe them to be a panacea for disease, the customs service said in a statement. The capsules of human flesh, however, contained bacteria and other harmful ingredients. The smugglers told customs officials they believed the capsules were ordinary stamina boosters and did not know the ingredients or manufacturing process...

What might have conceivably inspired such a move?

What Cost an iDevice?

A high cost, indeed.  Excerpts:

...the low prices of our iPhones and iPads — and the super-high profit margins of Apple — are only possible because our iPhones and iPads are made with labor practices that would be illegal in the United States.

...Last week, PRI's "This American Life" did a special on Apple's manufacturing. The show featured (among others) the reporting of Mike Daisey, the man who does the one-man stage show "The Agony and the Ecstasy of Steve Jobs," and The NYT's Nicholas Kristof, whose wife's family is from China.

You can read a transcript of the whole show here. Here are some details:

Batman Attacked in China

Umm...I meant Christian Bale.

Excerpts:

All Christian Bale wanted to do was tell a guy thank you, he said – but instead he got roughed up by a pack of apparent security guards and chased away from the home where a Chinese dissident has been held under house arrest for months.

“What I really wanted to do was shake the man’s hand and say thank you, tell him what an inspiration he is,” Bale said after the incident, which concluded with his party’s van being chased down the road by guards who jumped into their own vehicle and followed for more than half an hour.

“The man” Bale referred to is Chen Guangcheng, a self-taught lawyer and activist who has worked against China’s methods for enforcing its one-child policy – think forced abortion and sterilization. According to World Now, he has been kept under unofficial house arrest with his wife, mother and young daughter since September, when he was released after four years in prison related to charges he said he was not guilty of...

The Strength of Europe

and the wisdom of China.  Excerpts:

...M. Shu desired for China a complete rejuvenation, and he desired that in every sphere, the country should emerge from the condition of stagnation in which the best ancestral traditions, deformed and become sterile, were leading to a result diametrically opposed to the spirit which had given them birth and which had enabled them in the past to give us our finest epochs of richness and splendor.

He wanted a modernization which should cause the spirit of Yao, of Choen and of Yu, to live again in the world of today. He studied Europe, seeking to grasp the principle of its best institutions, the source of its progress, seeking to discover, in order to win them and to give them to China, the moral forces which assured the balance of European society, and to distinguish them sharply from the forces, from the passions and infatuations, which compromised that balance.

Christianity, the Church, and in particular the Catholic Church, imposed themselves on the respectful attention of M. Shu. He had been struck by the existence of a world-wide spiritual government, of which the history went back right to the Founder of the Christian Religion. So as to study this fact more closely, in the course of a journey which took him to Europe, he had stopped in Rome and had there spent the Christmas holidays.

...M. Shu went on,

The strength of Europe is not to be found in her armaments; it is not to be found in her science; it is to be found in her religion. In the course of your diplomatic career you will have occasion to study the Christian religion. It comprehends various branches and societies.

Take the most ancient branch of that religion, that which goes back most nearly to its origins. Enter into it. Study its doctrine, practice its commandments, observe its government, closely follow all its works. And later on, when you have ended your career, perhaps you will have the opportunity to go still farther.


In this most ancient branch, choose the most ancient society. If you can do so, enter into it also. Make yourself a follower, and study the interior life which must be the secret of it. When you have understood and won the secret of that life, when you have grasped the heart of the strength of the religion of Christ, bring them and give them to China...

What Inculturation Looks Like

These are quite lovely.

"The West's On-Going Capacity for Self-Delusion"

Ouch.  A fascinating piece, surveying a wide swath of territory.  Excerpts:

These geo-strategic trends – the rise of the East and the fall of the West – have been apparent for several decades. But they have been accelerated and accentuated by the Western world's "sub-prime crisis"...

While the West accepts the diplomatic furniture has been re-arranged, we still act as if the world outside has not. "The maintenance of undervalued currencies by some countries has contributed to a pattern of global spending that is unbalanced and unsustainable," Federal Reserve chairman, Ben Bernanke, boomed at the summit.

Bernanke was pointing the finger at China – reiterating the Western view that our woes are all due to Beijing's reluctance to let the yuan (which has risen 20pc against the dollar since 2007) appreciate faster still. The response of almost every economist outside the Western world, on reading Bernanke's words, would surely be: "Who are you kidding?"

