Save the home lenders, save the world? If only it were that simple.

The just-announced federal takeover of Fannie Mae and Freddie Mac, the giant mortgage lenders, was certainly the right thing to do  and it was done fairly well, too. The plan will sustain institutions that play a crucial role in the economy, while holding down taxpayer costs by more or less cleaning out the stockholders.

But Sunday’s action needs to be seen in a larger context  that of the attempt by the Federal Reserve and the Treasury Department to contain the fallout from the ongoing financial crisis. And that’s a fight the feds seem to be losing.

We’ve come a long way from the days when Alan Greenspan declared a national housing bubble “most unlikely.” There was indeed a bubble, and since it popped two years ago home prices have fallen faster than they did during the Great Depression.

Falling home prices, in turn, have led to the much-feared phenomenon of “debt deflation.” Yes, deflation: prices are going up at the checkout counter, but the prices of assets, which are what matter for balance sheets, are dropping fast.