"Do you anticipate bank failures like England saw with Northern Rock?" Paulson gave a non-answer, and the reason is probably because there are several bank failures in the offing.

Yes, but don't worry, it won't affect Wall Street bonuses.

This remark needed a little expansion:
Construction projects, once begun, are useless (and liabilities) if not finished. And like that housing inventory even if finished but vacant, continuing liabilities, yes?
The high maintenance costs of housing: those glamorous darlings of the investment world, didn't dwell on this aspect while the boom was on, but now she is starting to look like high maintenance and the glamor is gone.
I wonder how much of the enigmatic residential construction employment can be assigned to the cost of maintaining vacant housing stock?

the reason is probably because there are several bank failures in the offing.

Well something is going on. It's now pretty clear no recession in 2007 yet the Fed is obviously nervous. Banks being more troubled than we know is one possible explanation.

As of 03/01/2008 Fannie Mae will add a 25bp fee across the board to all new mortgages it buys. Full story can be accessed at housingdoom

In wyoming, we just sweep manure under the rug; this is not a bail out in any way, shape of form, its just business!

Legislatively Designated Investments

Individually and collectively, LDIs are a version of economically targeted investing, whose aim it is to improve the economic well-being of the state, its municipalities, and its residents. In most ways, however, LDIs do not appear closely related to one another: some are one-time economic development investments, others are infrastructure improvements, and yet others are ongoing programs. LDIs are also diverse in terms of recipient or beneficiary, financing vehicle, structure, credit terms and conditions, and mechanisms to protect the principal.

What LDIs have in common is the legislatively directed use of state funds to achieve public purposes, often at subsidized rates. Each involves the State Treasurer's Office, which makes the actual investment on behalf of the state.

This report uses certain terms to describe the status of funds associated with LDIs. For most LDIs, statutes or session laws authorize a specific amount of money to be used in connection with a program or project. Within the amount authorized, funds may be deployed in several ways. The portion of funds that an LDI program or project puts to active use is called allocated funds. Some authorized funds may not be actively at work for the program or project, and these are called unobligated funds. Finally, in those programs involving bond guarantees, some or all of the funds may be committed to stand behind the LDIs, while other funds are uncommitted, or not yet required for a guarantee.

Chapter 2: Summary of Individual LDIs

Chapter 2 contains a one-page description of each LDI, with discussion of the history, purpose, and current need for each. Overall, we found that the 26 LDIs have been approved in an ad hoc manner throughout this century, with little consistency in their terms and conditions. The first was authorized in 1907, but the majority have been authorized in the last 17 years, five of them in 1995 alone.

Nine LDIs are direct loans or loan programs, four more involve the purchase of loans, three are bond guarantee programs, eight involve the purchase of bonds, and two are deposit programs. Authorizations range from a low of $2 million to a high of $275 million, although only four LDIs are authorized for $100 million or more. For more detail on the individual LDIs, refer to Chapter 2 of this report.

Chapter 3: Funds Allocate to LDIs Earn Less-Than-Market Returns

LDIs result in lower-than-market returns in two distinct ways. First, as discussed in this chapter, the funds allocated to specific projects and programs are earning comparatively less than funds managed strictly for investment purposes. Second, as explained in Chapter 4, earnings on the funds that are authorized, but not allocated, are also less than market.

Funds allocated to LDIs resulted in forgone ear

seller contribution down from 6% to 3% on Fannie My Community/House America

Also cutting out No Ratio and NINA

Amen brothers:

Dec 7 (Reuters) - Simon Property Group Inc (SPG.N: Quote, Profile , Research), the largest U.S. mall operator, lowered its forecast for the year on Friday, citing a write-off for its investment in a Phoenix residential joint venture with home builder Toll Brothers Inc (TOL.N: Quote, Profile , Research).

The non-cash impairment, net of tax benefits, will reduce full-year net income available to common share holders by $26 million, or 11 cents a share, to $2.02 per share and funds from operations (FFO) of $5.77 per share.

The new forecast of $5.77 is near the upper end of Simon's original forecast of full-year FFO of $5.70 to $5.80 per share.

Ame

December 9, 2007

Cash shortage to keep navy in portMichael Smith
MOST of the Royal Navy will be tied up in dock next year, frozen by a £15 billion “black hole” in the Ministry of Defence budget over the next decade, writes Michael Smith.

