A sense of disappointment in some quarters that the US Federal Reserve didn’t cut interest rates overnight but it did acknowledge for the first time that “downside risks” have increased from the subprime mess.

But in the market place, deals keep falling illover and victims keep appearing.

UK cable TV group, Virgin Media has postponed its saleil after it became apparent buyers would not be able to raise the $US20 billion or so needed to complete the deal now.

Virgin Media said overnight that its financial advisers – Goldman Sachs and UBS (who have had problems of their own in coping with the meltdown) recommended that the strategic review process be extended until potential strategic partners or bidders “can complete their proposals in a more stable debt market environment.”

So the sale is off, meaning that the most interesting candidate, John Malone, from Liberty Global, has indicated he also could not raise the cash, even though he’s in a better position financially than the private equity groups sniffing around.

Virgin Media has a market capitalisation of $US7.7 billion and $US12 billion of debt. It acknowledged it had received a takeover approach last month. This was understood to be from the private equity group, Carlyle Group for more than $US30 a share. Virgin shares closed in London yesterday at $US23.74, so there is a ‘deal’ gap of considerable size.

The sale process was due to start this week.

In the US, MGIC Investment Corp, America’s largest mortgage insurer said it is looking at ending its planned acquisition of rival Radian Group Inc because of the fallout of the subprime mortgage crisis worsens.

MGIC says it is reassessing the deal, now valued at $US2.7 billion, because a subprime mortgage servicing and dealing joint venture co-owned with Radian may be worthless.

Radian is reported in US business media as saying that MGIC is obligated to go through with the transaction. A final decision will be made next week.

The two companies owned Credit-Based Asset Servicing and Securitization LLC: it was worth more than $US1 billion in June, but last week the two companies said it looked worthless.

The all share deal was valued at $US4.9 billion when it was announced in February. The $US2.7 billion is based on yesterday’s closing price for MGIC and the value of the 80.2 million outstanding Radian shares.

The loss in value is due to the subprime mortgage turmoil and the very sharp fall in the share price of both companies after last week’s shock announcement.

Bear Stearns, the investment bank which started the entire mess by being the biggest seller of securitised subprime mortgages and associated credit securities, has lost two, perhaps three hedge funds that specialised in the securities.

That in itself has raised eyebrows in New York: the investment bank set up the deals and then at least three hedge funds it sponsored were among the clients who invested in the securities and then borrowed money to gear up the investments and make big returns.

Two of the funds are dying after Bear Stearns injected $US1.6 billion to try and bail them out. Now it’s trying to liquidate those funds in a well known tax haven, the Cayman islands, where it will get a good deal and investors and debtors of the funds won’t, or so stories in US business media suggest.

The firm is not winning friends by trying to get a US court to block all legal action against the funds while the liquidation hearing is going on in the Caymans.

And the senior management of Bear Stearns has been ringing the heads of big Wall Street banks and investors trying to shore up support for the firm, whose shares have fallen one third in two months.

In Japan Shinsei Bank said losses on subprime loans had reached $US30 million and it has more than six times that amount of mortgage-backed securities that may be affected.

The holdings are more than double Shinsei’s first-quarter net profit. A quarter of the Tokyo-based bank’s investments in the securities are of the riskiest type, it said.

Shinesi was the first Japanese bank taken over by foreign investors after it ran into problems in the great Japanese deflation.

The bank’s shares have dropped 41% in Tokyo as the Japanese banking sector has suffered from slow growth and a sharp rise in bad debts and legal action over possibly illegal lending by finance company associates.

The bank would have invested in these securities through their US associates, and to boost returns. Japanese interest rates are around half a per cent to 1 per cent in the market and that allows the so-called carry trade investing to be carried out.

That involves borrowing cheaply in Japan and then switching to higher yielding currency investments, such as in New Zealand, Australia, Iceland, Latvia and in US subprime mortgages.