EU KAPUT?

The lack of a real central bank in the EU may spell the end of the entire dream. They met all night and couldn't drop rates. BECAUSE THERE IS NO EU CENTRAL BANK only a collection of nation central banks each acting on their own. We shouldn't engage in any schadenfreude bullshit here, what happens there happens here and vice versa. The biggest impediment to world wide coordination of interest rate policy is the usual: France and Germany, each country so arrogant that we can see how Europeans started the last two world wars. So Britain has nationalized their banking system outright, France and Germany may do the same, and then???? According to WSJ this AM 1 in 6 home owners belly up. (Sub only)

The relentless slide in home prices has left nearly one in six U.S. homeowners owing more on a mortgage than the home is worth, raising the possibility of a rise in defaults -- the very misfortune that touched off the credit crisis last year.

The result of homeowners being "under water" is more pressure on an economy that is already in a downturn. No longer having equity in their homes makes people feel less rich and thus less inclined to shop at the mall.

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And having more homeowners under water is likely to mean more eventual foreclosures, because it is hard for borrowers in financial trouble to refinance or sell their homes and pay off their mortgage if their debt exceeds the home's value. A foreclosed home, in turn, tends to lower the value of other homes in its neighborhood.

About 75.5 million U.S. households own the homes they live in. After a housing slump that has pushed values down 30% in some areas, roughly 12 million households, or 16%, owe more than their homes are worth, according to Moody's Economy.com.

Late Add: (4:05 AM PDT) Finally a coordinated rate cut....then the ATM machines broke down in Germany. Ach du lieber....

Later Add: Dow opened down several hundred points in the futures but rallied. We won't know for several days if any of this stuff has worked.