We have two very serious incidents that have no practical solution.

1. The meltdown of the credit and now credit default derivatives. Some have suggested that the Federal Reserve buy all the failed derivative instruments, which they have been buying last Friday to the tune of 41 billion. They simply cannot buy all by any means. To buy them all the Federal Reserve would have to monetize now more than $20 trillion which would produce a situation akin to the Weimar Republic currency debacle. This is simply not possible. There is no PRACTICAL solution to this problem without causing disruption of a terminal nature.
2. The situation in Pakistan has no practical solution and is a burning fuse heading directly for the charge of the Taliban and Jihadist. There is not greater disaster geopolitically anywhere. This exceeds Iraq and Afghanistan, making those events no more than a training experience.

Are you taking all this seriously?

Have you protected yourself and your family?

This is it!


jsmineset.com

Real estate in a hyperinflation is ok if it is either

a ) fully paid off

OR

B ) bought with a manageable, long term fixed rate mortgage.

Manageable means you would be able to keep servicing the mortgage if you were out of a job for a few months.

EDIT bl00dy hemoticons.

This comment is just silly. Gold has been used as money for thousands of years until 1971. Returning to gold means therefore returning to the norm after this short-lived fiat experiment.

Wake up.

Couple of snippets from here:


http://immobilienblasen.blogspot.com/





As reported in today’s FT, for example, Merrill Lynch, has written down mid-quality ABX debt to 63 cents in the dollar, even though the bank’s own analysts say its worth only 40. UBS, meanwhile, assumes the same debt to be worth 90 cents in the dollar. “Simple math would imply that UBS needs an additional $8bn write-down [on its $15.4bn holdings] if the ABX pricing is correct,” Merrill themselves had the cheek to point out in a report on their rival

Here is your outlook for gold versus property. We seem to be returning to houses for less than 100oz soon. Property, anyone?
EDIT: Note the dead-cat bounce recently.

The list of doom, I suppose?

Well it seems forces sales are about to hit the banks very soon. i think citi bank will be cut down if they like it or not.

Certainly a list of where you could be looking for trouble!

Just casting the shadow of perspective on these numbers again...

A write down of 50c on the dollar, equates to an industry wide loss of $200billion. Which roughly equates to the cost of the 2005 hurricane season borne by the insurance industry.


An affordable mishap.


That is not the problem currently facing the US economy.
The problem is the growing oversupply in the securities market, due to question marks over methods of risk appraisal.

This threatens to strangle the extension of credit to the US consumer. The driving component of the global economic expansion.

Check your numbers, idiot.

http://www.reuters.com/article/reutersEdge...06?pageNumber=2
The $2.5 trillion bond insurance problem: James Saft
Tue Nov 6, 2007 10:28am EST

"The problem is that overnight the $2.5 trillion of insured bonds would reverse back to the ratings of the issuer... Imagine the impact on the economy of a downgrade of $2.5 trillion of assets.

Under pressure
That burns a building down
Splits a family in two
Puts people on streets

It's the terror of knowing
What this world is about
Watching some good friends
Screaming let me out!
Pray tomorrow takes me high high higher
Pressure on people
People on streets

Insanity laughs under pressure we're cracking

http://www.thebusiness.co.uk/news-and-********...-pressure.thtml
Morgan Stanley under pressure
Wednesday, 7th November 2007

Morgan Stanley could become the next bank to own up to further sub-prime losses in light of the continued stagnation of the asset-backed commercial paper market.

The bank, whose shares have fallen 10pc over the past three days on balance sheet concerns, is coming under increasing pressure to disclose whether it has further writedowns to make. At lunchtime in New York yesterday, Morgan Stanley's shares were down $1.48 at $54.11.

Fox-Pitt Kelton analyst David Trone believes it is likely the bank will have to write down asset-backed securities (ABS), collateralised debt obligations (CDOs) and other sub-prime related assets by as much as $6bn (£2.87bn).

Mr Trone, who acknowledges his forecasts are "just educated guesses" as the bank does not publish details of its exposure to ABS or CDOs, estimates the bank has a maximum exposure of $25bn to such assets.

In a research note, he wrote: "Once-safe tranches of ABS and CDOs have seen values declining sharply lately, following multi-level (credit) ratings downgrades."

He believes investors should stage an "outright avoidance" of Morgan Stanley until chief executive John Mack discloses more specific exposure data or until the bank actually discloses the size of future writedowns.

