Russia is reducing its holdings of US Agency bonds.
As I pointed out in a recent MoneyandMarkets.com column, the Russkies are buying a lot more gold.
Just in case you were wondering, this is officially the worst bear market since the Great Depression.
From Barry Rithholz, a chart showing that the S&P 500 is STILL not cheap on a historical basis …
Yves over at Naked Capitalism (one of my favorite blogs) asks if our bank rescue programs are setting the stage for more looting? He cites Nobel prize winner George Akerlof (of “markets for lemons” fame) and Paul Romer as saying:
Bankruptcy for profit occurs most commonly when a government guarantees a firm’s debt obligations. The most obvious such guarantee is deposit insurance, but governments also implicitly or explicitly guarantee the policies of insurance companies, the pension obligations of private firms, virtually all the obligations of large or influential firms. These arrangements can create a web of companies that operate under soft budget constraints. To enforce discipline and to limit opportunism by shareholders, governments make continued access to the guarantees contingent on meeting specific targets for an accounting measure of net worth. However, because net worth is typically a small fraction of total assets for the insured institutions (this, after all, is why they demand and receive the government guarantees), bankruptcy for profit can easily become a more attractive strategy for the owners than maximizing true economic values.
XX Sean’s note — Let me translate that into non-economist for you: The “banksters” are operating their banks (and the US economy) like a “bust-out” on The Sopranos. According to this theory, they have their inside guys in the government — first, people like Phil Gramm, Robert Rubin and Hank Paulson, and now characters like Lawrence Summers and Tim Geithner, grease the skids to funnel our tax dollars into their pockets. The obvious thing to do to sort out this mess is to nationalize banks in the short term, sort out their finances and then sell them back to the private sector. It worked in the Savings & Loan crisis, it would work now. And it apparently isn’t going to happen, maybe for the simple reason that it would wipe out Summers’ and Geithner’s bankster friends.
That’s why, in my opinion, adminstration officials officials keep offering plans to save the financial sector that nobody else finds credible.
ON THE LIGHTER SIDE (’CAUSE IT’S FRIDAY)
For those of you who haven’t been scared enough by recent market action, step into Stephen Colbert’s Doom Bunker …
And just because it’s Friday, here’s a creepy spider that YOU can control: http://www.onemotion.com/flash/spider/
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