I really think we dodged a bullet today.

I went to bed at 1:30 am, and was convinced everything will be OK, afterall Yen was 98.5+, there was a rate cut, AUD 67.4+ and climbing and futures were recovering.

Woke up this morning and all the colors were flipped. That after all the rhetorics and CAPS yesterday was an absolute shock. It sends shivers up my spine so badly I actually felt dizzy.

It does look like PPT was feeling EXACTLY the same and was on "overdrive" mode this morning. "They" have to stabilize the money flow right here and now. And the way to do that is none other than unlimited currency swap, moral hazard be damned. I am fully aware of what the strength in USD at this rate would do to the "hard industry" in america (as opposed to the paper industry). Anyone with any amount of self preservation instinct would not stop at anything to protect those from liquidity issues. I would absolutely give away USD for free just to prevent that from collapsing, or I'd really have an unsolveable problem in my hands, if I were Ben.

"Gary Rosenberger's monthly survey of placement industry executives, not surprisingly, found pervasive weakness. Firms are sitting on their hands in terms of hiring, and placement agencies are seeing floods of resumes coming in, as the pool of jobseekers balloons. The tone of the comments ranged from 'bad but surprised it's not even worse' to 'disaster.' There seemed to be some degree of variance on whether contacts had felt the full brunt of the credit crunch/economic slowdown yet. Some had just started to see worsening over the past week or so, while others have been suffering since September. In a sign of the times, several contacts talked about their concerns of whether their customers (employers) would pay their bills.

The negative tone of Gary's piece is of course no great surprise, as it is exceedingly clear that the economy is as weak as it has been in a generation. The only pertinent question seems to be just how bad the payroll data can be. RBSGC looks for a 220,000 job loss for October, and declines at least that large if not bigger in November/December. At this point, our expectations are sufficiently low, that not much could surprise us on the downside."