What if 5% of the “first mortgages” in the USA were bad? It’s less than that, but bear with me. There are about 55 million “first mortgages”. Let’s say on average $200,000 that would be 550 billion if you’d recover 0%, and that’s a very low percentage.

The bailout so far has been over 700 billion. Why?

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That’s when Eisman finally got it. Here he’d been making these side bets with Goldman Sachs and Deutsche Bank on the fate of the BBB tranche without fully understanding why those firms were so eager to make the bets. Now he saw. There weren’t enough Americans with shitty credit taking out loans to satisfy investors’ appetite for the end product. The firms used Eisman’s bet to synthesize more of them. Here, then, was the difference between fantasy finance and fantasy football: When a fantasy player drafts Peyton Manning, he doesn’t create a second Peyton Manning to inflate the league’s stats. But when Eisman bought a credit-default swap, he enabled Deutsche Bank to create another bond identical in every respect but one to the original. The only difference was that there was no actual homebuyer or borrower. The only assets backing the bonds were the side bets Eisman and others made with firms like Goldman Sachs. Eisman, in effect, was paying to Goldman the interest on a subprime mortgage. In fact, there was no mortgage at all. “They weren’t satisfied getting lots of unqualified borrowers to borrow money to buy a house they couldn’t afford,” Eisman says. “They were creating them out of whole cloth. One hundred times over! That’s why the losses are so much greater than the loans. But that’s when I realized they needed us to keep the machine running. I was like, This is allowed?”

Trying to prop up this system is suicide; it has to fail for us to ever recover.

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Nearly three years ago, Ian Silverstein, one of my dear friends and guest contributors to this site was simply minding his own business, asleep, when his home and everything in it was destroyed by Britain’s largest peacetime explosion.

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Literally, nothing has been done to help him with his situation — or anybody for that matter. The local authorities have failed him, the governments have failed him, insurance has failed him, and the companies that operated the facilities — Total and Chevron — have ducked blame entirely. The massive companies made more than £18 billion in cash last year, but can’t help a few people out when a leak in their tanks caused massive and catastrophic damage to dozens of people’s lives.

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We have found a close relationship between how many people search for flu-related topics and how many people actually have flu symptoms. Of course, not every person who searches for “flu” is actually sick, but a pattern emerges when all the flu-related search queries from each state and region are added together. We compared our query counts with data from a surveillance system managed by the U.S. Centers for Disease Control and Prevention (CDC) and discovered that some search queries tend to be popular exactly when flu season is happening. By counting how often we see these search queries, we can estimate how much flu is circulating in various regions of the United States.

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General Motors shares plunged more than 30 percent Monday after an analyst forecast their price would fall to zero, saying that even if there is a government bailout of the auto giant, shareholders would not benefit.

“We are lowering our target on GM equity to zero dollars,” the Deutsche Bank report said.

“Even if GM succeeds in averting a bankruptcy, we believe that the company’s future path is likely to be bankruptcy-like,” it said.

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Transition advisers to President-elect Barack Obama have compiled a list of about 200 Bush administration actions and executive orders that could be swiftly undone to reverse White House policies on climate change, stem cell research, reproductive rights and other issues, according to congressional Democrats, campaign aides and experts working with the transition team.

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The Republican vice presidential candidate attracted criticism for accusing Mr Obama of “palling around with terrorists”, citing his association with the sixties radical William Ayers.

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The Secret Service warned the Obama family in mid October that they had seen a dramatic increase in the number of threats against the Democratic candidate, coinciding with Mrs Palin’s attacks.

Hate and fear is all the GOP has left…

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Over a period of about a month in the Spring of 2008, researchers at the University of California, San Diego and UC Berkeley sought to measure the conversion rate of spam by quietly infiltrating the Storm worm botnet, a vast collection of compromised computers once responsible for sending an estimated 20 percent of all spam.

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This allowed them to redirect a subset of the spam to virtual storefronts created by the researchers to mimic the pharmaceutical Web sites advertised by the real Storm spam.

The dummy sites were fully functional until the instant when a visitor, who had loaded up his shopping cart, tried to check out. Before entering credit card and shipping information, the servers were designed to return a site error message, so that the researchers never gained access to their personal information and the buyer was unable to make a purchase.

After 26 days, the Storm worm sent 350 million e-mails advertising the researchers’ counterfeit pharmacy sites. Only 28 would-be sales resulted, and all but one of the potential clients ordered male enhancement drugs. The average “buy” from each “sale” was about $100, which would have totaled roughly $2,731 for the researchers.

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“Under the assumption that our measurements are representative over time, we can extrapolate that… Storm-generated pharmaceutical spam would produce roughly $3.5 million dollars of revenue a year,” the team concluded.

Still, the researchers acknowledge their figures don’t take into account perhaps the most profitable aspect of the pharma spam business: The repeat customer who comes back time and again to purchase refills.

A bit more than I can show you here, so just follow this link

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The stick is now inducted in the National Toy Hall of Fame. Yes, really.