As the MoD fights proposals for £12 billion of defence cuts over the same period, only ships supporting operations in the Gulf will leave port. The soaring cost of operations in Iraq and Afghanistan and the increasing reluctance of the Treasury to fund them is adding to the pressure.

“The navy is looking at what options they have because the amount of funding is just not there,” one source said. “The overheating of the equipment budget is putting pressure on everyone.” The only major exercise expected to go ahead is Orion 08, in which the aircraft carrier HMS Illustrious, the destroyer Edinburgh and the frigate Westminster will head for the Gulf, defence sources said

The bond market has clearly got recession on the brain," Merrill Lynch economist David Rosenberg said in a report this week.

In just six months, bond investors have developed a very dreary mood -- a complete change of heart since June. Then, they were worried about too much growth and inflation, and the yields on 10-year Treasury notes reflected that spirit, touching 5.29 percent. This week, yields dropped to as low as 3.87 percent, as Rosenberg remarked, "Bond yields are melting before our eyes."

On Thursday, yields climbed a bit, to 4 percent.

Rosenberg said the extreme plunge that occurred over just six months is rare and often hints at a recession.

The last time bonds plunged so deeply was 2002, as the economy came close to relapsing into recession, he said. "Before that, it was in the spring of 1986, when the inflation rate melted to 1 percent year over year on the back of $10 a barrel oil price. Before that, we had a decline in late 1983 as the economy was just about to emerge from a nasty recession," he said.

Rosenberg's conclusion: "The Treasury market is thinking that the recession is either already here or just around the corner."

Of course, the quick about-face by bond investors since June indicates that economic conditions are difficult to predict and both stock and bond investors can get them wrong.

But Leuthold Group analyst Patrick Magnusson also noted this week that the bond market has been reliable in predicting economic weakness and the conditions that ultimately force the Federal Reserve to cut rates.

At the end of November, the two-year Treasury note was trading at a yield of 3 percent, versus the federal funds rate of 4.5 percent. And whenever the two-year note has been below the fed funds rate, the Fed has eventually dropped rates.

The idea is to make money cheaper to borrow so that consumers and businesses spend and give the economy a boost.

Still, what presumably ails the economy most is a deep housing recession -- one of the worst since the Depression.

Douglas Duncan, economist for the Mortgage Bankers Association, said Thursday that he does not think the home foreclosure rate will peak until next year's third quarter.

And lower interest rates won't necessarily fix the housing market because the main driver of slumping prices is an excessive number of homes and what were unusually high prices in some markets after years of speculation and overbuilding. Recently, the situation has been aggravated by a slowdown in lending.

Duncan said he thinks housing will start recovering after the third quarter, but that assumes that the economy does not become so weak that people lose jobs and can't buy homes.

Tanta may have to take a look at a post on Big Picture to elaborate about the signifigance of another judge's ruling on a securitization's shitty paper. Appears to be a unopposed bankruptcy motion where a judge stepped in without prodding to challenge shitty paper. From the comments it appears some are saying that the securitization's lein might be in trouble due to their shitty paper making them an unsecured creditor in the bankruptcy. What's that do to the value of these things???

That was kinda fun?

Now and the Future

Fractional-reserve banking - Wikipedia, the free encyclopedia 

Looks like a good zone over here and on topic mates!

BBC - Peston's Picks 

Rock in the zone
Robert Peston 7 Dec 07, 10:15 AM Northern Rock has been advised by its lawyers that it’s in the “zone of liquidation”.

Which sounds scary, but it’s really just a statement of the bloomin’ obvious, in that the Rock cannot fund its operations from normal commercial sources and is in hock to the taxpayers to the tune of £25.5bn.

The significance of being in that unappetising zone is that the board has to put the interests of its creditors ahead of those of its shareholders.

And that’s why the board cannot simply approve Olivant’s rescue plan, even though Olivant’s scheme is much friendlier to the interests of shareholders than the takeover proposal from a consortium led by Sir Richard Branson and Virgin.

Or to put it another way, ultimately it’ll be up to the chancellor – as proxy for the lead creditor, all of us – to decide what happens to the Rock.