The bank wrote off $940m of leveraged loans in the third quarter and sustained a $480m loss in its quantitative proprietary trading strategies business, leading to a 7pc fall in net profits.

A Morgan Stanley spokesman declined to comment.

Meanwhile, rumours persisted that Goldman Sachs, until now the wunderkind of the credit crisis due to its stellar third-quarter results in which it showed how to profit from a crisis, is harbouring writedowns.

A spokesman for Goldman denied the rumours, which have resurfaced every day for the past three days.

i was told today it was 1 Trillion, but there you go.

Isn't the whole problem with OTC derivatives that, because they are not of a standard form, they are almost impossible to price objectively?

This guy might become VERY busy soon.
<a href="http://www.bloomberg.com/apps/news?pid=206...refer=worldwide" target="_blank">http://www.bloomberg.com/apps/news?pid=206...refer=worldwide</a>

The problem with them they are unregulated and the losses could be huge. which might start a chain reaction, pricing them is open based on the market price and how many people are connnected in the chain.

Exactly - so, might this explain why no-one can put a solid figure on the extent of the (potential) liabilities?

So what factor has increased the risk of default on the remaining $2,105 billion?

Write downs will be on the order of $200 billion give or take $80 billion, not $2.5 trillion.

The sole reason for reassessing the risk on the remaining $2 trillion is that the methods of calculating risk on Mortgage backed securities was incorrect. On double checking their calculations the chance of insurers finding all risk calculations are incorrect is very small.


I dont think you have any grasp on the problem.

I think you're on the ball, "?...!" - though I consider the above statement pretty bold. What exactly was wrong with the method of calculating risk? I'd assumed that the error in judgement had been as simple as to assume that credit would always expand and house prices always rise - meaning that there would never be significant negative equity.

I see the pricing of risk here to be all-but impossible... it amounts to predicting political decisions about how the economy will be run... It isn't clear to me how it will ever be possible to establish that a risk calculation is right. The right risk calculation is the one which secures investment, surely?

No offence, but that assumption of the error is very simplistic.


It was a distribution error and a failure to assess previously untested tipping points.

It was always assumed some 80% of the value of the collateral would be easily recovered. But since the distribution of defaults is often concentrated in low income neighbourhoods there is a vast oversupply of property in these areas. This outstanding over supply erodes prices and destroys equity.

The problem is borne in the fact that sub prime mortgagees are not evenly distributed geographically amongst the population, the tend to live near one another. They are more likely to have their equity damaged by defaulting neighbours than the rest of the population. They are more likely to give up and default. The snowballing effect gathers pace much more readily in these neighbourhoods than was previously thought.

Such places are becoming impossible to sell and therefore worthless. The assumption on recovering 80% of the collateral appears to have been a gross mistake.


A large component of a house price is determined by location, well in the construction of the Mortgage Backed Securities the sub prime tranche was unwittingly geographically concentrated, this concentration greatly increased the risk.


.

Thanks for another insightful post!

I suppose this shows itself where the US has lost circa 5% of its house values in the last year but some areas far greater such as Florida, CA etc.

None taken... but, which assumption of mine was "very simplistic" - I wasn't aware I'd made one... I was concentrating on asking rather than telling.



Agreed.



I'd argue that the largest component of house price is determined by availability of credit... which has depended, chiefly, upon house prices. I see this cyclic dependency as being the biggest problem...

I agree with your assessment about why the problem first becomes visible with sub-prime lending in relatively homogeneous less desirable locations. Here, of course, is also the demographic most likely to be adversely affected financially by a downturn in the economy... giving a treble-whammy....

Citigroup Credit Swaps Near Highest in Five Years

Nov. 7 (Bloomberg) -- Credit-default swaps on bonds of Citigroup Inc., Wachovia Corp. and Morgan Stanley are trading at the highest in at least five years on speculation the biggest U.S. banks may be forced to write down more subprime assets.
Contracts tied to Citigroup's debt have climbed 17 basis points to 70 basis points since Oct. 31, according to broker Phoenix Partners Group in New York. The swaps are trading at the widest levels since at least September 2002, Credit Suisse Group data show. A basis point on a contract protecting $10 million of debt from default for five years is equivalent to $1,000 a year.........

full article http://www.bloomberg.com/apps/news?pid=206...&refer=home

Not so sure about this. The meltdown of the bond insurers will re-inforce things.