When it comes to under-valuation, America's "strong dollar" policy of recent years has been a study in how to keep a currency weak. Now the US, and the UK too, have resorted to "quantitative easing", the modern-day equivalent of the beggar-thy-neighbour currency devaluations of the 1930s....

Bernanke's G20 rhetoric fools no-one. But it does remind the rest of the world of the West's on-going capacity for self-delusion...

China's influence, and its financial muscle, is rising exponentially. Last year, the country loaned more to emerging nations than the World Bank. The fact that Beijing can propose building a new Trans-Continental Railway, in America's backyard, across a land-mass of unmatched strategic importance, and be taken seriously, speaks volumes.

The global power balance is shifting inexorably. The Western world needs to accept that. But as the G20 showed, the policies we propose and the decisions we take, are designed to deny, rather than accommodate, this new reality.

Too much good stuff to copy. Go read the original.

Debt and Decline

laid out by Mark Steyn.  Excerpts follow:

...Decline starts with the money. It always does. As Jonathan Swift put it:

A baited banker thus desponds,
From his own hand foresees his fall,
They have his soul, who have his bonds;
’Tis like the writing on the wall.

According to the cbo’s 2010 long-term budget outlook, by 2020 the U.S. government will be paying between 15 and 20 percent of its revenues in debt interest—whereas defense spending will be down to between 14 and 16 percent. America will be spending more on debt interest than China, Britain, France, Russia, Japan, Germany, Saudi Arabia, India, Italy, South Korea, Brazil, Canada, Australia, Spain, Turkey, and Israel spend on their militaries combined. The superpower will have advanced from a nation of aircraft carriers to a nation of debt carriers.

What does that mean? In 2009, the United States spent about $665 billion on its military, the Chinese about $99 billion. If Beijing continues to buy American debt at the rate it has in recent years, then within a half-decade or so U.S. interest payments on that debt will be covering the entire cost of the Chinese military. This year, the Pentagon issued an alarming report to Congress on Beijing’s massive military build-up, including new missiles, upgraded bombers, and an aircraft-carrier R&D program intended to challenge American dominance in the Pacific. What the report didn’t mention is who’s paying for it. Answer: Mr. and Mrs. America.

Within the next five years, the People’s Liberation Army, which is the largest employer on the planet, bigger even than the U.S. Department of Community-Organizer Grant Applications, will be entirely funded by U.S. taxpayers. When they take Taiwan, suburban families in Connecticut and small businesses in Idaho will have paid for it. The existential questions for America loom now, not decades hence. What we face is not merely the decline and fall of a powerful nation but the collapse of the highly specific cultural tradition that built the modern world. It starts with the money—it always does. But the money is only the symptom. We wouldn’t be this broke if we hadn’t squandered our inheritance in a more profound sense.


It’s interesting to learn that “anti-fascism” now means attacking the British Empire, which stood alone against fascism in that critical year between the fall of France and Germany’s invasion of Russia. And it’s even sadder to have to point out the most obvious fatuity in those “anti-fascist groups” litany of evil—“the British Empire’s association with slavery.” The British Empire’s principal association with slavery is that it abolished it. Before William Wilberforce, the British Parliament, and the brave men of the Royal Navy took up the issue, slavery was an institution regarded by all cultures around the planet as as permanent a feature of life as the earth and sky. Britain expunged it from most of the globe.

It is pathetic but unsurprising how ignorant all these brave “anti-fascists” are. But there is a lesson here not just for Britain but for the rest of us, too: When a society loses its memory, it descends inevitably into dementia...

"...why, when I converted, I converted to Catholicism..."

From some people, a digression is worth just as much as the original conversation.  John C. Wright is one such person, as demonstrated in what follows:

...A digression:

Here is a why, when I converted, I converted to Catholicism. I found, first, that before Henry VIII, all Christians held that divorce was forbidden except in case of unchastity, so the practice from time immemorial of ditching and dispossessing a old wife for a younger, for a time, in Christendom, was abated, if not abolished. That practice has since re-emerged.

Second I found that, as recently as the 1930′s it was not just those zany Catholics, but all mainstream denominations, who forbade the use of contraception as a grave moral evil. Obviously, there had been no new revelation from God nor change in the theological implications of contraception; no wording in the Bible had evolved nor altered, particularly not in the Bibles of those who believe Sola Scriptura.

Third, I realized how simply wise and sublimely wholesome the Catholic teaching about chastity and the integrity of marriage is.