You know whats so bloody interesting, the fact that we Yanks dont even notice The Bank Of England bailing out Rock, because we are so busy here watching Bush & Paulson bail out our subprime/CDO/SIV/Pension meltdown; this is a global problem which gets worse daily, as it moves from spot to spot, bank to bank!

Alistair Darling’s priority – apart from maintaining the stability of the financial system and protecting depositors – is making sure that we, as taxpayers, get our money back.

And what’s scary for him (and, frankly, for all of us) is that conditions in money markets are as bad as anyone can remember.

Virgin is no longer confident it can raise a jumbo loan of £11bn to repay a chunk of taxpayer-backed loans from the Bank of England – which currently total £25.5bn.

In theory, that undermines the Virgin proposal.

Except that Olivant too cannot give a cast-iron guarantee that it would be able to raise a comparable sum. All it can offer is hope that it will be able to repay somewhere between £10bn and £15bn within the next two or three months.

The Treasury had wanted to make a decision on the Rock’s future by mid December – which in reality means by the end of next week.

The options have narrowed to nationalisation versus two potential commercial solutions that are not yet wholly nailed down.

How is the chancellor to make a rational choice when money markets are so unstable?

What he needs to think about, and fast, is whether he genuinely believes the Rock is a going concern.

If it is, then there’s no ambiguity about what he should do.

As I was reading the following post, it occured to me that much of this Subprime Flu, which I really think is more like an advanced case of Colony Collapse Disorder, will resolve itself through simple honesty and accounting, because, money has to go somewhere to be safe. Thus, the banks that continue to play with credit enhancement derivatives and leverage risk to a point of chaos will simply destroy capital and customer approval, i.e., they will die on the vine, while banks that are in the business of "honest" lending that pursue risk management models that are not based on super computer finacial engineering and tax evasion -- will survive and thrive.

Im not sure if bees are over-leverged, but CCD is chaotic and symptomatic of stressed conditions, which might be somewhat related to a new model by Penrose:

Re: For example, Roger Penrose has argued that a cyclic model may be necessary to explain how the universe is compatible with the second law of thermodynamics, one of the most fundamental dictums of physics. According to the second law, entropy (the amount of disorder) always increases. Since the inflationary model creates an enormous amount of entropy, the universe must have begun with very little before inflation.

Now, back to supply and demand and why money will flee to safety, like bees to honey:

Worried savers’ money has to go somewhere. And both individuals and companies appear to have identified RBS as a safe haven.

RBS’s statement says that it has “experienced strong deposit growth”. And I understand that more than £800m of additional liquidity has gushed into its accounts over the past few months.

At a time when the rates charged by banks for lending to each other is hitting record levels, this inflow of deposits represents cheap money.

So unlike Alliance & Leicester – which recently warned of a squeeze in net profit margins – RBS’s profit margins are improving. Which may, to an extent, offset the expected slowdown in the US and UK economies next year.

RBS has another advantage over banks with a predominantly UK focus. It’s been able to tap the generous liquidity provided by the European Central Bank and the Federal Reserve.

The bank has therefore been less vulnerable to the perceived structural shortage of liquid funds in the sterling money market – for which the Bank of England’s conservative approach to the provision of cash to the banking system has been widely blamed.

But let’s not get carried away here.

RBS has been bashed by the debacle in structured finance and in the US sub-prime market.

In the second half of 2007, it has incurred write-downs of £950m on its holdings of assorted securities created from loans to US homebuyers with dodgy credit histories.

At the bit of the Dutch bank ABN which it has bought, there are anticipated write-downs of £300m.

And there’s a further £250m impairment charge on RBS’s holdings of loans made to private-equity buyouts.

Not nice, but a lo

In one breath, Mr. Bush warned he would use his veto power to stop Congress from over-spending, while in the next he fought -- alas, successfully -- to protect hedge fund managers and buyout partners from having to pay the same tax rate that millions of ordinary taxpayers must pay. Several of these fund managers are billionaires, others are multimillionaires. Yet the White House not only fought to keep their income tax rate at the capital gains level of 15 percent, but also, incredibly, to borrow $51 billion to make up for the revenue lost by this preferential tax treatment.

