$IRX

3-month T-bills plummet.

Worst week since 1987 crash -- that's something, huh?


Hedgies are racing to raise cash -- nobody wants to touch a mortgage, commercial paper... anything...


Essentially, this will force a rate cut.

But again 'liquidity crisis' or 'credit crunch' is the big illusion.

Sorry, if it were about liquidity, we'd be back over 14,000...

We're sinking because the loans on the books are toxic -- trillions of dollars of loans and derivatives that insure them.

If the loans go bad and the CDS get called to protect the losses -- then the banks lose and whoever is holding the 'insurance' paper and is liable to come up with billions will also default.

The Fed and everyone out there knows it'll just take one big default to expose the problems.

These problems won't go away even if you cut the rate to zero.

the resets that are coming will cause even more bad loans to go bad.

Nobody with a bad mortgage to get out of it -- they can't refinance, any appraisal will cause the individual to discover a big loss.


This is a game of who can sneak their way into cash or offload the worst junk before it falls apart. The Fed is merely buying time for insiders to hopefully sell a few more shares to the public.


T-bills are telling the story.