It was when I was in China, and talking to my tour guide, a fine young man named Simon (his English name) that I had driven home between my eyes the true cost and the true horror of the One Child Policy.

I had heard it discussed theoretically before: but this was real, not theoretical.

A prerequisite for obtaining a marriage license was to vow loyalty to the One Child Policy. Abrogation of this vow meant loss of work license and health care, so violators can neither work nor visit doctors, hospitals, pharmacies.

The year came finally when Simon and his wife wanted to have a child, and he duly filled out the paperwork for permission. Without any forewarning, Simon was forbidden by an anonymous old she-bureaucrat from having sexual relations with his wife. He was told that, since the population levels in his province were above quota for that fiscal year, he had to send his wife back home to live with her mother, lest he be tempted to enjoy nuptial pleasures.

The next year he was allowed to resubmit his paperwork.

Simon told the story with the same air of worldly resignation that an American might use to tell about a long wait or some irksome delay at the Motor Vehicles Department. To him, it was just the normal thing.

I asked him if he had any brothers. He said no. I asked him if he had any cousins. He said no. I asked him if he has any uncles or aunts. He said no. The One Child Policy had been in effect long enough that the extended family, once the backbone of the oldest civilized culture in human history, that same extended family whose filial duties form the core of Confucianism, had been abolished by the secular power...

Go to the original post for the rest. And buy his books (note--most written before his conversion, so don't be surprised by the evangelical atheism. They're just darn good high sci-fi/fantasy)!

Papal Defense of Religious Freedom Worldwide

Sandro Magister has selections:

Your Excellencies, Ladies and Gentlemen,

I am pleased to welcome you, the distinguished representatives of so many countries, to this meeting which each year assembles you around the Successor of Peter. It is a deeply significant meeting, since it is a sign and illustration of the place of the Church and of the Holy See in the international community. [...]

As a new year begins, our own hearts and the entire world continue to echo the joyful message proclaimed twenty centuries ago in the night of Bethlehem, a night which symbolizes humanity’s deep need for light, love and peace. [...] Humanity throughout history, in its beliefs and rituals, demonstrates a constant search for God and “these forms of religious expression are so universal that one may well call man a religious being” (Catechism of the Catholic Church, 28). The religious dimension is an undeniable and irrepressible feature of man’s being and acting, the measure of the fulfilment of his destiny and of the building up of the community to which he belongs.

Consequently, when the individual himself or those around him neglect or deny this fundamental dimension, imbalances and conflicts arise at all levels, both personal and interpersonal. [...]

Is it Still Faith When You've Seen the Other Side?

Frank Weathers on the Catholic mystics.  He starts off with a great discussion of Field of Dreams (trust me--I know that sounds off topic, but check it out) and then explains:

...That is what the great Catholic Mystics have done for us all. They have seen a glimpse of Heaven and have lived to tell us about it. From St. Catherine of Siena's Dialogues, to the Ascent of Mount Carmel of St. John of the Cross; From St. Teresa of Avila's Interior Castle to St. Faustina's vision of the Divine Mercy; St. Catherine of Genoa's visions of Purgatory to the visions of Meister Eckhart, the great preacher of the Dominican Order.

And where did these Catholic mystics experiences lead them? Straight into the arms of Christ, and thus unto our Triune God. Which is where their experiences will lead you as well.

You don't have to believe the private revelations of Catholic mystics in order to be saved. But like my friend John C.H. Wu said,

It is most gratifying to see the importance of the mystical element in religion is being more and more recognized in the West. It is to be hoped that the mysticism of the saints will gradually leaven the whole lump of Christendom.

2011 Financial Predictions

Interesting.  From across the pond come this set of prognostications:

This bear is not for turning. It would be joyous indeed if a fresh cycle of global growth were safely underway, but I don’t believe it. Sorry.

Policy levers in the US, Europe, and Japan remain set on uber-stimulus with the fiscal pedal pressed to the floor and rates near zero everywhere, yet OECD industrial output has not regained the peaks of 2007-2008 by a wide margin. Leading indicators are tipping over again. We are one shock away from a liquidity trap.

The East-West trade and capital imbalances that lay behind the Great Recession are as toxic as ever. Surplus states are still exporting excess capacity with rigged currencies -- the yuan-dollar peg for China and, more subtly, the D-Mark-Latin peg within EMU for Germany.

