morgan chase is in advanced discussions to purchase washington mutual, before wamu becomes insolvent. the same will happen to lehman bros, although we don't know who the lucky buyer will be. i imagine that whoever buys lehman, the treasury will be spending lots of $$$ in a bear stearns-style "rescue."

and now china is thinking of reducing its us dollar holdings since they have finally figured out that investing $400 billion in fannie mae and freddie mac maybe wasn't such a good idea. as of now, those two companies combined have a market cap of $1 billion. china could own both of them 400 times over for the money they have tied up in debt, not that anyone would want to own them.

if there's a silver lining, fre's 1.00 stated dividend now means it is yielding 151%! if there's anything that says "we're going out of business" it's a 151% dividend yield.

some prognosticators have been mentioning the word deflation, but i don't think that will happen. gold and silver are down due to manipulation and panic selling, as noted by don coxe and others. but copper has held up very well. copper is entirely an industrial metal. when is the last time we went into recession with copper being the strongest metal?

http://www.chinadaily.com.cn/china/2...