That $51 billion could have been recouped if only the Senate had had the courage last week to make the hedge fund millionaires pay their fair share. Instead, Democrats caved and joined with Republicans in voting to freeze the alternative minimum tax, without providing any way to replace the $50 billion that will be lost to the Treasury. The freeze is justified to protect middle class taxpayers from a levy intended to apply only to the very wealthy. But refusing to recoup the lost revenue isn't justified; it's irresponsible. Regrettably, the House, which has insisted on making hedge fund pay higher taxes, seems ready to go along with the Senate.

As The New York Times has pointed out, in addition to Head Start, the spending bill vetoed by Mr. Bush would have provided funds for the Centers for Disease Control and Prevention, college financial aid, mine safety, cancer research and other valuable programs. Mr. Bush said the bill exceeded prudent spending limits by $12 billion. He had urged Congress to cut $7 billion from these programs next year, but instead, the lawmakers increased the spending total by $5 billion.

At least one billionaire, Warren Buffett, recognizes the absurdity of the Bush position. He has candidly acknowledged that his tax rate is lower than that paid by the people who work for him and who aren't nearly as well off as he. The disparity has shamed him to the point of speaking out. But where is Mr. Bush's sense of fairness? Where is his sense of proportion? Where's his sense of shame?
Mr. Bush's double talk -- Page 1 -- Times Union - Albany NY

We learned earlier this week in a court filing that the prosecution plans to ask Buffett to the witness stand.

That means there's a possibility (not a certainty by any means) that both sides may be looking to Buffett to testify in the case.

At issue: whether five executives, including General Re's former CFO Elizabeth Monrad, orchestrated a deal that illegally pumped up American International Group's reserves. General Re is a subsidiary of Buffett's Berkshire Hathaway holding company.

Gasparino quotes Monrad's attorney, Reid Weingarten, as saying Buffett's testimony might be helpful because the Omaha billionaire knew about the transaction at the heart of the case and didn't try to stop it. That would be portrayed as supporting Monrad's argument that there was nothing illegal about the deal.

See previous case: KR Dublin refers to Cologne Re, which eventually took part in the transaction. According to the note, Mr. Brandon also suggested "funds withheld," a method of accounting for some reinsurance transactions that was also eventually employed by General Re in accounting for the AIG deal.

Analysis and Commentary: One has to ask how a seasoned financial person like Mr. Buffett would accept large deposits from another insurance company without knowing their fundamental character. Knowing this would be essential in terms of establishing an interest rate based upon expected maturity, etc.

While many speculate on why Buffett allowed these transactions to occur, my feeling is that he is trying to disguise the reality that General RE's goodwill is impaired and should be written down by at least $6 billion. The notion that a small spread between what Berkshire paid to have these deposits from companies like AIG and the spread on its investments was the primary reason seems a bit naive.

Each of the defendants was aware that the true purpose of the transactions was to permit A.I.G. to report and record loss reserves it did not really have to calm analyst criticism of A.I.G.'s reduction in loss reserves in the third quarter of 2000," the Justice Department said in a statement accompanying the indictment.

The S.E.C. also filed civil charges today, but it did not cite Mr. Brandon. Instead it named the four former insurance executives facing the criminal charges plus Christopher Garand, the former head of General Re's finite reinsurance operation.

The five were charged with securities fraud in connection with what the agency called a "sham transaction." They could face financial penalties, if convicted, and could be barred from becoming an executive or director of a public company.

A.I.G. has previously acknowledged that its transactions with General Re were improper. Regulators and prosecutors have characterized the deals as an effort by A.I.G. to make its financial statements appear more robust than they actually were. A.I.G. forced Mr. Greenberg, a strong-willed and detail-oriented executive, to r

I really hate Buffy, but... here is, offering you those sweet gems;

