According to witness, this rant at Long or Short Captial made our publisher laugh so hard that he almost busted a gut. He disputes the fact that he laughed that hard, but he will testify to the fact that it was very funny.

This from Spiegel…

Deutsche Bank’s announcement that it is short €29 billion has Germans fretting. If the country’s biggest bank is in trouble, what does that mean for the others? Commentators think it could be bad news.

This from the New York Times….

The dollar remained at a low ebb today against major world currencies.

One euro traded at $1.4090 this afternoon, up from $1.4065 yesterday, the first time in the common European currency’s nine-year history that it has crossed the $1.40 mark. The British pound also rose, trading at $2.0202, after closing at about $2 yesterday.

And the American dollar remained at virtual parity with the Canadian dollar, the first time that the two currencies have traded that closely since late 1976. It was trading today at 1.0007.

This from the New York Times via Calculated Risk….

It is a measure of the continued confidence in the power and wisdom of central bankers that markets around the world rallied. Both moves showed that the bankers had grown more fearful of credit market contractions damaging economies, but investors initially chose to focus on the action rather than the fears.

By yesterday, however, the markets were moving in ways that cannot have made the Fed happy. The dollar fell — an expected result from cutting short-term interest rates — but long-term rates rose, and so did mortgage rates.

“Alan Greenspan’s conundrum is becoming Ben Bernanke’s calamity,” said Robert Barbera, the chief economist of ITG, recalling that when the Fed raised short-term rates under Mr. Greenspan, long-term rates did not follow. Now the opposite is happening, a fact that will make it that much harder to stimulate the economy.

Those wanting to understand the Fed’s reversal can profit from reading two papers by Fed officials, released this summer as the credit squeeze was worsening.

In total, they constitute an admission that the Fed was surprised by the housing and borrowing boom on the upside, and now fears it will be surprised on the downside.

This from Marco Man…

Macro Man has long been more favourably disposed to the buck than many. His disavowal of the “dollar must go down forever” thesis is one of the reasons that he (unfortunately) didn’t delta hedge his powerball strip. However, even his patience has its limits. A few weeks ago, he noted that any aggressive gesture from the Fed to bail out turd-holders and reflate asset markets would force him to turn structurally bearish.

That has now come to pass, and in what Dennis Gartman might refer to as a “Watershed” moment, Macro Man has lost faith in George Washington. Simply put, if the Fed doesn’t give a crap about protecting the purchasing power of the dollar, why should anyone hold it?

Meanwhile, Jeff Matthews mocks the Fed. And Saudi Arabia declines to follow the Fed off the cliff.

This from Bloomberg….

Crude oil climbed above $82 a barrel to a record in New York after the Federal Reserve reduced U.S. interest rates more than economists expected.