Dangerously high budget deficits of 6pc, 8pc, or 10pc of GDP in countries with dangerously high public debts near 100pc may have prevented an acute depression, but they have not prevented the weakest rebound since World War Two, and they cannot continue, whatever the assurances of New Keynesians and pied pipers of debt.

Cyclical bulls may see the surge in 10-year US Treasuries -- and therefore mortgages rates -- as a sign that growth is about to blast off: structural bears suspect it may be the first convulsive shudder of bond vigilantes dismayed at the easy willingness of Washington to spend $1.4 trillion above revenues next year, with no credible plan to contain the monster thereafter...

And from the man who predicted the collapse of the past few years:

In this, my final column for 2010, I wanted to compare and contrast two important markets that I think give us some indication about what to expect in 2011. As longtime readers may be able to guess, I am talking about gold and bonds...

Recently, I headlined a column at FleckensteinCapital.com (subscription required), "Party Like It's 1999, Part III," and that is how the equity market landscape looks to me.

After living through the stock and real estate bubbles, you'd think it would be impossible to be surprised by how foolishly people can act. But with the amount of machismo, bravado and downright cluelessness that I see on display, I must admit I am dumbfounded.

Sadly, it seems that the vast majority of Wall Street types have learned almost nothing from the near-death experience they had only two years ago. My guess, though, is that 2011 will reacquaint them (again) with the fact that financial assets can cost you a lot of money.

WikiLeaks and Journalistic Ethics

An interesting post, especially this excerpt from a Reason magazine article:

...The existence of WikiLeaks is a good thing. You can’t be in favor of democracy—and you certainly can’t be a journalist—if you don’t believe that the potential for exposure of wrongdoings helps keep those in positions of power accountable. However, just because something can be published doesn’t mean it should be. Privacy is not the same as “secretive” or “clandestine” or “obfuscating.” As a society, we benefit from the Internet’s unrivaled ability to blast infinite information freely. But that ability does not mean everything ought to be shared. If we have a “right to know” the contents of Hillary Clinton’s private communications with her staff, do we have a right to see photos of her showering, to hear tapes of her snoring, to read stolen letters she wrote to her parents?...

China on North Korea

maybe?

...Comments published on major media in China perhaps revealed more about the Chinese regime’s viewpoint than the official reaction by the Foreign Ministry. All media in China are either run by the state or, while nominally independent, are only allowed to publish if they follow the state’s line on important issues.

Sina.com, People’s Daily.com, and over 20,000 websites in China refused to blame North Korea for the attack, reporting that “Both Koreas accuse each other of being the first to have opened fire.”

Sina.com raised the issue of negotiations with the United States: “This bombardment of the island could be North Korea’s attempt to force the United States to the negotiation table.”

Chinanews.com, military.people.com, and 200 other websites published a not-so-veiled threat if the hoped-for negotiations didn’t materialize: “If the artillery attack still cannot force the United States and the international community to value North Korea’s demands, the situation on the Korean peninsula could become dangerous.”...

On China and Carbon Emissions

An interesting debate north of the border, with our own NASA and financial difficulties involved:

...Individual Chinese power plants have higher carbon emissions than Canada’s 100 different oilsands companies put together.

But Hansen hasn’t flown to China with his protest.

In 2008, Hansen said CEOs of fossil energy companies should be put on trial for “crimes against humanity.” Try saying that in China and you’ll get the Tiananmen Square treatment.

Hansen doesn’t even criticize China from the safety of the United States. In a laughable essay he wrote this spring for the liberal Huffington Post, Hansen says he believes China wants to “avoid the fossil fuel addiction of the United States. They want to clean up their atmosphere and water.”

Avoid fossil fuels? Last year Chinese auto sales hit 13.64 million, more than the U.S. for the first time. The number of cars on the road in China is expected to double to 200 million in less than 10 years. Clean up their atmosphere? The World Bank says that 20 of the world’s 30 most polluted cities are in China.

But Hansen and NASA and Obama don’t criticize China. China is the largest owner of U.S. treasury bills.

When you owe someone a trillion dollars, you don’t call them “polluter.”

You call them “boss.”

On the Meeting of Eastern Religions and Christianity

Though, really, I suspect a lot of the questions and tensions between the Christian faith and the Eastern spiritual habits of pantheism and so forth are already fairly well resolved in Eastern Orthodoxy and Eastern Rite theology. I couldn't really argue for the point--it's just the sense I've gotten from a very superficial reading of tangentially related texts.

