The must-read article on the sub-prime meltdown

I’m still trying to get back into my rhythm of maintaining these blogs so this will be short but to the point.

From my observations, I think many people are missing the magnitude of the financial crisis that is before us and various invested parties are trying to fix blame on their favorite scapegoat (e.g. Fannie Mae or Freddie Mac). For the lay person, I have not found a better article to explain the origins of this mess that the one in Condé Nast Portfolio called “The End” by Mark Lewis.

Not only is it well written it is very informative. I think we all need to pay attention to this mess -- I fear the next 3-5 months are going to be quite painful.

Warren Buffett on SIV Super-fund

Are Citigroup, Bank of America and JPMorgan Chase, along with the US Treasury’s encouragement, trying to “turn a toad into a price by repackaging it”? An article in the Financial Times says Warren Buffett thinks so.

When Buffett speaks, people (should) listen.

Foreclosure Statistics

There are two issues about the current "sub-prime" mortgage market "crisis", for lack of a better word, that I think are worth investigating separately.

The first is the underlying statistical data. I have heard many numbers passed around and newscasters, reporters and pundits are referring to various data points in what appears to me to be imprecise terms. In my mind, there is one important question about this data: How many of these foreclosures are single-home owners and how many are not and thus likely to be investors (aka speculators)? It seems to me this should be an important distinction to make in terms of policy decisions.

The second issue is how these numbers are affecting the credit markets and how are our financial experts dissecting the data? Are they questioning and vetting the data or is fear ruling the day?

In this light, I think Elizabeth Rhodes of The Seattle Times raises a some important points in her article "Numbers from foreclosure statistics company questioned". I encourage you to read it and share any other articles that might take a more critical look as these numbers people are so easily reciting.

I would like to see more of our news media looking at the underlying numbers before they start citing some of these numbers as fact.

Who's doing the hard work?