Dismayed and disillusioned western investors will not play ball. In the leveraged loan markets, assets have been marked down by a fifth, so 80 cents in the dollar is the new par. Thus the financial alchemists have turned to the huge pools of money available in the Middle East and Asia... [Will} these new investors be as naive as many of the investors in some of the five- and six-times-levered private equity deals of the past three years? I would be surprised. Commentators have suggested that many state-backed funds are still in their infancy and thus do not have the experience and organisation to cope with “big debt investments”. That gives the private equity guys something of a problem.

And the NY Times looks at home equity loans, which it calls "the next round in the credit crisis" - key fact: "While homeownership climbed to record heights in recent years, home equity — the value of the properties minus the mortgages against them — has fallen below 50 percent for the first time, according to the Federal Reserve."

Bill Gross at Pimco, meanwhile, marks All Fools' Day by coming over all leftie. And he makes an interesting point about a likely effect of the Great Big Plan:

There seems no way that current reserve requirements for banks will not in some nearly uniform way be imposed on investment banks. Leverage and gearing ratios of securities firms therefore, will in a few years resemble those of commercial banks themselves resulting in reduced profitability for major houses such as Goldman, Lehman, and Merrill Lynch. Currently investment banks have only 50% of the capital base of standard commercial banks. If the two are to approximate each other either through regulation or moral suasion, these Shadow banks will likely be forced to raise expensive capital and/or reduce the bottom line footings of their balance sheets. Either way, this need to have the Shadow Banking System more closely resemble the banks of Jimmy Stewart’s "It’s a Wonderful Life" will be costly, and bond spreads as well as stock prices should begin to reflect it.

One quibble: if I remember the film, the Bailey Building & Loan Association actually resembled a modern investment bank fairly closely. They got heavily involved in subprime residential property loans, their CEO (George Bailey) didn't really have his mind on the job, their internal oversight was terrible, an inadequately supervised employee lost a whole lot of money to a much smarter and less ethical banker who put it (literally) into valueless paper, the regulators finally turned up (far too late), the BBLA suffered a crisis of investor confidence, and ended up the target of a hostile takeover bid.

Of course, the Baileys had Clarence Oddbody, angel second class. How he stacks up against Hank Paulson and Ben Bernanke only time will tell.