Single bet. Huge loss.

This is the mark of the derivative beast.

100% correct, guaranteed.

http://www.ft.com/cms/s/0/043b17d8-8d92-11...?nclick_check=1
Morgan Stanley loses $3.7bn on single subprime bet

By David Wighton in New York

Published: November 8 2007 00:36 | Last updated: November 8 2007 00:36

Morgan Stanley has lost $3.7bn on subprime mortgage-linked investments in the past two months after a big market bet went disastrously wrong, the bank revealed Wednesday night

By the time that this crisis is over and the dust has settled down, $1bn will seem like a lot of money again

Best,
L

Low and behold, more bad news and gold kicks up again.

Can anyone explain this in simple language.

I think I understand a credit bubble, borrowing bids up asset, which rises in price and makes people believe they are getting money for nothing. Producing a feedback loop more borrowing produces more profit/collateral produces more borrowing and so on. (Correct me if this is wrong)

Eventually nobody is able to bid the price up higher and prices crash, many debts remain on assets worth less than the borrowing secured on them, the defaults break banks and even staid savers lose everything as the banks are unable to pay back deposits.

Has something similar happened with these derivatives?

To understand this slightly better you need to have a clear understanding of credit risk, ie the risk that if you lend someone money, they won't pay you back. This is the risk that credit derivatives were created to manage.

There are 3 main components to credit risk, the first is default probability, ie the chance that someone will default on debt.
The second is exposure, ie how much you stand to lose if someone defaults, and the third is recovery rate, ie how much you might get back after default.

The interesting thing about this is that if you plotted default probability against recovery rate , you would find that they're highly inversely correlated.
What does this mean in practice? When times are good, people are less likely to default, and if they do, lenders can easily get their money back.
However when times get tough, default rates soar, and at the same time recovery rates plummet.

This is what is now happening in the US housing market, and this is why so many lenders don't have a clue how much money they're going to lose.

Looks like the news about Merrill not being allowed to hedge their exposure is slipping out. This is what I meant by the next leg down. Unlike ENRON, the accountancy firms will not be allowed to sign off any dodgy deals.

http://www.reuters.com/article/marketsNews...20071108?rpc=44

How do you envisage the transition to a global gold backed currency? We all just pretend paper cash doesn't exist and reboot?

Please explain to me how you expect this to go down.

Well if they did it, gold would cost a fortune! Time to pile in or is it just another bubble?! lol

Could this entire thing happen in 2008?

It can happen any day now.

Many large banks are skating on increasingly thin ice, and the temperature is rising.

This is 100% correct, guaranteed.

Protect yourselves.

http://www.ft.com/cms/s/0/97b8aeda-8ec3-11...00779fd2ac.html
Wachovia reveals fresh credit losses

By Daniel Pimlott in New York

Published: November 9 2007 14:16 | Last updated: November 9 2007 15:56

Wachovia, the fourth largest US bank, became the latest lender to reveal losses from continued turmoil in the credit markets on Friday. The company wrote down the value of its collateralised debt obligations by $1.1bn in October, and said it expected to raise its provision for loan losses to between $500m and $600m in the fourth quarter.

Electronic 100% backed gold currencies exist already. It would therefore be no problem to pay in grams or ounces of gold. For a transition, you could in a first simple approach take all existing 'Dollars' and divide this by the gold hoarded by the Federal Reserve. This would then be the official price, and the Fed would exchange Dollars with gold at this fixed rate (somewhere in the range over $40,000/oz, by the way).


Yes.

Wow. That would make the $ price of a barrel of oil about $2,500 to $3,000.

Only if you see a certain relationship of oil with gold. I think the price of gold is much more suppressed than the price of oil.

Haven't you said before that an ounce of gold has always been able to buy a good suit through out history ? Surely the same is true for oil ? I think there has always been a rough ratio of 16:1 oil:gold so far.

That's true. But if you think about it: if there really is something like technical evolution and growing economy and efficiency, this suit should today be a fraction of what it was 2,000 years ago.

The thing I don't understand about you goldbugs is your failure to understand that a gold standard would impoverish 99.99999% of the population in the developed world. It would be absolute chaos.

Read this article. Look at the names. You can see their exposure to derivatives in the pdf linked in the original post.

Remember, JPMorgan has the largest, now $80 Trillion, and only $2 Trillion in assets.

