Tuesday, October 07, 2008


For three days I have been fighting a flue bug. No fun. This must be the third one for me in less than two years.

Watching this market has made the aches and pains all the worse. The stress caused by the market meltdown has been visible in the faces, voices and emails of family and friends.

Last week, a regular reader and good friend wrote about a nerve condition that has made one side of his tongue go numb. I mentioned his condition to friends Friday night and was reminded of another friend who once had Bell's Palsy. The left side of his face temporarily went numb. I am not trying to give a medical diagnose, but I am keeping my friend in my thoughts and prayers. It is comforting to recall that the friend with Bell's Palsy was self healed in a few weeks.


Central bankers are delivering the goods and gearing up to deliver more goods. Furthermore, without the aid of the central bankers, the market is delivering its own cure.

In three days, the 10-year Euro Yield has fallen from 4.85 to 4.2%. The US 30 year bond is at the historic low of 4%. Mortgage rates have once again started to fall. In the UK, the 5-year note has fallen from 5.8% in June of 2007 to 3.9% yesterday. Back in June of 2007, it was hard to see that 5.8% was a high interest rate; a very expensive miss. Short rates were just cut in Australia (a full 1% cut), Israel and India. The drop in Euro yields is going to force the ECB to join the club very soon and the US has already instituted a De facto cut of 1%.

With my head feeling like it weighs 100 pounds, it is time to stop. I leave you with the thought that the "investor class" which is republican dominated cannot get slammed much harder. It looks like we are headed for financial Armageddon just before a democratic three house sweep. Are we at the depths of despair? Indicators such as the VIX show levels not seen since October 2002. Is there hope?