Recent bank earnings reports suggest that the costs of uncertain values of Level 3 assets -- those hard-to-value financial instruments with no active trading market -- could sink our financial system. By my estimates, the eight largest banks had a total of $517 billion in level 3 assets at the end of 2007, up 13% from the third quarter. And these assets represented 91% of those bank's capital at the end of 2007, a rise from their 78% share of capital in the third quarter.

Why does this matter? First, because banks are taking big write-offs of these level 3 assets. Bloomberg News reported that Investors are wary of banks and brokerages with difficult-to-sell securities on their books as $232 billion of write-downs and credit losses from the collapse of the subprime mortgage market have crippled earnings. And Bloomberg points out that more assets have become difficult to value in the last three months as investors shunned a wider array of credit, reducing trading.

Secondly, the way these assets are valued is almost totally at the discretion of management. According to a Wall Street analyst I interviewed who covers the banking industry, many of the assets are very unique and each company really does appear to develop its own methodologies accordingly. The analyst asked a senior auditor at one of the big accounting firms whether they tried to impose any sort of conformity on the valuation processes used by companies they audit and the answer was no, even when one auditor handles several directly comparable firms.

If you do not receive the annual report from Berkshire Hathaway (NYSE: BRK.A) you are probably missing the stock appreciation too, but you do not have to miss "my pal Warren's" charming musings about the company, investing, or the economy.

You can find Buffett's letters on the company website or refer to Everything Warren Buffett for this year's letter, and past years as well. One thing I thought worthy of sharing from the letter was the notion that financial statements require a lot of guess work. Buffett bemoans his concern about having to include a best guess and forthrightly acknowledges it could be wrong. He highlights the difficulty in predicting future costs with the following story.

A story I told you some years back illustrates our problem in accurately estimating our loss liability: A fellow was on an important business trip in Europe when his sister called to tell him that their dad had died. Her brother explained that he couldn't get back but said to spare nothing on the funeral, whose cost he would cover. When he returned, his sister told him that the service had been beautiful and presented him with bills totaling $8,000. He paid up, but a month later received a bill from the mortuary for $10. He paid that, too -- and still another $10 charge he received a month later. When a third $10 invoice was sent to him the following month, the perplexed man called his sister to ask what was going on. "Oh," she replied, "I forgot to tell you. We buried Dad in a rented suit.

Except for a few deals -- such as the Visa (NYSE: V) public offering -- the IPO market has been fairly quiet. But, there are some companies that think things will warm up.

Take SolarWinds, which has recently filed for an offering. The company develops enterprise-class network management software. What's more, the technology is easy to use (which is a rarity in the space).

As of last year, SolarWinds had more than 50,000 customers, which range from small businesses to Fortune 500 biggies.

A key to SolarWinds success is its focused marketing, which heavily leverages online marketing. There is also a direct sales force that knows how to close leads.

So far, the results have been stunning. From 2005 to 2007, revenues have gone from $27.9 million to $61.7 million. What's more, operating income is about $30.9 million.

And there is much room for growth. According to a research report from Gartner, the network management sector is expected to grow from $4.95 billion in 2008 to $5.66 billion by 2011.

The underwriters on the IPO include JP Morgan (NYSE: JPM), Goldman Sachs (NYSE: GS) and Lehman Brothers (NYSE: LEH). You can also locate the prospectus at the SEC website.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements. He also operates DealProfiles.com.

A look at the new Google (NASDAQ: GOOG) proxy shows that founders Sergey Brin and Larry Page were each paid $1 for their work in 2007. Steve Jobs has done the same thing at Apple (NASDAQ: AAPL). Of course, the two Google founders each have about $13 billion in stock and Jobs is also rich as Croesus.

The $1 salary is a bit of theater. It says that the compensation of senior management will be built on the stock price. If it does not do well, all we have is that $1.

The gesture does not even fool idiots when the share price is down and the management is wealthy. Even with Google off from a high of $747 to its current price of $450, Brin and Page retain wealth which is beyond most investors' wildest dreams. The level of their salaries has no meaning.

Google shareholders would be much happier if Brin and Page plundered the company for tens of millions in compensation provided that they get the stock back over $700. The $1 salary is just an insult.

Douglas A. McIntyre is an editor at 247wallst.com.

MF Global (NYSE: MF), a broker of exchange-listed futures and options, is recently down $10.99 to $6.50.

On Feb 28, MF recorded a bad debt provision of $141 million in response to unauthorized personal trading activity by one of the company's registered representatives.

MF call option volume of 2,540 contracts compares to put volume of 6,148 contracts. MF April option implied volatility of 222 is above its 26-week average of 49 according to Track Data, suggesting larger price risk.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

In GE's (NYSE: GE) annual report, CEO Jeff Immelt plans to state, once again, that the conglomerate will not sell NBC Universal, the company's entertainment arm. There have been rumors of a sale for the last two years.