The derivatives volcano is about to explode. This is 100% correct, guaranteed.

Protect yourselves.

http://www.bloomberg.com/apps/news?pid=206...&refer=home
JPMorgan Chase Held $40.6 Billion in Leveraged Loans (Update3)

By Elizabeth Hester

Nov. 9 (Bloomberg) -- JPMorgan Chase & Co., the third- largest U.S. bank, said it may write down more of its mortgage and debt holdings in the fourth quarter ``if market conditions worsen.''

JPMorgan held $40.6 billion in leveraged loans and unfunded commitments at the end of September that are difficult to hedge, the New York-based bank said today in a regulatory filing. The company's pipeline for fees from investment banking has also dropped from June 30 because of a decline in debt underwriting.

At least nine of the world's biggest banks and brokerages, including Citigroup Inc. and Merrill Lynch & Co., have written down a total of about $40 billion in bad loans and securities tied to mortgages this year after foreclosures set a record and late payments on U.S. home-loans rose to the highest since 2002. JPMorgan wrote down the value of loans for leveraged buyouts by $1.3 billion in the third quarter and marked down the value of collateralized debt obligations by $339 million.

During the fourth quarter, less liquidity and wider credit spreads may make it harder to sell loans to finance leveraged buyouts, lowering investment banking fees and trading revenue, JPMorgan said. Subprime mortgage holdings, trading positions and CDOs may also fall because of market conditions, the bank said.

Bad Loans

JPMorgan, which said Oct. 31 its mortgage originations climbed 35 percent in the third quarter, may have to set aside more money to cover bad loans. Home equity loans may cause a loss of $250 million to $270 million per quarter, ``over the next few quarters,'' the bank said.

JPMorgan fell 30 cents to $42.31 at 4:00 p.m. in New York Stock Exchange composite trading. The stock has dropped 12 percent this year, compared with a 20 percent decline in the 24- member KBW Bank Index.

``They weren't as involved in CDOs as Citigroup and Merrill Lynch,'' said Tanya Azarchs, a credit analyst for financial institutions at Standard & Poor's. ``Maybe that's one of the reasons they don't appear to have as many problems as the others.''

Bank of America Corp., the second-biggest U.S. bank, said today that turmoil in the credit markets would ``adversely impact'' fourth-quarter results. Wachovia Corp., the fourth- biggest bank, said mortgage-related losses and reserves for bad loans total $1.7 billion so far this quarter, more than the lender reported for the previous three months.

Wachovia gained 35 cents to $40.65 in New York Stock Exchange composite trading, after setting a 52-week-low of $38.05 earlier in the session. The shares have lost 29 percent this year.

Bank of America rose 48 cents, or 1.1 percent, to $43.98 in New York Stock Exchange composite trading. The stock has declined 18 percent this year.

If humans weren't so short-sighted, then a barrel of oil should be more than that amount. Fossil fuels being effectively a non-renewable resource have to last for the human race for millions of years because we only have one Earth at the moment. At this rate we will have used up all the fossil fuels certainly within a few hundred years. What are we going to do for the rest of the millions and billions of years that we have left on this planet? In this context, each barrel of oil should be priceless, never mind $2,500 to $3,000

Best,
L

I don't understand your argument. The immediate introduction of the gold standard NOW would impoverish no one. Your amount of Sterling would still be identical, only the gold price would adjust drastically upwards. Most people possibly would not even realize that there was a change.

More drastic could be the plunge of the currency of an ultra-low gold reserve country (UK) vs a higher gold reserve one (Switzerland), if the re-introduction was globally. But then, this adjustment will happen anyway, if you ask me.

Being a selfish pr*ck, I don't care what happens after I've logged off.

Firstly I am not a goldbug.

Secondly I can't understand your position on gold. You have an opinion on having currencies backed by gold as being a bad thing as read above. But in other posts you are supportive of Ron Paul.

I watched an interview with Ron Paul on Youtube and he clearly wants the US$ to be backed by gold.

Any chance you can explain?

Thanks.

Please protect yourselves.

http://www.timesonline.co.uk/tol/comment/c...icle2852547.ece
From The Times
November 12, 2007
Why FAS 157 strikes dread into bankers
Just when we hoped the worst was over . . .

