The Wall Street Journal reports on its Money & Investing cover that derivatives are predicting a collapse in the commercial real estate market, which has so far performed far better than its residential cousin.

While delinquencies on commercial mortgages dropped to a record low in January (a miniscule 0.27 percent), the Journal says the CMBX index is pricing in a default rate as high as 8 percent over the next year.

The WSJ quotes an analyst who says the index’s sky-high implication of default “doesn’t make sense,” and it is a high enough number to be scary. If that’s right, the economy will face another wave of hundreds of billions of dollars in losses and banks will be further weakened.

The paper reports that in the last seven weeks, prices to insure some commercial-mortgage debt have tripled, though it says critics suggest that short sellers piling into the CMBX are distorting it. The same thing was said about the ABX index, which measures the cost of insuring subprime debt, last year when it skyrocketed. It was one of the first indicators of something very amiss in that market, and it was dead-on.

While the WSJ story is good, it doesn’t do a great job of putting the moves in context—this year’s CMBX jump is only the latest in more than a year of such moves. At one time early last year, one group of AAA-rated commercial-real estate bonds was seen as being as safe as U.S. Treasury bonds and the CMBX priced its yield at just 0.04 percent more than the T-bond.

No more. Since that low, the so-called spread has multiplied by more than fifty to 2.04 percent as of yesterday.

The business papers all prominently display reports that Microsoft says it will open its closely guarded software code for other programmers and companies to use, in an effort to encourage “interoperability”—compatibility with other services.

The Financial Times and The New York Times go with the angle that the software behemoth’s move is a bid to fend off pesky European antitrust regulators (it goes without saying that there are no American antitrust regulators to fend off), while the Journal is kinder about Microsoft’s intentions, not mentioning the EU angle until the fifth paragraph of its A3 story.

The FT says Brussels bureaucrats are skeptical, reminding us that Microsoft has promised similar moves before but failed to follow through on them. The NYT notes, while the others do not, that the move could also be a way of clearing the way for Microsoft’s sure-to-be-closely-examined bid for Yahoo.

The Journal says the move is a bid to stay relevant in an Internet age where software is more flexible and faster-developing, with hordes of amateur and pro coders developing Internet program add-ons using so-called open-source software, which is an increasing threat to Microsoft’s computer-based software approach.

Many players, from Google to individual programmers, are using a host of free technologies to build new types of applications that work over the Internet. Popular programs such as Google Earth and free email services are the result. Increasingly, companies and individuals are melding existing Web sites and software into new applications.

The more people use these applications, the less need they have for Microsoft’s applications, or even for the traditional personal computer that runs Windows. By making its software more accessible, Microsoft is hoping to maintain the PC’s relevance.

Microsoft’s hometown Seattle Times combines the two angles while the Post-Intelligencer leans more toward the appease-the-Euros explanation. Both have good write-ups of the move.

The Washington Post says on its D1 that housing industry lobbyists are going to the mat to beat back a Democratic proposal that would allow bankruptcy judges to reduce the amount borrowers owe on their mortgages. The industry says it would raise the risk levels on mortgages, forcing banks to charge more to all lenders in the future.

The NYT leads its front page with a story on proposed federal bailouts for home borrowers whose mortgages are under water. It reports that a new study estimates more than one in 10 (8.8 million) borrowers owes more on their loan than their home is worth—the highest ratio since the Depression.

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.