"Should we sell NBCU? The answer is no!" Mr. Immelt writes in a message for investors in G.E.'s 2007 annual report, according to The New York Times.

The statement is likely to disappoint GE investors. According to the company's 10-K, NBC Universal revenue dropped last year to $15.4 billion from $16.2 billion the year before. Operating profit moved up about 7% to $3.1 billion. These results trailed the performance of GE's large infrastructure and finance businesses.

GE now trades near its 52-week low. With its balance sheet and international prospects, the stock should be doing much better. But the company has to auction off its under-performers if the shares are going to gain ground.

Douglas A. McIntyre is an editor at 247wallst.com.

Equities are ailing. And yes, the IPO market is basically dead.

But there is a bright spot: Special Purpose Acquisition Corporations (known as SPACs). Essentially, this is a new-fangled public offering.

So, what's going on here?

Well, I had a chance to interview Andre Peschong, who is a veteran investment banker and has his own blog, Deal Flow Diaries.

What is a SPAC? The structure?

A SPAC is really an updated and cleaned up version of the old blind pool or blank check company. Basically, these SPACs are formed around qualified management teams that typically have a depth of knowledge in certain areas of business or industry. The SPAC structures are all fairly uniform but of late have been changing due to a number of items, such as market conditions, investor demands and SEC regulations.

The management team usually buys into the SPAC for some nominal amount -- relative to the total raise -- and receives for that a "promote," which is their equity benefit. That promote is not more than 20% and can actually be scaled back relative to getting a transaction closed.

It appears that just after Electronic Arts Inc. (NASDAQ: ERTS) made a bid for Take-Two (NASDAQ: TTWO) that the board of the smaller company granted management an extraordinary pay package. A number of media are now "going negative" on that deal.

According to The New York Times, "Just days after Take Two Interactive, the troubled video game maker, received a buyout offer from a rival, Electronic Arts, the board of Take-Two approved a measure that significantly increased the compensation that management would receive in a merger or takeover, according to regulatory filings." The Wall Street Journal and MarketWatch have raised similar concerns.

Among other things the monthly management fees paid to ZelnickMedia, which employs the Take-Two CEO and Chairman, went from $208,333 a month up from $62,500. In the case of a takeover the management company would receive 780,000 shares.

In an effort to raise additional cash and maintain its AAA credit rating, MBIA (NYSE: MBI), the largest insurer of debt, including municipal bonds, has decided to sell $1 billion of new shares. MBIA prices stock at $12.15 a share which is below Friday's closing price of $14.60. While there is concern by some that this will continue to dilute the value of these already beaten down shares, the market makers understand that maintaining the all important AAA credit rating is the foundation of the company.

Indeed, some analysts believe the stock has got twice its fair share of bad news holding it down based on book value, and have made predictions that the stock will see much better days. So much better, in fact, that analysts at Fox-Pitt Caronia are looking for a $26 to $28 price target in 12 months. I have no such crystal ball, but I do believe the stock will be higher at the end of the year. In the mean time, it is paying a 3.8% 10% yield.

The holders of the largest number of shares (and growing) Warburg Pincus, reports 16.5% MBIA stake, and is committed to $300 million of the offering. Over the weekend, the Motley Fools wrote a thin story, Why You Shouldn't Double Up, discussing large and small cap stocks and why if you hold index funds you may want to rethink your investment allocations. It included MBIA.

Sheldon Liber is the CEO of a small private investment company and the design and research principal for an architecture & planning firm. Disclosure: I am a long time shareholder of MBIA and purchased additional shares recently.

Are you finding that in these times of volatility you're trading more frequently? Maybe overtrading a bit? Well, you're not alone.

The Nasdaq (NASDAQ: NDAQ) Stock Market's revenues grew 50% in 2007 while its net earnings grew at about half that pace. Nasdaq matched 29.7% of all equity-trading volume.

The WSJ.com reported today [subscription required] that "on Sept. 20, Nasdaq and Borse Dubai settled a long battle for OMX in a deal that would eventually give Borse Dubai a 19.9% stake in Nasdaq."

Nasdaq has a few other catalysts coming up:

1. Securities and Exchange Commission approval on its exchange application to trade options
2. Completion of its acquisition of the Boston Stock Exchange and the
3. Closing of an acquisition of the Philadelphia Stock Exchange

As we see more and more exchange volume and consolidation of global exchanges, Nasdaq may outperform.

Zack Miller is the Managing Editor of IsraelNewsletter.com and a former equity analyst for a leading multinational hedge fund.

