The action overnight has been dramatic. The number for equity markets overseas seems to be four or more, as in declines of 4%-5%, with developing nation instruments suffering more.. The theme was a flight from risk and worries about further economic slowing
The dollar fell, particularly versus the yen the preferred vehicle of the carry trade. But the yen, at 105, is still well below its Bear levels of almost 95 per dollar.
Treasuries rose, with the two year dropping below 2%.
Crude falls more than $7 to below $95.
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As our Titanic of a financial system edges nose down in the brine, that whining keen you hear are the stern screws as they broach the surface with the cant o’ the whole. When WaMu goes under, even without AIG blowing out, we’ll have the stern in the air and the universal masters sliding down the deck toward the icy foam. Oh, to live in interesting times!
Of course, US equities markets were not hit this hard. I find the asymmetry interesting. Greenspan et al will do nothing, absolutely nothing, to even partially slow huge increases in equities markets (they were bubbles, of course). But now look at what the Fed and Treasury have done to make sure the Dow/S&P/NASDAQ do not deteriorate. How many Sunday night announcements are we going to get? Also, go back to the Fed's reaction to the burst of the NASDAQ bubble. Now it surprises me that they didn't do more than cut rates to the bone. I guess we're all lucky they didn't take Pets.com website as collateral under a lending facility back in late 2000.
Seriously, look at the huge decreases in equities markets across the world the last six months, and the US is barely down 20%. Asymmetry.
I'm not saying I want a meltdown. I have a small business. I will get crushed in a meltdown. But if Fed and Treasury won't play by a set of rules, eventually everyone else is going to stop playing and take their ball home.