I have been asked why I disdain the traditional media. My answer is usually some variation on themes of inaccuracy and obsolescence. A perfect example of the latter is today’s coverage by 60 Minutes of the ongoing housing troubles; an exposé they could have done six months ago about a crisis obvious a few years ago. Fret not, I cite this coverage for an altogether different reason.

60 Minutes is an investigative news-zine that will be 40 years old this autumn. Their audience is the salt of the earth, the older generations that vote regularly and know what a savings bond is. In House of Cards, the ideas presented are thus:

• People otherwise able to pay their mortgages will not, simply because their house is not what it was. Defaulting as a business tactic was heretofore limited to the likes of businesses and Donald Trump, now it’s for everyone.
• The scale of the problem; the proper unit to use is “trillion with a t” and the presence of now worthless securities lurking in banks and pension funds.

As a commenter on Calculated Risk put it,

“60 Minutes” is at best middle-of-the-road investigative reporting. It’s not Uncle Walter. But it does have a certain credibility with Middle America. If “60 Minutes” carries the story — well, could be something of an Uncle Walter moment. A tipping point, at least in the mindset of a good portion of Middle America that wasn’t paying attention.

– Bob Dobbs, on Calculated Risk

(And if you don’t know who Uncle Walter is, ask your parents!)

In the past few days the indices have completed multiple bearish patterns and broken through significant levels of support. The ISM and jobs figures were poor. The commercials are now net short. These are not surprising new developments, but rather part of a long-awaited convergence.

… If you’re long equities, and unhedged, you’re likely to get an ocular penetration experience not seen since 2000.

– Karl Denninger, 2008-01-04

The party is about to begin, and oh yes, did I mention it’s going to be spectacular?

Wow… This past week has been full of exciting news. Some smart cookie has finally realized that maybe it would be worth revisiting the credit ratings of bond insurers. (At this point, I sincerely hope that no-one reading this is foolish enough to have given any credence to those ratings.) M-LEC, a sort of financial Superfund site, appears dead at birth, and FASB’s rule 157 will soon take effect to force more mark-to-market of dubiously-valued assets. Citigroup, just like Merrill Lynch a few weeks before, tossed its CEO and wrote down ~$11 billion in assets.

While I’d love to rant about the abomination that was M-LEC, I’m going to instead provide a quick introduction to two phrases: “counterparty default” and “acceleration event”. I think we’ll be seeing much more of them in news articles over the coming months.
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