A Historic Week

This past week was truly historic, as we saw the biggest weekly selloff ever for global stock markets. Many stock markets fell over 20% just this week! This brought the decline from their peaks last year to about 40% - 50%! Other financial assets were not immune either, as bonds and commodities also fell. Why the huge drop? There were many factors, mostly negative. It looks like the US auto companies may be a lot closer to bankruptcy than people imagined. It also looks like the rot is spreading from the banks to the insurance companies. Even more importantly, the credit markets are still basically frozen. The very important commercial paper market, which I discussed last week, has improved a bit. The improvement came after the Federal Reserve announced that they would be buying commercial paper directly(another financial... [read full story]