this is an old classic from columbia business school

ben bernanke has spent much of his adult life studying the great depression. he will keep throwing money at the markets anyway, it was $650 billion today, although admittedly those are short term loans backed by less than perfect collateral.

i don't think we have a return to andrew mellon's 1929 policy. "liquidate! squeeze the bad out of the system" as much as people would like to see that happen, the effects would just be too disastrous. before the great depression, ben strong, who was fed chairman for 14 years had recently passed away, and nobody had a strong relationship with europe to co-ordinate policy with them. well, now i am waiting for my old books to be delivered to my place on my birthday. my great depression history books are in there.

the belgian government just bailed out fortis ag today. i didn't know a country like belgium could be affected. dexia, french-belgian is in trouble. hypo in germany needs emergency short term funding. glitnir in iceland has been nationalized

dow ended at 10,365. largest intraday points loss in absolute terms. but nowhere near 10% circuit breaker territory.

there is one view. TED spread spiked today to 3.5+%. 350 basis points is the highest TED spread in history. 3-Month London interbank offer rate is 3.76%. So that is the price of money right now. If that looks low, well it is usually about 0.20%, and technically getting to 3.5% is a 6 sigma event (and last year when it first blew up it was a 9 sigma event). which shows how wrong all the models are. It is still a price, and markets are functioning. But it reflects a huge pricing of risk and also a sign that the Fed could be running out of ammo.

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