But anyway--one of the greatest evangelists of Catholic history sought to inculturate the Gospel in the Chinese context:

China is one of the most colossal challenges that the Church is called to face today. And not only for reasons involving religious freedom.

In fact, the distance between the Western and Christian vision of the world and that of the great civilizations of the East – not only China, but also India and Japan – is decidedly more vast than with Islam, an historical religion that has always had many features in common with Judaism and Christianity.

The challenge is all the greater today, with China rising to become a new global superpower. But it has been one before.

Between the sixteenth and seventeenth centuries, this challenge was taken up by a brilliant missionary, Jesuit Fr. Matteo Ricci, the fourth centenary of whose death is being marked in 2010 with exhibits, studies, and conferences, including in China, where he is considered a national treasure. His beatification process is also underway.

In dialoguing with the intellectual circles of Beijing at the time, Ricci adopted an approach remarkably similar to the one proposed by Benedict XVI today. He knew very well that the Christian Gospel was an absolute innovation, come from God. But he knew that human reason also has its origin in the one Lord of Heaven, and is common to all who live under the same sky.

He was therefore confident that the Chinese could also accept "the things of our holy faith," if these were "confirmed by much evidence of reason."

His proclamation of the Christian news was therefore gradual. He took his cues from the philosophical principles of Confucianism, from the traits it had in common with the Christian vision of God and of the world, in order to build gradually to the absolute novelty of the Son of God made man in Jesus.

Matteo Ricci did not do the same thing with Buddhism and Taoism, instead subjecting them to severe criticism. A little like the Fathers of the Church had done before him, being extremely critical of pagan religion but in respectful dialogue with the wisdom of the philosophers...

On the Wisdom of Therese of Lisieux

In a remarkable piece, well worth a read in it's entirety, the "Chinese Chesterton" pays tribute to the Little Flower:

My only wish is to see people so thoroughly sophisticated as to be aware of the utter worthlessness of their sophistication, so thoroughly skeptical as to be able to doubt their own doubts, and so thoroughly disillusioned as not to fall in love with their own disillusionment, but with something greater than themselves...

To my mind, Thérèse is so significant to the spiritual life of our age, precisely because she is a saint fully aware of her mental states. She is charmingly subtle and subtly charming. She is ingenuously ingenious, and she is holy. She is as complicated as she is simple. She is delicately audacious, and audaciously delicate. She has the head of a witch, and the heart of an angel. She is as flexible as water, and as passionate as fire. She is a genius who knows how to hide her genius gracefully. She knows the masculine, but keeps to the feminine. She is as sharp as a two-edged sword, but she always keeps her sword in its scabbard. She was a precocious child; but she pasteurized her precocity by always remaining like a hidden sprout and not rushing to early ripening. Even now, after she has become a veritable prodigy of miracles, she is still a hidden sprout at heart; and, in spiritual things, as we know, a sincere disposition of heart is all that matters. I think that now more than ever she has realized the truth of what she said before she had shed her mortal coils, "It is Jesus who does all, and I...I do nothing."

I suppose that Lao Tzu would have said, "It is the Tao (the Word) that does all, and I...I do nothing." But the Tao is such an impersonal entity that it appears to me to be of the ice, icy: whereas Jesus is such a living flame of love that He enkindles every fiber of my heart.

To me as a Chinese, the great thing about Christianity is that it combines the profound mysticism of Lao Tzu with the intense humanism of Confucius. It differs from Taoism in that the Tao, or the Word, has taken on flesh and has a warm pulsating heart. It differs from Confucianism in that it is the Word, and nothing short of the Word, that has done so.

On the World

An interesting argument:

Tribal ties—race, ethnicity, and religion—are becoming more important than borders.

For centuries we have used maps to delineate borders that have been defined by politics. But it may be time to chuck many of our notions about how humanity organizes itself. Across the world a resurgence of tribal ties is creating more complex global alliances. Where once diplomacy defined borders, now history, race, ethnicity, religion, and culture are dividing humanity into dynamic new groupings.

Broad concepts—green, socialist, or market-capitalist ideology—may animate cosmopolitan elites, but they generally do not motivate most people. Instead, the “tribe” is valued far more than any universal ideology. As the great Arab historian Ibn Khaldun observed: “Only Tribes held together by a group feeling can survive in a desert.”