FAIRFAX FINANCIAL HOLDINGS LIMITEDTo Our Shareholders:Our biblical seven lean years are over. 2006 was an excellent year for Fairfax

http://www.fairfax.ca/Assets/Downloads/070309ceo.pdf

Finally, we continue to worry about the unprecedented issuance of collateralized bonds,mortgages and loans (we hold none!). The assumption in the marketplace is that ‘‘structure’’will eliminate or significantly reduce all risks. So a portfolio of 100% non-investment gradebonds, sub-prime mortgages or non-investment grade corporate loans, by sophisticatedstructuring, can transform into securities of which 80% or more are rated A or above. This hasresulted in thousands of collateralized bond issues being rated AAA while fewer than10 corporations in the U.S. are AAA! We see an explosion coming but unfortunately cannotpredict when. As Grant’s Interest Rate Observer said in its December 15, 2006 issue, ‘‘Blame forthe distress at the fringes of subprime, we judge, cannot be laid at the feet of the U.S. economy.It should, rather, attach to the lenders and borrowers who piled debt on debt until the edificesways even in a dead calm.’’Our concerns about the U.S. financial markets are why we continue to protect our shareholdersfrom a 1 in 50 or 1 in 100 year event. With about half our equity exposure hedged against theS&P 500 (there are some basis risks as our stock positions are worldwide), our investment of$276 million in credit default swaps (with a notional value of $13.1 billion), andapproximately 78% of our investment portfolios consisting of government bonds and cash, wefeel that we have effectively protected our investment portfolios from a potential (though lowprobability) financial market disaster.Last year, we gave you a treatise on credit default swaps. In 2006, as spreads narrowed evenfurther, we lost $87.1 million on these swaps! Since our original purchase, we have lost 74% of our original investment of $276 million. Fortunately, these losses are predominantly only on amark-to-market basis. On average, we still have four years left on the swaps. As this goes topress, spreads have begun to widen considerably and we have recouped some of our mark-to-market losses. Also, we continued to maintain our S&P 500 hedges in 2006. Those hedges costus $159.0 million in 2006, and $296.0 million cumulatively since 2004. However, if not forthose hedges, we would not feel comfortable having approximately $2.3 billion in equities.Some of you have wondered – sometimes loudly – why we bother with these hedges and creditdefault swaps. Besides our comfort in having this protection, we continue to think that thisinsurance policy may pay dividends – perhaps sooner than you think!

"The risk/return characteristics of these businesses were not consistent with our expectations or the strategic framework we have set for CIBC, a framework we intend to vigorously adhere to," he said. "We also intend to place additional emphasis on building capital strength, which we believe to be prudent given the uncertainty of the current market conditions."

This capital, which would normally be earmarked for a possible U.S. retail acquisition, will now double as a cushion against potential writedowns. CIBC said yesterday it would take an additional $225-million in charges in the month of November on its unhedged exposure — exposure that is not insured against losses — bringing the total so far on that portfolio to $978-million. The far bigger worry, though, is on the $9.8-billion hedged book, especially given the uncertain financial health of U.S. bond insurers who provide these hedging contracts.CIBC said almost half of its $9.8-billion in hedged exposure is spread across five triple-A-rated financial guarantors, and has purchased an additional $420-million of protection against this group. A further 18 per cent is with two double-A insurers.

What investors are focusing on, however, is $3.5-billion worth of exposure that is thought to be hedged with ACA. These assets have already declined by half in value, meaning that ACA would owe CIBC $1.7-billion. These assets have likely deteriorated even further in recent months, and the question now is how much, if any, money will ACA be able to pay.

"How does CIBC get this big of an exposure in the first place?" asked another analyst. "And why $3.5-billion to one counterparty? These are two massive mistakes, and they're going to pay the price."

How do they get this exposure........go ask the dumb clucks in Florida and 50 other states where they all were greedy pigs with retarded financial models that all exploded with the same stupidity virus!

Fun page:

Page not found - MunicipalBonds.com

Last one tonight:

On Thursday, MBIA declared a regular quarterly dividend of 34 cents per share on its common stock. The dividend is payable Jan. 15 2008 to shareholders of record as of Dec. 21.

Friedman, Billings, Ramsey analyst Steve Stelmach told Forbes.com recently that the issue for Ambac over the past few weeks has been whether the New York-based bond insurer is appropriately valuing its CDO portfolio as credit ratings on the securities have plummeted. CDOs, or collateralized debt obligations, are securities backed by a pool of bonds, loans or other assests, where investors buy slices classified by varying levels of debt or credit risk. (See " Ambac Investors Sweat A Little More")

Ambac management has recently been making its case to the public as to why the situation is not as bad as it seems, holding conferences and issuing rebuttals. (See “Ambac Talks Back”)

The collapse of the subprime mortgage market in recent months has created a domino effect in which investments like CDOs have lost much of their value, and subsequently the companies that hold them have had to incorporate those declines onto their books.