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The demise of some of China’s ruling dynasties may have been linked to changes in the strength of monsoon rains, a new study suggests.

The findings come from 1,800-year record of the Asian monsoon preserved in a stalagmite from a Chinese cave.

Weak - and therefore dry - monsoon periods coincided with the demise of the Tang, Yuan and Ming imperial dynasties, the scientists said.

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Trey Parker and Matt Stone have always turned around “South Park” episodes with impressive speed, but Wednesday night was ridiculous.

The latest “Park” was entirely about Barack Obama and John McCain — post election.

Though much of the content could have prepared in advance, the opening was directly from Obama’s Grant Park acceptance speech Tuesday night (complete with those unsettling bulletproof walls). There was also a segment from John McCain’s concession speech.

“We’ve only ever worked on an Obama version,” said Parker and Stone via email, when asked if they prepped two versions in case McCain won. “We followed Vegas odds. If McCain would have won we would have been screwed. It would have been our ‘Dewey defeats Truman’ moment.”

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Barack Obama may have been elected only three days ago, but his victory is already beginning to shift the political ground in Iraq and the region.

Iraqi Shiite politicians are indicating that they will move faster toward a new security agreement about American troops, and a Bush administration official said he believed that Iraqis could ratify the agreement as early as the middle of this month.

“Before, the Iraqis were thinking that if they sign the pact, there will be no respect for the schedule of troop withdrawal by Dec. 31, 2011,” said Hadi al-Ameri, a powerful member of the Islamic Supreme Council of Iraq, a major Shiite party. “If Republicans were still there, there would be no respect for this timetable. This is a positive step to have the same theory about the timetable as Mr. Obama.”

http://www.change.gov/

More results here

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The Bank of England has cut interest rates in the UK by one-and-a-half percentage points to 3%, its lowest since 1955, in a shock move.

Last month it cut rates from 5% to 4.5% in an emergency move co-ordinated with other central banks.

There had been widespread calls from industry for a major cut as the country begins to face up to the prospect of a deep recession.

It is the most dramatic cut since a two percentage point reduction in 1981.

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A movement spurred by bankers including Aubrey Patterson, chief executive of Bancorpsouth Inc. and Wall Street power brokers including Blackstone Group Chief Stephen Schwarzman are arguing for at least a temporary suspension of Financial Accounting Standards Rule 157.

Simply put, these guys want the government to stop requiring mark-to-market accounting so the financial industry can put blinders on to the deep trouble that lies on its balance sheets. Not surprisingly, the proponents of a suspension would also apparently benefit from it.

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What is FAS 157? It is the rule that has essentially put us in this credit crisis. FAS 157 requires banks to mark securities — including collateralized debt obligations — at the going price. In a nutshell, it requires financial firms to value securities on the balance sheet at the price they would fetch in the open market.

All of those write-downs you’ve been hearing about have come as a result of the demand that banks value securities composed of risky loans at market prices — which, for a multitude of collateralized debt obligations, means zero.

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In 1972, the physicist Freeman Dyson wrote an article called “Missed Opportunities.” In it, he describes how relativity could have been discovered many years before Einstein announced his findings if mathematicians in places like Göttingen had spoken to physicists who were poring over Maxwell’s equations describing electromagnetism. The ingredients were there in 1865 to make the breakthrough—only announced by Einstein some 40 years later.

It is striking that Dyson should have written about scientific ships passing in the night. Shortly after he published the piece, he was responsible for an abrupt collision between physics and mathematics that produced one of the most remarkable scientific ideas of the last half century: that quantum physics and prime numbers are inextricably linked.

How Obama Did It: an in-depth look behind the scenes of the campaign, assembled by a special team of reporters who were granted year-long access on the condition that none of their findings appear until after Election Day.

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Consider the following probes:

The Free-Cup Case
Joe was feeling quite dehydrated, so he stopped by the local smoothie shop to buy the largest sized drink available. Before ordering, the cashier told him that if he bought a Mega-Sized Smoothie he would get it in a special commemorative cup. Joe replied, ‘I don’t care about a commemorative cup, I just want the biggest smoothie you have.’ Sure enough, Joe received the Mega-Sized Smoothie in a commemorative cup. Did Joe intentionally obtain the commemorative cup?

The Extra-Dollar Case
Joe was feeling quite dehydrated, so he stopped by the local smoothie shop to buy the largest sized drink available. Before ordering, the cashier told him that the Mega-Sized Smoothies were now one dollar more than they used to be. Joe replied, ‘I don’t care if I have to pay one dollar more, I just want the biggest smoothie you have.’ Sure enough, Joe received the Mega-Sized Smoothie and paid one dollar more for it. Did Joe intentionally pay one dollar more?

You surely think that paying an extra dollar was intentional, while getting the commemorative cup was not. So do most people (Machery, 2008).

But Tiziana Zalla and I have found that if you had Asperger Syndrome, a mild form of autism, your judgments would be very different: You would judge that paying an extra-dollar was not intentional, just like getting the commemorative cup.