Today In Troubling Financial News

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(In the interest of sanity, this will not be a regular feature.)

–Currency fluctuations in China seem to signal a coming political crisis. “[D]omestic and global economic weakness could test the grip of the ruling Communist party. ‘This is clearly a reference to the fact that weak growth is likely to lead to significant social unrest,’ said Steve Barrow at Standard Bank.”

–Bill Gross, the bond wizard at Pimco, warns that the stock market of tomorrow is unlikely to be the stock market of yesterday. “We will not go back to what we have known and gotten used to. It’s like comparing Newton and Einstein: both were right but their rules governed entirely different domains. We are now morphing towards a world where the government fist is being substituted for the invisible hand, where regulation trumps Wild West capitalism, and where corporate profits are no longer a function of leverage, cheap financing and the rather mindless ability to make a deal with other people’s money.

–The U.S. Treasury lacks a “coherent plan” for distributing the bailout money.

–The home price slide ain’t done sliding. “Economists and other pros generally say home prices won’t bottom out before the second half of 2009, and some don’t see a bottom until 2011 or 2012. Even when they stop falling, prices may scrape along the bottom of the rut for years.”

–The credit crisis is moving “away from financials” into the rest of the corporate world, with market predictions of ever-greater corporate bond defaults.

–On the upside, Fed Chairman Ben Bernanke, a scholar of the Great Depression, says we are experiencing an “order of magnitude” different kind of event when compared to the Great Depression. So we have that going for us.

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