William Rees-Mogg

We have heard about sub-prime mortgages; we have heard about collateralised debt obligations (CDOs); we have heard about banks writing down their assets; we have heard about global bankers resigning; we have heard about Northern Rock and the first run on a British bank in 140 years.

The risk of a worldwide banking crisis – one that is particularly damaging to mortgages, private equity, hedge funds and the banks themselves – is higher than it was a month ago, and the storm is rising.

This is still an emerging story. It was not until last Wednesday that The Financial Times led on the legal provision that CDOs can be liquidated by the senior holders when they go into default. That could lead to a fire sale of CDOs and still larger defaults.

Yet this, as important as it could be, is not the biggest threat. Few non-bankers have heard of FAS 157 and 159, yet these are the regulations that will set the terms on which the banks will value their assets. The trouble with FAS 157 and 159 is that they are perfectly reasonable regulations in themselves which could have disastrous, though unintended, consequences.

What are FAS 157 and 159? They are the new United States (Federal) accounting standards that have been introduced to regulate the valuation of bank assets. These valuations are of crucial importance because they are the basis of all bank lending: no assets, no lending; no lending, no bank. According to an informative article in The Financial Times, the new standards will apply fully from Thursday. Many US banks have adopted them already. All US quoted banks will have to publish asset figures in conformity with FAS 157 by next spring.

The new rules divide bank assets into three “levels”, according to the freedom with with which they can be bought or sold. Level-one assets, which are easy to value or trade, have to have quoted prices in active markets such as US government bonds or gold bullion. Level two is an intermediate stage; these assets are not as fully marketable as level one, but still sufficiently tradeable to have a definite value.

Level-three assets – usually artificial financial instruments – are the problem. They do not have quoted prices in active markets. They have to be valued by reference to the bank’s own models. According to the analyst Martin Hutchinson, who had analysed some of the US banks, the holdings of level-three assets are substantial. Lehman has $22 billion; Bear Stearns $20 billion; JP Morgan Chase $60 billion. Even these figures may be understated, since the banks have themselves decided whether assets belong to level three or the more acceptable level two, and they have an interest in placing as little in level three and as much in level two as they reasonably can.

Martin Hutchinson has also analysed the assets of Goldman Sachs. The bank has disclosed $72 billion of level-three assets, out of total assets of $900 billion. That seems reasonable enough, but it compares with Goldman Sachs’s capital of $36 billion. Any substantial write off of level-three assets would impact on Goldman Sachs net asset value.

One cannot say that FAS 157 is only an American regulation and the banks of other countries would not therefore be affected. Most global banks already have a listing in the United States that would therefore be subject to US accounting standards. Those that do not will be judged by FAS 157 as the international standard. From now on all major banks will have to declare their assets in the FAS 157 form with its division into different levels by marketability.

No doubt this is the reform that should have been introduced years ago; that would have saved a great deal of agony and some abuse. But FAS 157 is coming into effect at a most inconvenient time. The sub-prime mortgage defaults have already undermined confidence in mortgage banked securities. These form a significant part – perhaps about a quarter – of all level-three assets. Level three also includes higher-quality mortgages and leveraged bridged loans for buyouts.

The global banking system now faces the risk of a general flight towards cash and liquid level one assets on a scale that has not been seen since the early 1930s. Already British banks are showing signs of near panic. I hear of London banks going back on recently agreed loans to parties of good credit, presumably on orders from head office.

There have also been cancellations of offers of credit cards that had already been approved. One need have little sympathy for the US investment banks; they found it profitable to make speculative loans, and now they are paying the price.

Even if ordinary mortgages do continue to be offered – and they are bound to be restricted – sub-prime mortgages will no longer be available for first-time buyers. Yet the housing market depends on people being able to sell their first houses when they trade up to their second. If all banks are anxious to protect their cash reserves, and to reduce their level-three assets, that will make ordinary borrowing difficult and level-three borrowing impossible. Probably the downturn will spread into stock markets, even though it did not originate in stock market speculation.

It is far too late to cancel FAS 157 and 159, even if that were desirable. The concept of different levels for bank assets has been introduced to the banking system and the defaults on sub-prime mortgages have lowered the acceptability of all level-three assets. No one knows what they are worth and hardly anyone wants them.

Commercial banking, with its large customer base, is in better shape than investment banking, but will also be affected. FAS 157 may prove an historic regulatory blunder.

They want to buy toxic crap from each other, to keep the market value artificially up and avoid having to report the losses that have made them insolvent.

