The United States and the World: Where Are We Headed? – … This bubble is only about 60 percent deflated, and that assumes that there is no overshoot in the other direction at the bottom. The arithmetic is fairly straightforward3: from 1996 to 2006, U.S. home prices rose by about 70 percent above the rate of inflation. Prior to this, home prices over the long term did not rise faster than inflation. This means that home prices would have to fall about 40 percent to reach trend levels; in real terms (including inflation), they have so far fallen about 25 percent. … -  – CEPR.net

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Citigroup Swallows Wachovia – Carl Gutierrez -  Left with no choice, the debt-laden firm has handed over its banking operations to Citigroup – Forbes

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Haste Makes Waste – … The problem with trying to legislate in the middle of a revolution is that you aren’t sure whether you are governing the world that is being destroyed or the one that is coming into being. There can be little question that the Wall Street that existed at the beginning of this year is no longer the industry that Congress is seeking to rescue from its own excesses. The financial world has been permanently altered by the collapse of the debt bubble that inexorably built up over the past three decades. Now Congress is trying to design a rescue plan for a world whose shape is highly contingent and unstable …. John Mauldin’s Outside the Box E-Letter

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New Servicer Targets Needs of Distressed Mortgage Investors – PAUL JACKSON  – Dallas-based Wingspan Portfolio Advisors, LLC, announced on Monday that it had opened its doors for business, and that it would announce its first major client relationship next month.  – housingwire

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Fed Pumps Huge Wads of Cash Into System – The Federal Reserve announced new actions Monday to combat the credit crisis, increasing the size of its lending facility to banks and its swap facility with foreign central banks, which will deliver more dollars abroad, where demand for dollars is far more in excess of supply than it is in the U.S. – TheStreet.com 

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AIG stake has potential for big returns – NY Fed – The Federal Reserve Bank of New York said on Monday that a 79.9 percent equity interest in American International Group Inc has the potential “to provide a substantial financial return to the American people.” -  – Reuters 

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Fed Throws in $620 Billion In Swaps For Dollar Liquidity – 24/7 Wall St 

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The New Biggest Risk of All – DEFLATION – “It seems like a foregone conclusion that deflationary pressures are now squarely upon us. Prices are falling in asset classes across the board,” said guest contributor Bennet Sedaca.  – Investment Postcards from Cape Town 

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60% of Institutional Investors and Large Companies Express Confidence that Defeated Legislation Would Work -  Ryan Utsumi -  More than 60% of institutional investors, large companies and pension funds around the world think the $700 billion government bailout rejected yesterday by the U.S. House of Representatives would have a good chance of restoring stability to financial markets if implemented, according to a new survey from Greenwich Associates. -  riskcenter.com 
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Wachovia sale alters Charlotte business landscape – WRAL.com 
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Wachovia’s `Great Success’ Became $122 Billion Burden – Bob Ivry -  … “Golden West was the beginning of the end” for Wachovia, said Anat Bird, a former Wells Fargo & Co. executive who now runs SCB Forums Ltd., a Granite Bay, California, company that conducts peer group conferences for bankers. Golden West “had lousy assets, lousy liabilities and they paid a fortune for it.”  … – Bloomberg 

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Blame Wall Street and Ruin Main Street – Marko Kaminis – Let’s Not Overlook Others Equally at Fault … Let’s Start with the Credit Rating Agencies  … Mortgage Brokers … Look No Farther than the Mirror … Our Society is to Blame – Our encouragement of easy living and good times … lots of good points – Wall Street Greek