Foreclosures have soared—they are up 93 percent in July of 2007—and the flows of funds have decreased accordingly. Housing prices have collapsed and this has eroded the value of the underlying collateral.

And it gets worse. Our experts predict that the worst of the foreclosure pain will not be felt until at least a year from now, because ARM (adjustable rate mortgage) resets will not peak until March, 2008. And as more and more foreclosed properties flood the market, the housing price decline accelerates accordingly.

So there is no way to say with certainty what the values of the securities are, and this uncertainty is wreaking havoc with the markets. All real estate is affected—residential, commercial and industrial.  In fact, the entire global economy is affected.