Billions More

Billions more in write-downs from banks and mortgage companies based on the sub-prime mess.  This situation has put our economy in a serious situation.  If it is not for the fact the the US dollar is at it's lowest level against other currencies we would be in a real pickle.

Why?  With a low US dollar the securitized loans that our on banks books in US dollars that are poor performing based on the HIGH DOLLAR strength when purchased are ATTRACTIVE investments for foreign investors.  Betting on two things 1) That the mark-down on these assets is paper loss only (accounting rules requiring mark-it-to-market) 2) the US dollar will gain in strength

Example:  Duncan (investor from England) can purchase $100 dollars worth of mortgage obligations for $80 US but with currency exchange rate is paying the equivalent of $53 ... if the dollar strengthens his investment goes up ... if Duncan just holds onto the mortgage obligations which eventually mature he has made $47 on his $53 investment less any defaults ... that would be a 88% total return.  Although a very simplified example it proves the point.

It is sheer luck that our Dollar is weak against other currencies right now ... had this crisis happened last year we would be much worse off.