Lifeline for endangered albatross BBC
First evidence of a supernova in an ice core physics arXiv
Thousands queue at New York job fair Financial Times
The Media Continue to Ignore Welfare for Citi Shareholders Beat the Press
AIG’s Liddy May Shift Strategy as Asset Sales Stall Bloomberg and As A.I.G.’s Losses Grow, Its Survival Options Shrink New York Times
The Bernanke rally Jim Hamilton
Bernanke – the pot calls the kettle black Bruce Krasting
German CDS debt spreads hit record as economy crumbles Telegraph
The Inevitability of U.S. Debt Repudiation Paul Kedrosky (hat tip reader Dwight)
Antidote du jour (hat tip reader Rob):
Anonymous 
Posts
Thanks Yves for this great blog, one few which get the extent of the problem.
This short story (from an old water hose monetary analogy) captures the essence of this crisis.
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There once was a nation of farms that experienced booms and busts as water availability varied in the land. Some farms managed better than others by conserving and prudent planning, while some failed and caused much hardship. The government decided to manage the water supply for the nation’s farms. They promised a great moderation in the cycles of boom and bust.
A small group decried the redistribution of water resources, and warned that those closest to the outlets would be the only beneficiaries. They were ignored, as the vast majority trusted their government. And so the government took charge of much of the nation’s water resources. They brought the water to one vast federal reserve, and created a distribution outlet called Water Street.
At some point, an influential group successfully pressed for a hands-off approach to distribution of these resources from Water Street. Some insiders argued the reserve needed to closely regulate the waterways, but they were shouted down in the name of business freedom. Most others were just happy to trust the government to do the right thing.
Predictably, a set of farms close to Water Street had control of the water supply, and soon indulged in over-consumption and waste. They started to sell the water to speculators and other non-productive water users. Little of the water directly reached the rest of the nation’s farms, but many readily received water on credit from speculators to keep their farms going. The Water Street beneficiaries built huge farms and even bigger speculative businesses that relied on an endless supply of free water.
With time an entire economy was built on free government water. Creative new businesses loaned water, sold water futures, got farms into debt, and mushroomed. Although everyone praised the new innovations, this economy was unsustainable and showed clear signs of excess. But every time risk-taking caught up to these huge Water Street farms and speculators, the reserve provided ample free water to recover from their mistakes. This ensured the problem only grew bigger.
Once every few years government water reserve managers realized they had to slow down the water output, or risk running out. This latest time, they knew many were addicted to free water and tried to slow down the outflow very very slowly to avoid hurting the wasteful farms and speculators. Even so, Water Street farms were the first to be hit. Without ample free water, these huge farms with their water speculation arms were simply not viable. Soon they were in full blown crisis. Worse, they threatened to disrupt the waterways that supplied other farms. The government stepped in to save the system, and deluged Water Street with as much water as possible.
But this time it was too late. The Water Street farms started to hoard water, as did the speculators, for many had made open-ended promises to supply cheap water. No water was reaching the nation’s farms, which were failing and defaulting, deepening the crisis. The government continues to deluge Water Street like water was going out of style. A long term solution still eludes the nation.
Moral: If you must redistribute, regulate like a hawk.
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