We have been neglecting the unfolding hedge fund/CDO/subprime crisis lately. Not because it has not been interesting, but because nobody knows anything at the moment. Heck, Bear Sterns won’t even let its investors know how much money they have lost until mid July. So nobody will really know if the sky is falling until then.

So we ignored this rather alarmist Bloomberg article when it first came out. But over the weekend Macro Man did a post on it that was so funny we just had to point it out. Just to give you a taste of Macro Man’s commentary, the following is a passage from the Bloomberg article with a comment from Macro Man in bold at the end.

S&P abandoned seven-year-old criteria for determining a bond’s protection against default in February.

Under the old guidelines, S&P said a bond’s “credit support” must be twice the rolling 90-day average of the sum of value of mortgages delinquent by three months or in foreclosure plus real estate that has been seized by the lender.

Of the 300 bonds in ABX indexes, the benchmarks for the subprime mortgage debt market, 190 fail to meet the credit support standard, according to data released in May by trustees responsible for funneling interest payments to debt investors.

Most of those, representing about $200 billion, are rated below AAA. Some contain so many defaulted loans that the credit support is outweighed by potential losses. Fifty of the 60 A rated bonds fail the criteria, as do 22 of the 60 AA rated bonds and three of the 60 AAA bonds.

All but five of 120 securities in BBB or BBB- rated portions of the mortgage-backed securities would have failed S&P’s criteria, according to data compiled by Bloomberg.

None have been downgraded, though S&P and Moody’s have parts of three pools of securities linked to the index under review for a downgrade. Fitch has downgraded parts of three mortgage pools tied to the ABX and put four on watch for downgrade.

“Don’t misunderstand me: I’m not saying these others are performing great,” Robert Pollsen, a director in S&P’s residential mortgage surveillance in New York, said in an interview last month. “And they certainly might warrant our attention several months from now, which obviously we’re going to do.”

What can I say? To abandon a credit-standard test just as it starts to bite is the height of irresponsibility. And the comments from Mr. Pollsen are so lame, they need a cane.