Great posts Dave. Yeah, it’s amazing how literally no one in the MSM is talking about this. It’s like none of the Wall Street guys and none of the commentators on CNBC know how to value real estate. There is actually one commentator on CNBC — that women who reports on the California market quite a bit — who seems to have a clue. But other than that, nada.

I am really surprised by Cramer. I consider him to be a smart guy, but he really thinks that all that needs to happen is for the Fed to lower interest rates a bit more and everything will go back to being hunky dory.

The folks who get close to the root of the problem are those who mention that it is “difficult” to value the CDOs/MBSs. However, they never talk about why it is difficult to value them. One of the main reasons it’s difficult to value these things is because the home buyer at the bottom of the pyramid probably “stated” his or her income. To really get a handle on the value of these things, someone would need to investigate all the individual buyers and find out what their actual ability to repay is and how likely they are to repay. They would also need to estimate the value of each individual property based on rental rates in the area or what have you. Who the heck is going to do all that? Given the amount of work required to evaluate these things, you have to figure that at least a 10% reduction to market value (which no one really knows) will be needed to move these things.