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9:00 AM EST, Wednesday, September 3, 2008: This is the Autumn of Refinancing. And the question is "At What Price?" For example, a company called Viskase Companies, Inc. is offering to exchange 11 1/2% Senior Secured Notes due 2011 for 8% Senior Subordinated Notes due 2008. You'll see more and more of this. The question is simple: Would you do this deal? Or would you rather have

1. Your cash back, or
2. A higher interest rate.

I'd take the cash, if I had a choice.

There's more agony to come. From this weekend's BusinessWeek:

Third-quarter financials, which firms deliver in the coming weeks, could set off the avalanche of sales. Credit analysts at J.P. Morgan Securities (JPM) estimate that banks worldwide will experience an additional $200 billion in losses and writedowns this period, on top of the $500 billion they've already taken. When the whole credit crisis is said and done, the full count could top $2 trillion by some gloomy estimates.

Until now, banks have replaced most of that lost capital with money from outside investors. But those funds are drying up. For one, it's getting harder to issue the type of special securities that sovereign wealth funds and others have found appealing when giving big cash infusions to Citigroup (C), Merrill Lynch (MER), and other struggling companies. Plus, many of those early movers may have buyer's remorse, considering that the value of their investments has eroded dramatically.

Without a white knight, banks will likely resort to dumping assets to maintain satisfactory capital levels for regulators and creditors. How much stuff could be up for sale? Generally speaking, commercial banks try to hold $1 of capital for every $10 of assets they own; for investment banks it rises to about $20. That means if banks and other financial firms lose the predicted $200 billion in the current period, there could be roughly $2 trillion of assets on the block, including prized possessions.

Remember yesterday's piece about commercial real estate? One of my mavens emailed me:

Mavens? I said possibly 2 years, but at least into mid-year 2009 before see any start of a turnaround. All dependent on US economy. Are we in a recession or as the paper indicated this morning , are we just going into one? There is no liquidity from Lenders but I heard this morning that some major banks are raising capital to make loans at albeit higher interest rates to take advantage of the illiquid market.

Hope this helps. Article is pretty gloom, but that is the reality.

The Great American Invention Machine: Oil is still high -- high enough to deliver major incentive to enterprising inventors. Items:

From MIT's Technology Review: In 2001, a professor of materials science and engineering at MIT, Yet-Ming­Chiang, announced some promising results concerning new battery materials. But those materials might still be in the lab today were it not for Ric Fulop, then an enterprising 26-year-old from Venezuela. Today, the materials are being used to make high-performance batteries that General Motors is testing for use in its new electric car, the Volt.

Fulop founded his first company--which imported computer hardware and software and sold it to Venezuelan retailers--at the age of 16. He has since founded five more companies, including one, Into Networks, whose software is used in the Windows Vista operating system. But it is at A123 Systems, the company he founded with Chiang in 2001, that Fulop has had his greatest success. Now the company's vice president of business development, he has helped A123 raise over $250 million, including investments from Sequoia Capital, GE, and OnPoint, the venture capital initiative of the U.S. Army. A123's batteries can already be found in power tools, airplanes, and hybrid buses.

Fulop dropped out of college to found one of his companies, only to return for an MBA after starting A123. But despite a lack of academic training in materials science, he is quick to grasp technical details. He spent months scouring scientific journals, attending conferences, and picking the brains of university technology licensing officers before his search led him to Yet-Ming Chiang. And thanks to this preparation, it took just one meeting to convince the MIT professor that Fulop's idea for a battery company was sound.

Commercializing battery technology, especially for new cars, is a capital-intensive and risky business. To help jump-start the company, Fulop helped negotiate a deal with Black and Decker to supply batteries for the power-tool market. Not only did the agreement give A123 an early and much-needed source of revenue from an industrial customer, but it was an ideal way to start testing its production technology for the much larger automotive market. In 2006, partly on the strength of the company's success in reliably producing millions of battery cells a year for power tools, Fulop and his partners persuaded GM to give A123 a chance. The automaker is testing two different battery technologies for its Volt, with a decision expected by the end of the year. If GM does select A123's technology, Fulop will have played a key role in making possible the United States' first mass-produced electric car. --Kevin Bullis

From Hank Green:

Twenty-two percent of America's power is used to create light. But a well-kept secret is that over half of that light comes out of bulbs that you've likely never seen up close, and certainly haven't ever bought.

They're the high intensity discharge (HID) lights that give the world's supermarkets and Wal-Marts that brighter-than-sunlight feel.

While HID lights are pretty efficient, especially when compared with incandescents, they have a few pretty serious problems. They take about 10 minutes to warm up, and they can't be dimmed. And, of course, no one would complain if they were a bit more efficient.

Well a startup called HID Technologies has developed a new digital ballast for HID lights that fixes all of those problems. The new technology could cut energy use by HID lights by 40%. Altogether this tremendously unsexy technology could save gigawatts of power.

The power would be saved by allowing stores to dim lights on sunny days (in concert skylights), allowing lights to turn on instantly (so they wouldn't have to stay on all the time), and simply because the new technology makes the lights more efficient, with a 320 watt new HID lamp being roughly as good as an old HID lamp.

Of course, it's a change that none of us will likely even notice, but in the end, that's the best kind of environmental innovation.

From me: I've been in touch with the inventor of a new spark plug which can, it seems, increase your gas mileage by up to 50%. A friend has the system in his truck and it works.

The commodities bust: On June 30, my commodities fund was up 27% for the year. Now it's up only 7%, having lost 6.5% in August. Fortunately, I wasn't in hedge fund Ospraie Management, one of the biggest players in commodities, which the Wall Street Journal said is shutting down its largest fund after significant losses. It fell 27% in August due to bets on oil, natural gas and structured products, CNBC said it also bet on copper which has fallen also. In a letter to sent to investors Tuesday, Dwight Anderson who ran the fund said, "The losses were primarily caused by a substantial selloff in a number of our energy, mining and resource equity holdings during a six-week period characterized by some of the sharpest declines in these sectors in the past ten to twenty years."

To my brain, the big lesson here is you must accommodate to much heightened volatility -- in commodities, in the stock market, in real estate, in capital markets, etc. Things no longer move slowly. Hence,

1. If you're "betting" big on anything, you'd better have ultra-tight stops. If your bet starts going awry, get out fast. If your bet starts going well, take some profits off the table.

2. Cash is king. Without a substantial amount of it, these gyrations will bankrupt you fast. Remember what Keynes said, "The (stock)market can stay irrational longer than you can stay solvent."

3. The last lesson -- and God, I've harped on this -- Stay away from Wall Street's structured products. I'm not 100% certain they were Ospraie's downfall. These are investment products that create elaborate and convoluted bets for you, the investor. You may win -- highly unlikely. But Wall Street always makes its money, since it hedges your bet upfront with puts and calls, etc. .

Google's new browser called Chrome: From reader Eric Lentz:

Hi Harry,

You must use Google's latest invention Google Chrome.

It is a new web browser they launched today and there is only one word to describe it: AMAZING! It is lightning fast. I could not believe how fast it was compared to Internet Explorer 7. You can download it at Google Chrome (BETA) for Windows. Please share this with your fellow blog readers and try it for yourself! It's fantastic!

Eric

More good tennis to watch. Federer nearly lost last night. Roddick killed Gonzales, who looked listless. Watch the tennis in high definition. My best setup is DirecTV and a 61 inch Samsung DLP (now down to an amazingly low $1640 on Amazon.) I played a one-set, one and a half hour match yesterday, which no one watched, but which I enjoyed. I'm not as good as Federer, yet.