Reading Between The Lines At UBS

So I was reading the losses, writedowns and what have you at UBS. Yes yes it is all doom, gloom and boom…  However, something did catch my eye.

Last week, it agreed to buy back almost $19 billion of bonds after New York State and others sued it for steering clients towards auction-rate securities — debt which became impossible to sell after the market froze. UBS said this would cost it $900 million.

This is very interesting. UBS is buying 19 billion dollars of debt, and the cost of doing this is 900 million? That’s 5% of the grand total, and my thought is if this is the loss on the bonds. If I am not mistaken these bonds are the problem bonds, and if UBS takes them on they take on the problems. If UBS believes that the net change in value is 5% then it tells me if the entire credit crisis is not a bit overblown? And I wonder if the real problem is not shaky credit, but the fact that the financial community took on too much leverage.

Nonetheless it seems to me that we really have turned the corner. Those that have problems are exposed and those that are ok are, well, ok.