Fixed Income Panic

Cozy weekend reading.

Seeking Alpha: Corporate Bond Market Grinding to a Halt

“The market in my opinion is on the verge of ceasing to function… it is nearing the time when my next post will be an obituary for the fixed income market.”

Don’t miss this trader’s comment:

“We have the makings of a collapse that could be far beyond the Treasury and Fed to manage. My call this AM to Paris was morose since the US markets are telegraphing black signals to EU on all fronts. They are starting to say the “bail-out” while necessary is NOT sufficient. Our office in Moscow is equally alarmed; Russia has little love for the USA, but its love of energy sales is legendary (and necessary) and anything that might slow the sales this winter has their attention. A currency wipe-out would slow energy sales. We should not expect too much if this bill is enacted by the House. I think this is a much longer story than many of us foolishly imagined.”

and America’s Reign of Terror

“..the financial equivalent of the Reign of Terror during the French Revolution..”

Treasury Secretary Paulson celebrated the signing of the “bailout bill” by tapping a massive asset management team to get this party started – and his transition chief is still talking of “precious days.”  So as quickly as Congress could pass this bill, the chatter almost immediately morphs from “rescue” and “bailout” bill to “buying us a little bit of time” bill.

Wall Street Journal: So Much For The Bailout

New York Times’ Krugman: Edge of the Abyss:

“…while the election is only 32 days away, it will be almost four months until the next administration takes office. A lot can — and probably will — go wrong in those four months.  One thing’s for sure: The next administration’s economic team had better be ready to hit the ground running, because from day one it will find itself dealing with the worst financial and economic crisis since the Great Depression.”

It’s all starting to move much faster than I thought it would. The vibes from the market feel like a tense prologue to a stampede.

Not trying to feed panic here, but scenarios that just a year or two ago I would have given 1000-to-1 odds now feel considerably more likely.   I hope each of you have – at least – considered a personal plan for facing a financial system seizure. This is really a very precarious and historic moment.

Now, here’s a beautiful girl to cheer you up.


9 thoughts on “Fixed Income Panic”

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