(It's funny. I can remember being shocked by quarterly writedowns of a mere ten figures. Now I can write things like "$13.7 billion writedown" with barely a qualm.) Thain said it was "not likely" that ABS CDO values would ever recover.
So, presumably more writedowns to come, then?

And Martin Wolf has presumably started eating red meat for breakfast - his FT column today argues for pay curbs on bankers:

The world has witnessed well over 100 significant banking crises over the past three decades. The authorities have even had to rescue important parts of the US financial system – on most counts, the world’s most sophisticated – four times during the same period...No industry has a comparable talent for privatising gains and socialising losses. Participants in no other industry get as self-righteously angry when public officials – particularly, central bankers – fail to come at once to their rescue when they get into (well-deserved) trouble... I now fear that the combination of the fragility of the financial system with the huge rewards it generates for insiders will destroy something even more important – the political legitimacy of the market economy itself – across the globe. So it is time to start thinking radical thoughts about how to fix the problems...Many market liberals would prefer to leave the financial sector to the rigours of the free market. Alas, the evidence of history is clear: we, the public, are unable to live with the consequences...
By paying huge bonuses on the basis of short-term performance in a system in which negative bonuses are impossible, banks create gigantic incentives to disguise risk-taking as value-creation. Yet individual institutions cannot change their systems of remuneration on their own, without losing talented staff to the competition. So regulators may have to step in. The idea of such official intervention is horrible, but the alternative of endlessly repeated crises is even worse.

Wolf, and Yves Smith, make the point that incentives don't work if the horizon of failure is too far away compared to the horizon of reward. But this wouldn't matter if personal accountability was easier.

At present, (taking a hypothetical example) if Joe Brown puts together a frightfully innovative and lucrative deal in elephant derivatives, he gets a big bonus at the end of the year from GlobalBank. And if, three years down the line, the deal turns out to have been monumentally ill-judged and loses GlobalBank hundreds of millions, Brown doesn't feel any pain - he's off working for Banco Mondo by then as Head of Elephant Trading, and his bonus is safely banked or spent. This (Wolf and Smith say, correctly) is a massive mismatch of incentives. Brown should get his bonus spread over a longer period - say, in restricted stock grants over ten years - so that, wherever he is by the time his idiotic elephant deal blows up, he'll still see a financial penalty.

Here's an alternative. Brown would have an incentive to do deals that looked good in the long term as well as the short term if his personal reputation were at stake - if he could easily and publicly be tied to deals that he had done. He'd have no incentive to go after the short-term payoff of a bonus from his risky elephant-backed structured product idea, if he knew that he risked being known for the rest of his life as "Joe Brown, the blithering idiot who structured the elephant deal that lost GlobalBank all that money" and would as a result never get another job.

But at present - and Smith hints at this - it's difficult to link bankers to their screwups:

In fact, some firms manage to institutionalize lack of accountability. When I had Citigroup as a client (admittedly many years ago), it would reorganize every couple of years, making it impossible to track the performance of any business over time, unless you hired a consulting firm to put together a P&L for a longer-term period.

Partly this is structural, as Smith points out. Partly it's because banks tend to be secretive, about their losses especially (no bank wants to wash its dirty linen in public). Partly it's because the financial industry seems far too ready to forgive - how many names from the Enron and dotcom scandals of the turn of the century are now re-employed in responsible positions?

The last offence in English law for which the pillory was the punishment was stock exchange manipulation. Maybe that wasn't such a bad idea.