Some mortgage debt now selling at 20 cents on the dollar

behind the scenes unnoticed by a population as its govt bloats, goes
corrupt and usurps the national treasure (hidden by means of printing
funny money)...is loss of economic viability. it cannot be swept
under the carpet any longer. a cracker box house is simply not
adequate to support a million dollar mortgage.


Folks. 20% of the mortgage is an 80% reduction of asset value in cases
where the morgage equalled the sell price. If the mortgage was say
only 90% of the sell price, and the mortgage value dropped by
80%...the net devaluation would be 90#.. proably rare as this hit
the press... but it may not be so rare as this disaster and all the
fraud behind it, and the blow back in terms of derivitive losses (into
the tens of trilliions most likely) begin to float to the
surface.....

those floaters won't flush either.


Phil scott



HSBC Bails Out 2 Troubled Funds
Monday November 26, 10:43 am ET
By Robert Barr, Associated Press Writer
HSBC Assumes $45B in Assets and Funding in Bailout of 2 Troubled
Investment Funds


LONDON (AP) -- HSBC Holdings PLC, Europe's largest bank, said Monday
it will bail out two troubled funds it manages by transferring about
$45 billion of their assets onto its balance ***.
HSBC said it will also inject $35 billion into the two funds,
Cullinan
Finance Ltd. and Asscher Finance Ltd., in a move that will clarify
responsibility for the funds and prevent liquidation of their assets.


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The funds are "structured investment vehicles" or bank-sponsored
businesses that sell short-term debt but have been operated off the
bank's balance ***.


The moves are another symptom of a global credit crisis which has
forced up the cost of short-term lending.


HSBC shares fell 2.2 percent to 809.5 pence ($16.56) in midday
trading
Monday in London.


Structured investment vehicles, or SIVs, are bank-sponsored
businesses
that sell short-term debt -- such as unsecured commercial paper -- to
investors such as hedge funds. The banks use the proceeds to buy
longer-term assets, like mortgage-backed securities.


SIVs normally generate money through fees and the difference between
short-term and long-term rates. But in August, demand for short-term
assets dried up, creating liquidity problems for SIVs.


The viability of an SIV relies on its ability to continue borrowing
money.


Amid this year's flight from risk, lenders in the commercial paper
market have frequently balked at letting borrowers "roll over," or
extend, their debt. This is what is happening to most of the world's
roughly 30 SIVs, which collectively manage about $320 billion.


An SIV that cannot continue borrowing money would need to find cash
elsewhere or sell its investments. Since mortgage debt has lost so
much value -- some types of mortgage debt are selling at less than 20
cents on the dollar -- this would likely lead to losses for investors
in SIVs.


Smaller banks including WestLB and Landesbank Baden-Wuerttemberg have
previously agreed to buy the senior debt of SIVs managed by their
affiliates to prevent having to sell assets at a loss.


Earlier this month, bankers from Citigroup Inc., JPMorgan Chase & Co.
and Bank of America Corp. announced an agreement on a multibillion-
dollar fund to buy distressed debt securities.


HSBC, whose SIVs are among the largest in the market, said it would
not be participating in that fund.


"As existing investors will continue to bear all economic risk from
actual losses up to the full amount of their investment, HSBC expects
no material impact to its earnings," the company said in an
announcement to the London Stock Exchange.


HSBC said it will offer investors in Cullinan and Asscher the option
to exchange their existing income and mezzanine notes for notes
issued
by one or more new vehicles.


Current senior debt holders of Cullinan and Asscher will be repaid as
the debt falls due and will have the opportunity to reinvest in the
commercial paper issued by the new vehicles, HSBC said.


On the Net: http://www.hsbc.co.uk



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