It won't work because $75 billion is just a minuscule fraction of the exposure.

This is 100% correct, guaranteed.

http://www.bloomberg.com/apps/news?pid=206...&refer=home
U.S. Banks Reach Agreement on SIV Backup Fund, N.Y. Times Says

By Dan Hart

Nov. 11 (Bloomberg) -- Bank of America Corp., Citigroup Inc. and JPMorgan Chase & Co., the three biggest U.S. banks, agreed on the structure of a fund of at least $75 billion intended to help calm credit markets, the New York Times reported, citing an unidentified person involved in the talks.

The proposed fund could begin operating by the end of December, the newspaper said, citing the unidentified person. The banks may begin asking about 60 financial institutions to contribute money as soon as Nov. 16 or early next week, the newspaper said, citing the person.

The plan requires approval by the major credit-rating companies, and the banks are still negotiating a fee structure of between 75 to 100 basis points, the Times said. The agreement on a simpler fund structure, reached late Nov. 9, concluded almost two months of negotiations, the Times reported.

The fund won't require structured-investment vehicles, known as SIVs, to obtain approval of at least 75 percent of investors if they want to participate, and the fund won't distinguish between the risk levels of different SIV assets, the newspaper said.

Please read the paragraph highlighted in red.

It explains (albeit implicitly) how derivative notional value becomes real value.

This is 100% correct, guaranteed.

http://www.ft.com/cms/s/0/26733c2a-912c-11...00779fd2ac.html
Banks and CDOs

Published: November 12 2007 14:33 | Last updated: November 12 2007 21:17

“Exposure” has become a scary word these days. When banks start talking about their exposures, you can bet a mention of collateralised debt obligations is not far behind. Then comes the size of the writedown – pick a number, any number, as long as it is in the billions of dollars.

But it turns out that pinning down what “exposure” actually means is not that straightforward. It is little wonder that Citigroup’s $43bn of highly rated CDO exposure came as something of a shock to observers. More than half of it was never expected to land on Citi’s balance sheet in the first place. But it did, as Citi customers exercised their right to put securities back to Citi when they faced liquidity problems.

Now Bank of America has disclosed that it, too, has CDO exposure – a stonking $12.8bn, also courtesy of liquidity support. So lesson number one is that CDO exposure can come from mere funding commitments that few observers had focused on.

The second issue concerns the assumptions behind the banks’ newly reported exposures. This is really black box stuff. Who knows what discount rates the banks are applying to the cash flows they still expect from their CDO holdings? How do the models change if assumptions, such as house prices, change? True, Morgan Stanley has taken a radical approach: its $6bn exposure represents the most it could lose if the underlying collateral defaulted and the bank recovered nothing. Such publicly disclosed measures of absolute downside, though, are rare.

The third issue concerns hedging. The banks have detailed their exposures of CDOs net of hedging positions. But where they have managed their exposure down in this way, it is at least reasonable to ask how effective the hedging will prove to be. Wall Street investors may understand even less than they thought they did.

Very interesting, but it raises two questions:

( A ) Which banks have already implemented these pending regulations?
( B ) What is the exact date "spring next" on which compliance is mandatory?

And, a rhetorical anecdote... here's as good as anywhere... A major UK investment bank, it has been suggested to me, requires all its employees to watch documentaries about Enron "to make sure nothing similar happens."
Is this ( a ) credible; ( b ) usual practice in investment banks today?

This is the mark of the derivative beast.

Protect yourselves.

http://www.bloomberg.com/apps/news?pid=206...&refer=home
Bank of America Sees $3 Billion Write-Off, CFO Says (Update3)

By David Mildenberg

Nov. 13 (Bloomberg) -- Bank of America Corp., the nation's second-largest bank, may need to write down $3 billion in debt securities in the fourth quarter that have lost value because of defaults on subprime mortgages. Shares gained the most in almost five years on investor sentiment that the worst may be over.

Bank of America, based in Charlotte, North Carolina, may provide as much as $600 million to funds that bought debt from SIVs, Chief Financial Officer Joseph Price said at an investor conference today.

``As market conditions change and possibly worsen, there could be additional diminution in value,'' Price said in New York today, where the bank became the latest to disclose the wide ranging effects of credit market turmoil. ``There is complexity and difficulty in estimating the value of these positions, especially the collateralized debt obligations.''