November 7, 2007 (LPAC)--"Risk rises of asset fire sale" is the banner headline across the front page of today's Financial Times, under which lies a large graph showing the dollar collapsing from $1.34 to the euro in October to 1.4552 today, a drop of 9% in just less than two months. Under this graph are three others, also for the last two months. One shows the price of gold zooming from $740 to $820, another the price of crude oil from $80 to $98, and a third, the collapse of the ABX BBB index of value of U.S. mortgaged-backed securities from a high of 29 to the current 18.

The Financial Times reports that U.S. Treasury Secretary Hank Paulson's brainchild, the Master Liquidity Enhancement Conduit, is "dead in the water" following Citigroup's revelations of huge writedowns. The credit-rating agencies have deemed a "clutch of complex debt vehicles to have defaulted" all of which will force the sale of "these assets, inevitably at heavily discounted prices." On top of Citigroup's surprise Nov. 6 announcement of a new $11 billion writedown, Morgan Stanley could be in the whole for about $6 billion in writedowns according to David Trone, of Fax-Pitt Kelton.

If that's not enough, the Financial Times reports that there is worry for the health of U.S. bond insurance companies, whose high credit ratings and insurance are essential to the issuance of bonds and other commercial paper. Playing into this picture is the announcement that Standard and Poor's and Moody's have received default notices for another $5 billion worth of collateralized debt obligations (CDOs), which are causing some of the huge losses being reported by the big banks.