Yesterday proved out to be a day of declines in equities and bonds both; today is so far working out the same. Investors are retreating to cash outright, apparently. The Dow has fallen as I write below 9,000 again; the S&P 500 has lost half its gain from Monday. Todd Harrison at Minyanville thinks we'll explore a trading low here for a while before moving further south in early 2009.
The Federal involvement in back "unsecured assets" coverage will rise to around US$1.4 trillion, according to the FDIC. Brad Setzer quotes G7 pledges to "accommodate whatever quantity of U.S. dollar funding is demanded," and yes, that is a quote. He calls it "unprecedented," sad that the word has lost much of its impact over the last few months, noting that "[t]he US and the major European central banks have effectively agreed to lend without limit to make good on their pledge to avoid a systemic bank failure." In a separate post, he notes that this is because the system is "on the precipice" of systemic failure.
The question remains, however, whether this will do any good without simultaneous forcing of transparency on bank assets. (Karl at Market Ticker thinks not, as you can tell from the link.) So far, all moves on this front have been in the other direction, towards less mark-to-reality (via extension of mark-to-fantasy rules). Yves at Naked Capitalism is not at all convinced. Bloomberg notes that none of the new authority allows anyone to order more lending; it just gives them money and then Paulson hopes they'll do something with it. (Mish has commentary here.) The TED spread is not significantly improved from yesterday (it's down, but moving within the same range); the LIBOR is doing a little better - but only a little. (Yet more Mish commentary here.) John at Across the Curve describes the continued gridlock in financials, but notes that non-financial companies seen as "safe haven credits" such as General Mills are seeing movement.
eta: I don't usually do these mid-post, but in this case, I want to make sure everyone sees in context how badly shipping continues to suffer as the Baltic Dry Index falls dramatically and some shippers are finding lines of credit necessary to ship simply unavailable.
Remember the CMBS, the risk measurement on commercial property? It's still insane.
Fitch has issued credit ratings downgrades for the state of Rhode Island. Iceland's equity markets reopened and fell 77% in a day, with bank shares getting no bids, so it could be worse. Several Hungarian banks are considering suspending foreign-currency lending, with one major bank having already done so.
Dr. Roubini at RGE Monitor says this will be the worst recession in 40 years - but he's apparently still convinced it won't be as bad as the Great Depression, or the previous Panic before that. But he's raised his total losses estimate quite a bit, to between US$2 and 3 trillion.
Interesting side effects; Peter Schiff at the San Diego Tribune says to just stop paying your mortgage; under the new aid-and-recovery rules, imprudent borrowers will be bailed out, while prudent and on-time buyers will continue to be screwed by a combination of no relief and additional falling property values. I note this mostly for the benefit of the anger at the bailout processes so far. The New York Times talks about "The Frugal Teenager - Ready or Not." The article talks a lot about feelings of entitlement, in that annoying way characteristic of the Times.
Finally, a bit of social economics, Time had an article on gender-based wage disparity, talking in part about this study showing that in gender transition, transwomen see their earnings decline 30-ish percent, and transmen see their incomes rise about 2%. You might take a look.