The New York Times finds a place where 90 percent of the mortgages are underwater, the most in the country.

The average homeowner in Mountain House, California, owes a whopping $122,000 more than the house is worth. Look how much houses were going for there during the bubble, and this is a 60-mile commute from San Francisco:

The Martinezes bought their house in early 2005 for $630,000. It is now worth about $420,000. They have an interest-only mortgage, a popular loan during the boom that allows owners to forgo principal payments for a time.

But these loans eventually become unmanageable. In 2015, Mr. Martinez said, his monthly payments will be $12,000 a month. He laughed and shook his head at the absurdity of it.

It seems the Times is implying that the interest-only part of that loan lasts ten years. Surely that’s not right.

Bloomberg says that the restructured (and expanded) AIG bailout shows that the government is now bailing out “zombie” companies, even though it’s said it would only help out healthy ones.

Vincent Reinhart, resident scholar at the American Enterprise Institute and former director of the Monetary Affairs Division at the Fed Board, said yesterday’s expansion of the AIG bailout shows that “no one knows the general principles” behind the Treasury’s trouble-assets program.

First, Treasury said it would buy distressed assets. Then it began injecting capital directly into banks, and now, with AIG, into troubled financial institutions.

“Now we are outside solvent institutions. If you don’t have a design principle it is very difficult to draw lines,” Reinhart said.

This Andrew Ross Sorkin column in the Times is annoying.

To the contrary, Mr. Boies said. At least over the next two years, the exact opposite will be true. Mr. Obama might want to police antitrust issues, but the economy is in such sorry shape that he probably won’t be able to, Mr. Boies said. It just won’t be politically palatable to kill deals that could save some jobs.

Deals almost always result in mass firings.

He suggested that while the firms would be heavily regulated, that was no replacement for antitrust enforcement. “The regulators end up being, with a few notable exceptions, co-opted by the industries they regulate,” he said, ticking off airlines and railroads as examples.

But beat reporters aren’t co-opted?

And an unnecessary detail alert, I don’t need to know what David Boies ordered for dessert, especially when you’ve already told me what he had for dinner:

As he ordered a dessert of mixed berries — strawberries and raspberries, “no blueberries” — he started in another worry…

Allan Sloan in the Washington Post is good in explaining what’s going on with GM and Chrysler.

The problem is the cash GM and Chrysler need — and soon — under terms of the grand bargain the Detroit Three made last year with the United Auto Workers about health care for retirees. GM, Ford, Chrysler and the UAW agreed to have health-care trusts assume responsibility for retiree health care. In return, the companies promised to turn over billions of dollars to the trusts. The amount, while huge, was way less than the cost at which those benefits were carried on the companies’ books. Capping the retiree-health liability seemed to promise the companies long-term salvation.

But, boy, is there a near-term problem. By my math, GM and Chrysler have promised to give the trusts a total of $12.5 billion to $18.1 billion in cash — maybe more — by early 2010. That’s above the $16.8 billion currently in the trusts. Good luck coming up with that money, guys. Or getting more givebacks from the UAW.

GM and Chrysler would almost certainly stop paying retiree health care if they go into bankruptcy before the end of next year. That would be devastating to retirees not old enough for Medicare — and it is a major reason I don’t think that bankruptcy would be a good thing.

This page-one Journal story on the bailout doesn’t really add much we didn’t know already, but another page-one story has a good angle—the dismal state of the retail industry means those desperately needing jobs can’t depend on it for a last resort anymore.

Circuit City is the latest of at least 14 major retail chains, including Linens ‘n Things and Mervyn’s LLC, to file for bankruptcy protection in the past 12 months. Many, such as Linens, are discovering that they can’t find financing and are liquidating, slashing tens of thousands of jobs…

Roughly one of every 10 Americans is employed in the retail sector. But since November 2007, about a fourth of all jobs that have been lost — about 320,000 in all — have been in retail.

This is some good context:

The layoffs expose the thin economic safety net available for many Americans who have long depended on part-time or second retail jobs to make ends meet. Front-line retail jobs are among the primary sources of employment for those without a college education. For better-educated, full-time employees, retail jobs also filled a void left by the decline of U.S. manufacturers. Retail jobs could become more competitive still as unemployed workers with college degrees enter the market.

And good for the Journal for calling Circuit City out for sacking its employees last year for cheaper ones—something it and others didn’t do last week when the chain announced it was closing a bunch of stores.

Until early this decade, store-level jobs at Circuit City were considered some of the better retail jobs because they paid commissions. But about five years ago, the company phased out commission jobs. Last year it fired 3,400 of its better-paid retail employees, replacing them with less-experienced workers and suffering a backlash in customer service.

Here’s a solid ProPublica/LA Times joint effort on Goldman Sachs advising clients to bet against bonds it was arranging for the state of California.

The giant investment firm did not inform the office of California Treasurer Bill Lockyer that it was proposing a way for investment clients to profit from California’s deepening financial misery. In Sacramento, officials said they were concerned that Goldman’s strategy could raise the interest rate the state would have to pay to borrow money, thus harming taxpayers…

Some experts said the investment bank’s actions, while not illegal, might be inappropriate. “That’s not a good way to do business,” said Geoffrey M. Heal, professor of public policy and business responsibility at Columbia University. “They’ve got a conflict of interest and they’re acting against the interest of their customers… . You act in the interests of your clients. You don’t screw them, to put it bluntly.”

That Goldman has conflicts of interest is an understatement.

Bloomberg’s Jonathan Weil hammers Barack Obama for bringing in “more of the same.”

Take a good look at some of the 17 people our nation’s president-elect chose last week for his Transition Economic Advisory Board. And then try saying with a straight face that these are the leaders who should be advising him on how to navigate through the worst financial crisis in modern history…

So, by my tally, almost half the people on Obama’s economic advisory board have held fiduciary positions at companies that, to one degree or another, either fried their financial statements, helped send the world into an economic tailspin, or both…

The president-elect needs some new advisers — fast. We are in a crisis of confidence in American capitalism. These aren’t the right people to re-instill its sense of honor.

Many of them should be getting subpoenas as material witnesses right about now, not places in Obama’s inner circle. Did Obama learn nothing from the ill-fated choice of James Johnson, the former Fannie Mae boss, to lead his vice- presidential search committee?

Right on.

I would be remiss if I didn’t point out Gretchen Morgenson’s long piece in the Sunday Times on the fall of Merrill Lynch. She gets a couple of JP Morgan bankers on the record talking about how the derivatives they invented came to be misused by companies like Merrill.

This inside info on how Merrill operated looks bad:

Always carrying a notebook with his operations’ daily profit-and-loss statements, Mr. Semerci would chastise traders and other moneymakers who told risk management officials exactly what they were doing, a former senior Merrill executive said.

“There was no dissent,” said the former executive, who requested anonymity to maintain relationships on Wall Street. “So information never really traveled.”

Read the whole thing.

Bloomberg is good in polling actual taxpayers on what they think ought to happen to Wall Street bonuses.

“I may not understand everything, but I do understand common sense, and when you lend money to someone, you don’t want to see them at a new-car dealer the next day,” said Ken Karlson, a 61-year-old Vietnam veteran and freelance marketer in Wheaton, Illinois. “The bailout money shouldn’t have been given to them in the first place.”

Finally, look at this story in the Boulder Daily Camera last week about hawking two of the paper’s buildings. The publisher says “This decision has nothing to do with the Camera’s health.”

Sure, buddy. Check out this story—published the very next day.

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Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu. Follow him on Twitter at @ryanchittum.