From tues: In an uncommon move, Ambac Financial (nyse: ABK - news - people ) issued a rebuttal to a report issued Friday by Morgan Stanley that painted a very cautious picture of the financial guaranty industry in general, and Ambac in particular.

“As the credit market continues to weaken,” Analyst Ken Zerbe wrote, “our confidence that the guarantors will survive the credit meltdown is waning, prompting us to take a more conservative view of the financial guarantors.”

More importantly, Zerbe increased his loss expectations for Ambac to $3.5 billion, with $2.1 billion in losses on collateralized debt obligations (CDOs). On its CDO exposures, he revised his estimate to a loss rate of 15%, up from 13%, based on trading levels of subprime asset-backed securities.

For the most part, the New York City-based company’s rebuttal expressed only a difference of opinion. The company said that it stood by its assessment of itself, while identifying specific points where it took exception to Zerbe’s analysis.

“We are confident in the quality of our internal credit ratings process,” Ambac said, “we have been very transparent to the market and our investors by disclosing significant detail in our direct mortgage and CDO exposure in our various public disclosures.”

One point of inconsistency between the company’s rebuttal and Zerbe’s analysis centers on the use of the ABX index as a standard of assessment.

The ABX index represents a basket of credit default swaps on high-risk subprime mortgages and home-equity loans. Investors buy ABX swaps to hedge on the risk of default on the underlying mortgages. If the index falls, it indicates that investors expect losses to increase on high-risk mortgages.

The company took exception to Zerbe’s expectation that CDO losses would increase, saying that Zerbe had assumed t

OCTANS III CDO - Notice of Event of Default
| Reuters

Market News

Reference is hereby made to that certain Indenture dated as of December 6, 2006 (the “Indenture”), among OCTANS III CDO, LTD., as Issuer, OCTANS III CDO, CORP, as Co-Issuer, and The Bank of New York Trust Company, National Association, in its capacity as trustee (the “Trustee”). Capitalized terms used herein and not otherwise defined shall have the meanings assigned to such terms in the Indenture.

Pursuant to Section 6.2 of the Indenture, the Trustee hereby provides notice of an Event of Default under Section 5.1( of the Indenture because on the Determination Date occurring on December 3, 2007 (a) the Net Outstanding Portfolio Balance on such Determination Date plus the MVS Account Excess as of such Determination Date was less than (b) the sum of the Remaining Unfunded Notional Amount plus the Outstanding Swap Counterparty Amount plus the Aggregate Outstanding Amount of the Class A Notes.

If an Event of Default occurs and is continuing, a Majority of the Controlling Class may direct the Trustee, by notice to the Co-Issuers and the Trustee, to (A) declare the principal of all of the Secured Notes to be immediately due and payable, and upon any such declaration such principal, together with all accrued and unpaid interest thereon, and other amounts payable under the Indenture, including any Senior Loan Swap Installment, shall become immediately due and payable and (B) terminate the Reinvestment Period

July 23 (Reuters) - Standard & Poor's on Monday said it may cut $1.76 billion in collateralized debt obligations backed by asset backed debt, citing exposure to residential mortgages that have undergone downgrades.

S&P said it may cut 33 CDO pieces, taken from eight deals that package asset-backed securities, or a combination of ABS and ABS derivatives. Seven of the eight deals were created in 2006, and one was originated in 2007, the rating agency said.

All of the affected CDO transactions have exposure to U.S. residential mortgage-backed securities (RMBS) backed by first-lien subprime mortgages.

The deals under review are all so-called mezzanine rated paper, which are backed by "A" and "BBB" rated tranches of residential mortgage backed securities and other structured finance securities, S&P said.

The deals that have tranches under review include Arca Funding 2006-II Ltd., Auriga CDO Ltd., Cetus ABS CDO 2006-2 Ltd., Gemstone CDO VII Ltd., GSC ABS CDO 2006-4u, Octans III CDO Ltd. and Ischus Synthetic ABS CDO 2006-2 Ltd.

