FLASH: Merrill Lynch just announced another $7.9 billion in mortgage cancer write-offs, and to think we're still just getting started

Ouch.

That's gotta hurt.

And you ain't seen nothing yet. Just wait until Countrywide Toxic Mortgage reports on Friday. Major companies will go away during this downfall. Banks will fail. And the financial community will be shaken to its core.

The losses when this whole Ponzi Scheme are counted up will be in the trillions. Yes, the trillions. Nobody can stop it, and the truth is getting tougher and tougher to hide.

Merrill 3Q Roiled by Mortgage Crisis - Merrill Lynch Posts Steep Third-Quarter Loss, Roiled by Mortgage and Credit Crisis

NEW YORK (AP) -- Merrill Lynch & Co., the world's biggest brokerage, on Wednesday said the summer's credit crisis triggered a bigger-than-expected $7.9 billion writedown during the third quarter.

Bad bets on mortgage securities and leveraged loans used for corporate takeovers caused it to post its first loss in six years. The blow makes Merrill Lynch the hardest-hit investment bank on Wall Street amid the recent market turmoil.

The losses were a big miss from what Merrill said it expected on Oct. 5. The company warned Wall Street at that time that it would take an almost $5 billion writedown for the quarter, because of its exposure to risky mortgage-related securities.

Chief Executive Stan O'Neal said the company continues to face uncertainty on the impact of its mortgage-related investments.

"The level of terror that must exist in the boardrooms of the banks and regulators that peered into Pandora's box this summer must be extreme."

Great rant from Fleckenstein on the Paulson/Banker "Super SIV" house of cards

No need to beat around the bush. The banks (and US Treasury) are trying to create this SIV super-fund in order to avoid or delay a significant "mark to market" of the mortgage cancer they have on their books. Period. The losses are real, the cancer is spreading, and they're doing all they can to keep the truth from their shareholders and the financial community.

Even Alan Greenspan and Warren Buffet think this whole thing stinks. And it does. To high heaven.

Here's Fleck. And get ready for the crash when this whole deceptive plan caves in, and even the bankers rush to the exits.

This week I have another entity of entitlement to add to the list: "SIV Mae" (SIV = structured investment vehicle). That seems a fitting description of the super-duper bailout put together by the Goldman Sachs (GS, news, msgs) subsidiary known as the U.S. Treasury Department. (Goldman itself doesn't appear to be participating in the bailout, which is interesting.)

When I first heard about this, I was outraged, disgusted and slightly depressed. I thought, here we go, another bailout.

Barney Frank and friends are trying to bail out the homeowners. Wall Street, the Treasury Department and the Bank of England appear determined to do whatever it takes so that we have absolutely no price discovery on any mortgage-related assets that may have gone bad -- thereby giving a pass to the folks who've made obscene amounts of money conceiving and marketing them.

To quote a knowledgeable friend of a friend: "How anyone can look at the creation of this fund as anything other than a cynical way of moving an existing pile of crap from one place to another is beyond me. The fact that no one seems to think there is anything wrong with it (and I include the regulators) tells you just how 'fixed' the markets' problems are.

"The level of terror that must exist in the boardrooms of the banks and regulators that peered into Pandora's box this summer must be extreme."

Housing Reality: $1.2 trillion lost already, $4 trillion more next year, builders walking away, foreclosures, bankruptcies and a historic crash

It should all be coming so clear now for Americans. The NAR may keep spinning, realtors on commission may keep lying, The Worst President Ever may keep quiet, and Wall Street may keep there head in the sand (or not).

But when it comes to the US housing market, an epic collapse is underway. And we're just getting started.

If you haven't sold your home yet, and you want to preserve any of your equity, sell now, sell at any price, and rent. If you bought at the peak and are already underwater, just walk away. Stop making payments, preserve your cash, and prepare for foreclosure. And if you're renting, keep renting. This crash will take years until we see bottom. Buy again when it's cheaper to "own" than "rent".

What happened to housing around the world these past few years was a classic financial mania, fueled by historic leverage and massive speculation. The market will take care of itself and wash away its sins. It hath been foretold.

Builders Giving Up On The Sinking Market

In California, where developers have been racing to turn farmers' fields into subdivisions, they're now walking away, leaving houses partially built.

Those who have already moved in wondering what will hit next.

“I'm concerned that once the weather starts getting bad, there's tile piled on the roof that could just fly off,” homeowner Marius Gieske told CBS News correspondent John Blackstone.

Dunmore Homes had building projects in a dozen California communities from Bakersfield to Yuba City. Now it’s halted work everywhere, giving up on a fast-falling market.

“We couldn't sell a moving target,” said John Slaughter, vice president of construction and operations for Dunsmoor Homes. “What we wanted to do is stop.”

That moving target, collapsing house prices, has already cut $1.2 trillion from the value of American homes. And the losses are mounting, going to $4 trillion by one estimate, by the end of next year.