In no particular order, here's a bunch of URL's with some good information on what has been going on in the bond markets:

1. The Fed appears to be pushing on a string WRT mortgage rates:

http://www.mortgage-x.com/trends.htm 

NB now the 30 & 15 year fixed rates are going up, even after the Fed had been very aggressive in cutting the Fed Funds and discount rates.

2. Thrifts and Savings banks take a record loss of $5.24 billion:

http://www.reuters.com/article/bondsNews/idUSWBT00841120080220 

I would NB that the way they took this loss was also bogus. "Goodwill" is an intangible item on a balance sheet used for things like branding (ie, how much is the "Coca-Cola" brand name worth? And where do you put that on a balance sheet? "Goodwill" is the accounting term I was taught for such things).

The banks are clearly losing business and they're suffering from bad loan losses. Putting bad loan losses under a write-down of goodwill is just bogus to me. Jake might tell me I'm wrong here tho.

3. In our latest item under "Don't worry, the sub-prime problem is contained!" we have this:

http://www.bloomberg.com/apps/news?pid=20601087&sid=ar8fYFHqvTdU&refer=home

In the movie "The Princess Bride" there is an utterly classic scene where the Sicilian ringleader has cut the rope on which the Man in Black is climbing. The MIB doesn't fall, and the Sicilian says "Inconceivable!"

His Spaniard swordsman says: "You keep using that word. I do not think it means what you think it means."

That's what I think of when I hear this word "contained" now.

4. Yet more "containment:"

http://www.bloomberg.com/apps/news?pid=20601009&sid=a667sSFs1aFA&refer=bond 

5. So what has happened to the monoline insurers since I last wrote about them? Why the politicians have gotten involved!

And, as usual, they're proving to be complete and utter morons:

http://www.bloomberg.com/apps/news?pid=20601087&sid=aRgbDoRUoSM8&refer=home 

They can't just split the monolines in two, leaving the muni insurance side afloat and allowing the structured finance side to sink. They'd like to, but that pig just ain't gonna fly.

6. More silly ideas:

http://money.cnn.com/2008/02/20/real_estate/OTC_refinance_plan/index.htm?postversion=2008022016 

If a borrower bought a house with a high LTV loan (say, 95% or more) and the market valuation of the home has gone down 15% or more, guess what? It will take 10 years before the homeowner isn't under water on the mortgage. Most people don't stay in one house that long any more. It sure sounds nice on paper, but all this proposal really does is recommend that the banks use phoney accounting and phoney loan structure to push the defaults off into the future, presumably on someone else's watch.

Net:net - in the last three weeks, the situation is getting worse, not better. The stock market is putting a happy face on things for right now, but the economic data and bond markets aren't indicating happy times are here.