NOTE: This is part of a continuing online novel. Here is the Table of Contents.

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‘Next up, our Number Four story on the Countdown for a Friday, America, pay the mortgage or we foreclose! Yeah-heh-heh-heh-haaa! We’ll be talking to Fannie Mae president Franklin Raines.”

In Ft. Lee, New Jersey, Keith Olbermann laughed at his own joke, wadded up a piece of paper and threw it toward a camera as his theme music came up. On cue, the camera lens pretended to crack, the sound effect coming in over the music.

Meanwhile, in a Washington studio, Franklin Raines relaxed. The day had not gone as bad as he’d feared. Other major networks had bought his line that these were preliminary results, that the situation might turn around any day, that there was no reason to panic.

Raines, however, knew better. By the 10th of the month most people know if they’re going to make their mortgage payments. And there were other considerations…as he had learned while going through detailed reports this afternoon.

The situation was even worse than it looked last night, he had realized. Most of the mortgages about to default were ARMs, or Adjustable Rate Mortgages. Their payments were tied to market interest rates, meaning many payments had doubled for this month, or were about to next month. For most of those delinquent, a decision to default, to put the key in the door and walk away, was just good economic sense.

Raines’ nightmares were interrupted by the feed of the MSNBC network, where he would appear within moments.

“Here to explain all this is Franklin Raines, president of the Federal National Mortgage Association, known as Fannie Mae, and former Director of the Office of Management and Budget in the Clinton White House. Mr. Raines, welcome to the program.”

“It’s good to be here, Keith,” said Raines.

“As our own Monica Novotny said a moment ago, your office estimates nearly 4 million families may be about to default on their home mortgages. Could you explain the impact of that.”

“That’s not exactly true, Keith,” said Raines in his most soothing manner. “We presently estimate that about 3.63 million mortgages are technically delinquent at the close of business today.”

“Delinquent? Did they skip school?”

“No, Keith,” Raines smiled. “It means lenders haven’t received payments that were due on the 1st for that number of home mortgages.”

“And you estimate that if all these mortgages go belly-up, if I might use a technical financial term, we’ll be out $600 billion?”

Ouch. Olbermann had been the first reporter all day who had cut to the chase. “Sort of. We would still hold the real estate. But, in theory, yes.”

“How much might you get back if you dumped $600 billion in homes on the market at once?” Olbermann demanded. “And can you cover it? I’ve read only 1 in 100 mortgages go bad. What if 1 in 10 suddenly go pfft?”

Raines felt sweat beading his brow. “You’re right, it would be difficult.”

“Exactly how difficult?” Olbermann snapped.

“We would have to stop making mortgages and ask for an infusion of capital from the government,” Raines said.

“Sure, a billion here and a billion there. But aren’t we talking about real money? I mean, $600 billion is the cost of two Iraq wars. It’s more than the defense budget, more than the government spends on health care and education every year.”

Raines closed his eyes briefly to calm himself. He hadn’t talked to Alan Greenspan all day. These defaults had technically not happened yet. But it was time to come clean.

“Keith, mortgage rates have nearly doubled in the last three weeks. A lot of people were already paying 40-50% of their monthly income in mortgage payments. Many of the newest mortgages were written with adjustable rates, meaning their payments have skyrocketed just this week. In some markets the monthly payment on the average 30-year mortgage was already higher than the average rental payment. These danger signs have been in the market for some years.”

“So the housing bubble is about to pop. How would the impact of that compare to what happened with the stock market a few years ago?”

Raines sighed. “It would be catastrophic, Keith.”

Olbermann heard his producer with his right ear, telling him a commercial break was coming up. He shook his head in a nearly imperceptible way, no, indicating he really needed to continue and she’d just have to adjust the schedule. This wasn’t on the script.

“Doesn’t this mean housing prices have to fall hard, and fast? It seems to me that would be something like a nuclear chain reaction. Values fall below what homes are worth, more mortgages get turned in, more homes go on the market, and so on until, when, we get to China?” Olbermann had to throw a joke into every question. His audience demanded it.

The line caught Raines off-guard a moment. “A China Mortgage Syndrome? I hadn’t heard that before, but yes, something like that could happen.”

Olbermann picked up immediately. “In that great Jack Lemmon-Jane Fonda love story from the 70s a nuclear meltdown was said to run straight through to China. But we’re not on good economic ground with China now. Isn’t that why the President headed there tonight? Doesn’t this news, by itself, make the dollar even shakier? Hasn’t this Economic China Syndrome already begun?”

There was silence in both studios, and thus silence on the air. Raines’ eyes flicked this way and that as he wondered what to say. The sweat on his forehead was becoming obvious.

“Yes, Keith, I’m afraid it has,” he said at last.

“Fannie Mae president Franklin Raines, thank you very much,” said Olbermann after another moment. “Next, following that downer, let’s play Oddball.” Olbermann’s theme music, a take-off on the snippet from Beethoven's Ninth Symphony that Huntley and Brinkley had used to close their newscast in the 1960s, swelled again.

The photo of Franklin Raines sweating bullets would be on the cover of every Saturday morning newspaper, along with the headline. “Economic China Syndrome!”