credit market condition worsen

--Mark Zandi estimate that of 2.45 tril in risky mortgaes currently outstanding - includign subprimes, mortgaes taht exceed Fannie Mae lending limists andother s -- as much as a quarter could suffer defaults in the months ahead. --Total losses could reach $225 bil --price drop will be 10% from Q4 2005 to Q4 2008. It will wipe out $2 tril in home values, less than $7 tril in stock wealth wiped out by the tech bust. --Moody, SP, Fitch has downgraded or put on watch $100 bil CDO in Oct --ABX BBB- is 17.5 cents, droped 50% from August --ABX AAA is 79, down from 95 a month ago --super senior tranches is not immmune too, Merr and UBS are examples --special funds (SIV) invested in the top-rated tranches of CDOs by issuing CP or MTN to raise funds. Now $300 SIVs are in truoble, especially Citigroup --Bond Insurance company (MBIA, Ambac, AIG financial guaranty unit, PMI, ACA Capital) aggressively write insurance on super-senior tranches of CDOs that were backed by subprime. Ambac, PMI shares dropped 19.7% and 11% respstively. --3m libor dropped to 4.865, no sign of credit crunch. banks are still willing to lend money comments --housing market will continue to drag down economy and drive Fed fund rate lower to at least 4%