The paper reports that advisers are saying the breakup fees owed by banks would be less than the cost of assuming debt that is worth less than the face value of the loans, though the banks risk huge lawsuits in walking away. A wave of abandoned deals would further trip up stock markets.

If you want to come up with news that could make the Dow drop another 500 or 1,000 points, this would be it,” says one lawyer specializing in private equity issues for a major New York law firm. “But desperate times call for desperate measures.”

A WSJ report on the front of its Money & Investing section quotes people familiar with the matter as pretty much damning Bear Stearns and Ralph Cioffi, whose hedge funds collapsed last summer. The collapse was a signal that something big was about to happen in the credit markets.

The Journal says (subscription) investigators are focusing on an April conference call in which Cioffi said he was “cautiously optimistic,” when weeks earlier he had moved millions of his own money out of the fund and into a safer one—all the while e-mailing colleagues internally about the potential plight of his funds’ investments.

The Dallas Morning News writes that apartment developers say the housing bust is a boon for them. We understand that if people lose their homes and jobs, they’re more likely to have to rent. But presumably all those houses sitting empty can be rented once the banks foreclose on them.

Dallas anyway (which to be sure, wasn’t nearly as bubblicious as the coasts), apartment developers are going full tilt building new complexes.

Nationwide, total multifamily home starts have fallen for the last two years and are forecast to drop again in 2008. But that was due to developers putting the brakes on condominium construction… In the Dallas area, builders are rushing to start thousands of new units.

The WSJ has an interesting front-page take (subscription) on the farm boom, noting that while the rest of the economy appears to be heading into recession, rural communities that have been in decline for decades are flourishing on global demand for their products.

In the seems-good-at-first-but-is-really-not category of economic news, the U.S. trade deficit dropped 7 percent in December. That’s largely due to slower consumer spending, as well as the weak dollar, which has made American exports more affordable.

Fed chief Ben Bernanke implies (subscription) there will be another large interest-rate cut next month, as he warns with the type of insightful analysis we’ve come to know and love from our Econ 101 students…er…Federal Reserve chairs: “More-expensive and less-available credit seems likely to continue to be a source of restraint on economic growth.” Futures markets give one in three odds on another whopping three-quarter-point cut.

The Washington Post’s Dana Milbank has a revealing take on the ice in the top money men’s veins, and Al Lewis of the Denver Post hits them more directly.

Quote of the day goes to hedge-fund investor Angelos Metaxa in an FT story on hedge funds questioning the Wall Street banks on how safe (read: solvent) they really are—and in some cases, moving their assets out of the banks.

In August, everyone was worried about a hedge fund blowing up, but now they are worried about a bank blowing up and taking a few hedge funds with it.

(Due to the births of our two greatest presidents and the resulting annual closing of stock markets, the Opening Bell will not publish on Monday.)

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