Bond rating agency Fitch just downgraded $37.2 billion of toxic glop CDOs from highest rank AAA to junk, the lowest grade. This led a commenter to say Collateralized Debt Obligations should be renamed Cannonballized Debt Obligations.

In related news, E-Trade is toast, and for the same reason, “investments” in toxic waste mortgage-backed securities. Lots more of this will be coming too.

Weren’t these investment bank / hedge fund types supposed to be the best and the brightest? So, how did it get this crazy? Aside from the obvious greed and lack of ethics by too many of those involved, government regulatory agencies were asleep at the wheel, perhaps quite deliberately so.

If you have a retirement or money market fund, they may well have toxic glop in their portfolio. How about your bank? So far the impact from this has seemed rarefied and distant, but that’ll be changing. Consumer spending driven by using home equity as an ATM is gone, which means a business slowdown too. Obvious businesses that will be affected are real estate, travel, and any discretionary spending. Mortgages are way harder to get now and real estate prices continue to fall. So, even if you rent, you can and probably will be affected by the imploding debt market.

The problem with a crisis of capitalism, and this sure seems to be one, is that everyone gets burned. A staunch socialist can lose his job just as easily as a die hard capitalist.

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And The Band Played Waltzing Matilda

(the hospital ship returns to Australia during WWI)

So they collected the cripples, the wounded, the maimed
And they shipped us back home to Australia
The armless, the legless, the blind, the insane
Those proud wounded heroes of Suvla

And as our ship pulled into Circular Quay
I looked at the place where my legs used to be
And thank Christ there was nobody waiting for me
To grieve and to mourn and to pity

And the band played Waltzing Matilda
As they carried us down the gangway
But nobody cheered, they just stood and stared
Then turned all their faces away.

Sure, some wars do need to be fought, but as Sue says, “no one ever recovers from war.”

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Hydrail technology - electric railway propulsion using onboard hydrogen fuel cells - is poised to replace both diesel electric locomotives and trains powered by track electrification. It will happen much faster than it took diesels to supplant steam locomotives.

Wow. The trains are powered by hydrogen, and thus generate their own electricity. Railroads in Japan and India are already testing the technology, and here’s the kicker. The fuel cells can run on waste hydrogen used by various chemical manufacturing processes. A proposed Danish train plans to run entirely on such waste hydrogen. But there’s more!

Later Danish trains may run on wind power. Denmark’s Hydrogen Innovation and Research Center calculates that a single large wind turbine can generate enough hydrogen through electrolysis to power two trains. Given that Denmark already gets more than 38 percent of its energy from the wind, the economic prospects for hydrail are excellent.

Clean trains that don’t use carbon-based fuel would be a paradigm shift and are an inspiring example of how new technology can help remediate both global warming and peak oil.

Hydrail.com

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General Motors wrote off $39 billion last week in tax credits against future earnings. Since there is no deadline on when the tax credit could be used, then the jarring implication is that GM never expects to make that much money ever again.

This is beyond bad news for Detroit.

But the real pain happens this Thursday, Nov. 15, when FASB Rule 157 goes into effect. It dictates that investment banks and the like can no longer avoid putting market prices on now-dicey “securities” characterized as Level 3 assets. These would be the TGFKAI (Toxic Glop Formerly Known As Investments) that have cratered so badly that instead of being marked to market they are being “marked to make-believe.” But, come Thursday, the pixie dust wears off and they must be marked-to-reality. How much money are we talking?

Morgan Stanley has 251 percent of its equity in Level 3 assets, making it the most vulnerable to writedowns, followed by Goldman Sachs Group Inc. at 185 percent.

Lehman is at 165%, and Bears Stearns 159%. I’m guessing no Xmas bonuses this year for all the greedy little piggies who precipitated the current credit market collapse with their mad subprime schemes. Some of them, like with Enron, will be going to prison soon enough no doubt.

And where was the government on all this? Shouldn’t they, y’know, have been “regulating” and stuff like that? Oh, I forgot, the “magic of the marketplace” was supposed to create orderly, rational markets if just left alone by pesky governments. But instead quite the reverse has happened, hasn’t it?

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Excellent overview of the choices now facing the Respect Party, sans any SWP influence. Choices: Form a real Left party or get subsumed by monied interests and lose relevance.

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