Yup. I’d say that 37 percent in July goes beyond cuts and becomes flees.

“China Construction Bank Cuts Fannie, Freddie Bond, MBS Holdings”, Dow Jones / CNN Money, August 25, 2008.

China Construction Bank Corp. (0939.HK) said Monday it had cut its holdings of bonds and mortgage-backed securities related to Fannie Mae (FNM) and Freddie Mac (FRE) to just above US$2 billion by the end of July from US$3.2 billion at the end of June.

And I’m not sure about bonds. Many bond auctions are failing as investors question the health of the issuing agency. We can’t tax the unemployed or bankrupt.

Assuming that it’s Monday, and not a good day (FNM down 5% in premarket) perhaps you could try one of my poems. At least there you’re not supposed to understand what’s going on!

Igor says, “Coverup.”

“Bank Failures Have Customers Seeking FDIC Protection”, by Jeff Plungis, Bloomberg, August 8, 2008.

For those seeking insurance over the normal FDIC limits, banks in the Promontory Interfinancial Network LLC will split up a large CD among several banks to stay under the cap. The Arlington, Virginia-based company has been offering this service, known as a certificate of deposit account registry service, or CDARS, since 2003.

Promontory network banks would divide $1 million among 11 different bank CDs, according to company spokesman Phil Battey. Each CD would be less than $100,000 to make sure any interest earnings are also insured.

Promontory’s network started with a handful of banks, enabling up to $250,000 in insured CDs. Five years later, 2,170 banks are in the network, and savers can insure up to $50 million through a single bank.

Equal Treatment

A 2003 legal opinion from the FDIC assures CDARS customers that they’ll be treated like any other insured bank customer, Battey said. Three of the banks that have failed this year were part of Promontory’s network. In each case another bank assumed CDARS deposits immediately, making payouts unnecessary.

None of this addresses whether it’s a good idea to have that much money tied up in low-yielding bank accounts, when there are safe, higher-paying alternatives like bonds and mutual funds. Young, the financial planner, says his fixed-income customers usually opt for municipal bonds or U.S. Treasuries.

Igor says, “Excess.” But for once that might just be descriptive.

Very little press but the beat goes on. Next week is the last week for buyers to get DPA’s. Or should I say, seller to use DPA to entice buyers.

http://www.nytimes.com/2008/08/23/business/23bizbriefs-FDICSHUTSDOW_BRF.html?ref=business

Another large area of concern is consumer loan collateral. Like housing, the value of the collateral is dropping into a pool of red ink.

Auto loans on trucks and SUVs are totally under water. A Denver Dodge dealer is offering new Dodge trucks at 50% off. You read that correctly.

So what is a used Dodge truck worth? What amount does the bank have on their books?
What about a diesel motorhome?

What is the underlying collateral for credit card debt?

The irresistible force referred to above, is rolling down the mountain as we speak.