well, as an aside---what matters really i suppose is whether things do or do not move in a straight line. by a straight line, i mean a bunch of things, but principal among them is the possibility of another republican administration coming into power and being responsible for dealing with the fallout of this fiasco. that would, i think, mean the end of the american empire. and that will not be pretty. i do not think obama that radical an alternative, but i do think that the international community, such as it is, probably prefers something of a variant of the status quo in terms of geopolitical and economic power simply because they know it and it generally works to their benefit--so obama might well represent a kind of "coming to their senses" on the part of the us internationally and i think that'd generate more room to manoever for the states. either way, the unipolar world of republican fever dreams is self-evidently on fire, with the ruins of neoliberalism helping it burn. because everywhere except in the us, neo-liberalism and the new and improved colonial order they call "globalizing capitalism" and american domination are synonymous more or less--even amongst more friendly political positions, the three operate in tandem. it seems to me that the americans---whom i refer to at a distance because i do not really recognize myself anywhere in a context wherein a nitwit politics like that of the us right can be taken seriously---anyway, the americans have a choice--burn with the outmoded arrangement or put the place in a position to remain a meaningful player in the mutation/reconfiguration---be the geopolitical entity the marginalization of which is amongst the central features of the mutation, or be part of reshaping it, so that the mutation would be something else.
-----Added 17/9/2008 at 03 : 12 : 16-----
an end-of-the-day wrap kinda article from the financial times.
i continue to be struck by the distance which separates the coverage in this paper from anything that has appeared in the states, and i keep thinking about why this is the case and what is going on with it.
anyway, read on.....
Quote:
Credit panic hits historic levels
By Krishna Guha in Washington, Michael Mackenzie in New York and Gillian Tett in London
Published: September 17 2008 18:23 | Last updated: September 17 2008 20:00
The panic in world credit markets reached historic intensity on Wednesday prompting a flight to safety of the kind not seen since the second world war.
The $85bn emergency Federal Reserve loan for the troubled insurance giant AIG, announced on Tuesday night, failed to curb the surge in risk aversion. Instead, markets were hit by a new wave of anxiety.
One cause for fear came when shares in a supposedly safe money market mutual fund fell below par value – or “broke the buck” – due to losses on Lehman Brothers debt. This raised the risk that retail investors in other such funds could panic and pull out their money.
All thought of profit was abandoned as traders piled in to the safety of short-term Treasuries, with the yield on three-month bills falling as low as 0.03 per cent – rates that characterised the “lost decade” in Japan. The last time they were this low was January 1941.
Shares in the two largest independent US investment banks left standing – Morgan Stanley and Goldman Sachs – fell 37 per cent and 21 per cent respectively as the cost of insuring their debt soared, threatening their ability to finance themselves in the market.
Repercussions were felt far beyond the US. There was turbulent trading in HBOS, a huge UK mortgage lender, which was forced – at the prompting of the UK government – to enter into merger talks with fellow retail bank Lloyds TSB after drastic falls in its share price.
Lending between banks in Europe and the US in effect halted. The so-called Ted spread – the difference between three-month Libor and Treasury bill rates, which measures fear over banks – moved above 3 per cent, higher than the record close after the Black Monday stock market crash of 1987.
The US authorities fired back with the Treasury announcing it would borrow money to give to the Fed to use for its emergency lending operations – in essence removing any balance sheet constraint on the size of this assistance.
The Securities and Exchange Commission announced new curbs on short selling that traders called draconian. Short sellers, who profit from share price declines, were widely blamed for the trouble at AIG. But these efforts failed to avert heavy selling, particularly of US financial stocks.
Angry traders blamed the Fed for not cutting interest rates on Tuesday amid market speculation that the US central bank could be forced into a U-turn. Many analysts also blasted the US authorities for adopting an arbitrary approach to financial rescues – saving AIG but not Lehman – that was impossible for investors to predict and therefore did nothing to boost confidence.
The S&P 500 fell 3.6 per cent, led by a 9.4 per cent slump in financials. Equity volatility was near its highest level since March. The dollar weakened slightly, while the Japanese yen rallied as risky currency funding trades were unwound.
Gold also benefited from safe-haven buying, with bullion prices heading for their largest one-day gain for 20 years, leaping 11.2 per cent to a three-week high of $864.70 a troy ounce.
Emerging markets shares dropped more than 7 per cent, according to the MSCI index.
Andrew Brenner, co-head of structured products and emerging markets at MF Global, said: “It feels like no one wants to take anyone’s credit . . . it feels like we are on a precipice.”
Copyright The Financial Times Limited 2008
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FT.com / In depth - Credit panic hits historic levels
so what it looks like is that that machinery of the international trading system is jamming up, and the reason for the jamming is a kind of institutional panic that is deploying across the instruments of credit.
at this point, there's no obvious conclusion, but things are ramping in a kinda scary direction.
unless you're like me, and are mostly just watching this and trying to figure it out.