Tag Archives: credit seizure

Bailout schmailout. This is it. We’re toast.

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The credit system is not operating at all. LIBOR has a bid, but no offer. The TED spread is at a new record, over 3.82. Congress and Paulson are powerless to do anything about this. Equities, always slow to catch on, are still not reflecting the severity of the situation.

Here’s the TED spread from Bloomberg:

Here are 90-day Treasuries from Yahoo! Finance:

Here’s a six-month view of the the Dow (Bigcharts.com). Not much of a move so far, given that this is a once-in-three-generations event:

The VIX is high, but not showing once-in-three-generations fear (Yahoo! Finance):

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All stocks have is hope. Hope is not enough.

Fear remains high. Treasuries and VIX not buying the rally.

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90-day T-bills are 0.11%. That is up from a low of 0.04% yesterday, down from near 1.5% last week.

Click for sharper view. Source: Bloomberg.

The VIX (options volatility index, a reliable fear gauge) remains elevated:

Click for sharper view. Source: Yahoo! Finance.

These are still crash conditions. That is not a prediction, but crashes do arise from oversold markets like this with weak internals. If there is one tried and true method of inducing a stock market plunge, it is a credit seizure. The central banks are just huffing and puffing. Their $250 billion does not address the core problem of system-wide insolvency. Liquidity is a red herring. Nor do short selling rules matter. Keep on guard.