After not receiving what they considered to be adequate bids, Britain is nationalizing Northern Rock Bank, which was one of the top home mortgage providers in the UK. The bids received, “failed to meet the government’s criteria for protecting taxpayers.”

I think that we will see more of this in the UK, which is suffering from the Anglo-Saxon contagion much as its American counterparts are. We won’t in the US, substituting instead ruinous (for the taxpayer at least) bailouts, because the American body politic will not accept this solution.

In a related note, it appears that there is a lucrative business developing aiding banks in finding people who have skipped out on mortgages. With the costs of foreclosures typically nearing $100K, it makes sense to find and cut a deal with these people, but they leave without providing a forwarding address.

From September 2005 to August 2007, 53 percent of the loans backed by Freddie Mac that went into foreclosure involved borrowers who could not be reached.

As an insight as to just how bad this has gotten, some lenders are allying with ACORN, an organization with a mission that is seriously at odds with those of banks, to find the mortgage holders.

In much higher finance, we have signs of trouble in credit default swaps, a complex derivative whose market is estimated to be twice that of the stock market.

These instruments are largely unregulated, to the degree that the exact size of the market is not known.

Basically, it’s an agreement between two parties. One pays the other a fee, and if something bad happens, such as a default, the second party pays off the default.

How flaky and unregulated is this market?

But during the credit market upheaval in August, 14 percent of trades in these contracts were unconfirmed, meaning one of the parties in the resale transaction was unidentified in trade documents and remained unknown 30 days later. In December, that number stood at 13 percent. Because these trades are unregulated, there is no requirement that all parties to a contract be told when it is sold.

One out of 7 people did not know who owed them money.