Octans I Cdo Ltd
C/O: Walkers Spv Limited, George Town, GR CAYMAN, Cayman Islands (Add Company Info)

SIC:Offices of Holding Companies, NEC

Line of Business:Holding Companies, Nec, Nsk

had to get this in!

try this: http://209.85.173.104/search?q=cache:fREb_W5py9cJ:www.vanderbiltfinancialtrust.com/reports/MNTR0601_20061205_R9_v7.pdf%3Bjsessionid%3DOQF1EY3PIVN3XQFIFQCSF3WAVAWAIIY4+Montrose+Harbor%5ECDO%5EMicheal+Mateja&hl=en&ct=clnk&cd=8&gl=us

The Europeans use the money supply to calculate their inflation, theroxy. It is an interesting and I believe whole look at the concept.
We look at consumption, that basket of goods which doesn't include house prices but the proxy OER (devoid of the speculative component...and removed from the reality of the actual cost and the pressures that high house prices have put on other spending).
Our narrow view of inflation excludes investment of any sort even though a ton of money is printed for those causes.
It is almost an ideological divide --not merely a financial strategy for undervaluing inflation to keep government "inflation-protected" payments unprotected from commodity inflation, but also a partial measure of the economy (missing the manager's pay and the growing "financial" portion entirely) refusing to examine anything more than the consumer and his behavior as a worker --fuggedabout his (paltry) investments and especially the other non-paltry investments. It reminds me of anthropological studies: the consumers are the case study, the managers conduct the study.

Safety in numbers?

Accountants seek guidance on bank debt
By Helen Power
Last Updated: 12:40am GMT 09/12/2007

In an unprecedented move PricewaterhouseCoopers, KPMG, Deloitte and Ernst & Young met officials from the Financial Services Authority late on Friday afternoon to plead with the regulator to sanction a common valuation code in an attempt to push some of the responsibility for quantifying banks' liabilities on to the Government.

Accountants seek guidance on bank debt - Telegraph

This is a great post. I have a list of the banks with the highest ratio of construction loans to capital in my office. I dont recall too many of the large money center banks being too exposed, but some of the large regionals were very exposed. I recall Fifth Third being on the list but not at the top.

“It was the case that the price level in 1929 was not much different, on net, from what it had been in 1800. But, in the two decades following the abandonment of the gold standard in 1933, the consumer price index in the United States nearly doubled. And, in the four decades after that, prices quintupled. Monetary policy, unleashed from the constraint of domestic gold convertibility, has allowed a persistent over issuance of money. As recently as a decade ago, central bankers, having witnessed more than a half-century of chronic inflation, appeared to confirm that a fiat currency was inherently subject to excess." – Fed Chairman Alan Greenspan before the Economic Club of New York, New York City December 19, 2002 "Issues for Monetary Policy"

Paulson headed to Alcatraz according to SF Chronicle. Already referenced by Yal, but a must read:

MORTGAGE MELTDOWN / Interest rate 'freeze' - the real story is fraud / Bankers pay lip service to families while scurrying to avert suits, prison 

Tanta and CR know better, but still...how can these servicers avoid lawsuits when they are clearly acting in their own interest as opposed to the investors'?

Look, the Plan's mod criteria is predictive of nothing. We all agree on that, right? The servicers will argue that non-predicitve criteria is still "the best agreed-upon practice", and that their actions are within the PSA terms. In reality they chose the criteria that minimizes their costs!

Is this much ado about nothing? I don't think so.

You see, these mods benefit servicers and a subset of investors that cannot stomach write downs. The latter of course includes the servicers' parent companies (I'm talkin' about you, Countrywide!).

Think of it as the ranchers, their bankers, and their crony sherriff "fencing in" the sheep herders' land. This is just the first battle, folks. Its pschological, as they are testing the waters to see if they can pull it off. If the townsfolk just lay down and take this one, the ranchers will steal more and more as the cycle wears on.

The point is that none of these pooled loans that investors bought would withstand discovery in a lawsuit. If just one judge rules "Buy 'em back at par" the floodgates open. I suspect that's why there is a rush to do quick and dirty re-negotiated loans with the borrowers most likely to have lied. If they can do the mods fast enough the servicers can claim the bad loans with falsified information have been replaced with verified loans even if they are every bit as bad an investment.