An overview of the perceived groupings of nations follows. The authors seem to be predicting some sort of series of regional alliances/federations based off these commonalities, or at the very least, alliances between a series of nations.

Religion in China

Well. This is weird.

Official Chinese surveys now show that nearly one in three Chinese describe themselves as religious, an astonishing figure for an officially atheist country, where religion was banned until three decades ago.

The last 30 years of economic reform have seen an explosion of religious belief. China's government officially recognizes five religions: Protestantism, Catholicism, Buddhism, Islam and Daoism. The biggest boom of all has been in Christianity, which the government has struggled to control...

Pastor Ni is in charge of this church. (NPR agreed to withhold his full name to protect his identity.) He says there is total religious freedom in China, and he characterizes relations between state and the church as extremely good.

Enlarge Ariana Lindquist for NPR

Pastor Ni leads a service at a state-sanctioned church. He says he believes there is total religious freedom in China. Relations between church and state, he says, "are extremely good."

"The government never interferes with our internal affairs," he says. "There are no orders, no coercion. That doesn't exist and we get on well."...

No one knows exactly how many Christians there are among China's population of 1.3 billion. There are an estimated 21 million members of the government-sanctioned Three-Self Patriotic movement, but nobody knows how many Protestants worship in unregistered house churches.

Some recent surveys have calculated there could be as many as 100 million Chinese Protestants. That would mean that China has more Christians than Communist Party members, which now number 75 million...

Fannie and Freddie

More bad news:

The cost of fixing Fannie Mae and Freddie Mac, the mortgage companies that last year bought or guaranteed three-quarters of all U.S. home loans, will be at least $160 billion and could grow to as much as $1 trillion after the biggest bailout in American history.

Fannie and Freddie, now 80 percent owned by U.S. taxpayers, already have drawn $145 billion from an unlimited line of government credit granted to ensure that home buyers can get loans while the private housing-finance industry is moribund. That surpasses the amount spent on rescues of American International Group Inc., General Motors Co. or Citigroup Inc., which have begun repaying their debts.

“It is the mother of all bailouts,” said Edward Pinto, a former chief credit officer at Fannie Mae, who is now a consultant to the mortgage-finance industry.

Fannie, based in Washington, and Freddie in McLean, Virginia, own or guarantee 53 percent of the nation’s $10.7 trillion in residential mortgages, according to a June 10 Federal Reserve report. Millions of bad loans issued during the housing bubble remain on their books, and delinquencies continue to rise. How deep in the hole Fannie and Freddie go depends on unemployment, interest rates and other drivers of home prices, according to the companies and economists who study them...

The Congressional Budget Office calculated in August 2009 that the companies would need $389 billion in federal subsidies through 2019, based on assumptions about delinquency rates of loans in their securities pools. The White House’s Office of Management and Budget estimated in February that aid could total as little as $160 billion if the economy strengthens.

If housing prices drop further, the companies may need more. Barclays Capital Inc. analysts put the price tag as high as $500 billion in a December report on mortgage-backed securities, assuming home prices decline another 20 percent and default rates triple.

Sean Egan, president of Egan-Jones Ratings Co. in Haverford, Pennsylvania, said that a 20 percent loss on the companies’ loans and guarantees, along the lines of other large market players such as Countrywide Financial Corp., now owned by Bank of America Corp., could cause even more damage.

“One trillion dollars is a reasonable worst-case scenario for the companies,” said Egan, whose firm warned customers away from municipal bond insurers in 2002 and downgraded Enron Corp. a month before its 2001 collapse...

A 20 percent decline in housing prices is possible, said David Rosenberg, chief economist for Gluskin Sheff & Associates Inc. in Toronto. Rosenberg, whose forecasts are more pessimistic than those of other economists, predicts a 15 percent drop.

“Worst case is probably 25 percent,” he said.

The median price of a home in the U.S. was $173,100 in April, down 25 percent from the July 2006 peak, according to the National Association of Realtors.

Fannie and Freddie are deeply wired into the U.S. and global financial systems. Figuring out how to stanch the losses and turn them into sustainable businesses is the biggest piece of unfinished business as Congress negotiates a Wall Street overhaul that could reach President Barack Obama’s desk by July...

“Do we really want to go to the central bank of China and say, ‘Tough luck, boys’? That’s part of the problem,” said Karen Petrou, managing partner of Federal Financial Analytics Inc., a Washington-based research firm.