WellCare Health Plans, Inc. (NYSE: WCG) lost its CEO, CFO and general counsel on Friday. The company is currently under investigation for irregularities in Medicaid and Medicare billings in Connecticut and Florida. The SEC has requested information, as has the U.S. Department of Justice. Agencies are investigating whether WellCare overbilled for mental health care provided as part of Florida's Medicaid program. WellCare also has a subsidiary in the Cayman Islands. Investigators are looking into whether reinsurance arrangements through that subsidiary led to misrepresentations of costs for providing care. WellCare has not yet filed papers with the SEC for the previous quarter and will be late filing its annual report. Earnings reports for the first several quarters in 2008 will also be late.

Given the background of problems, some of which might prove very expensive to correct, why have investors bid up the stock over 11% on the news that a new management must soon take over? The stock closed on 28 January at $48.08, up $4.96 or 11.5% (though on the 29th it dipped slightly back to $47.18). Go figure!

Looks like Al Gore, the world's most prominent environmentalist, also is interested in the type of green that you put in your bank account. The former vice president and Nobel prize winner's company, Current Media, told the SEC today that it plans to raise as much as $100 million through an IPO.

His timing, though, couldn't have been worse. Bloomberg News reports that about 24 companies have canceled IPOs in the past month, the most in a decade. So what makes Al Gore, the company's executive chairman, and his partner Joel Hyatt, the CEO, think the time is right for Current Media? I have no idea.

For one thing, the parent of the Current TV cable channel, is almost $32 million in the red and neither Gore nor Joel Hyatt have any agreement to either remain employed by the company or maintain their stock ownership at particular levels, according to a filing with the SEC.

Interestingly, Current Media pays its executives pretty well. Gore and Hyatt both earned more than $1.04 million in compensation from the company in 2007. Both have also lent the San Francisco-based company $1 million each, the filing said.

Odds are pretty good that this IPO isn't going to happen. Current Media, though, would make an attractive acquisition target for a media conglomerate such as Time Warner Inc. (NYSE: TWX) or Viacom Inc. (NYSE: VIA) because it attracts a young audience that advertisers covet. Rupert Murdoch probably would like the company as well, but I doubt that Gore would ever be able to show his face at Earth Day again if he sold out to News Corp (NYSE: NWS).

The newspaper industry has been struggling of late, battling online classified sites, job listings, and free blogs. While readership of offline paper has been steadily decreasing, readers have been drawn more and more to the online versions of newspapers.

Last Thursday, Reuters published the results of a recent study from the Newspaper Association of America reporting the number of unique visitors to newspaper websites last year rose more than 6% to a monthly average of 60 million.

So, it's not surprising to see that one hedge fund in particular is reported to be readying itself for a proxy battle to make a move for the New York Times Co. (NYSE: NYT). Marketwatch reports that the New York Times has said that Harbinger Capital Partners Master Fund has recently informed them of plans to seek seats on their board.

After we pointed out Bloomberg's failure to mention that an analyst quoted in a piece had been paid by the firm he expressed bullishness on, Bloomberg corrected the piece, adding that "Beacon said in a statement distributed Jan. 10 by PR Newswire that it was compensated $15,000 and 100,000 restricted shares by a third party for enrollment of BioSolar in a research program, without giving more specific information. Earlier today, BloggingStocks.com reported the payment."

But here's where it gets confusing. In the January 9th press release, Beacon disclosed that:

"Beacon Equity Research has been compensated a total of fifteen thousand dollars and one hundred thousand restricted rule 144 shares from a non-controlling third party for enrollment of BSRC in this research program." (emphasis added)

But in a press release dated January 3rd, Beacon disclosed that:

"Beacon Equity Research and its affiliates have been directly compensated a total of fifteen thousand dollars and one hundred thousand restricted rule 144 shs directly from the company for enrollment of BSRC in this research program and other marketing services." (emphasis added)

Countrywide Financial (NYSE: CFC) has decided to give retention bonuses to some of its top executives to keep them at the company until its acquisition by Bank of America (NYSE: BAC) is consummated.

For instance, executive managing director Ranjit Kripalani will get $2.5 million if he stays through March 15th.

Wow. A $2.5 million bonus to stay and do the job he is already handsomely compensated for doing for less than two more months. Nice work if you can get it! And given the company's horrifically bad performance, I doubt that Kripalani is inundated with job offers. At least I hope he isn't.

True: Retention bonuses aren't uncommon when companies are being acquired after periods of turbulence, but this is just more excessive compensation at a company that is an absolute parody of good corporate governance. A $2.5 million retention bonus for Kripalani is like paying the captain of the Titanic a a couple million bucks to stay on the ship after he slams it into an iceberg. If these Countrywide executives had any sense of decency, they'd stay on board to help BofA clean up the mess they left because it's the right thing to do. But this is Countrywide Financial, after all...

More exciting news on the Countrywide front: If the deal falls through, Countrywide could have to pay Bank of America $160 million "under specified circumstances."