They say that the failure to bail out Lehman Brothers was a mistake. But given the fact that the cost of the bails that did go through continues to grow, I don’t buy this line of reasoning.

From Calculated Risk…

The Fed has marked down the Bear Stearns assets from $29,526 million to $26,802 million this week. This is a mark down of $2.7 billion or 9.2%. The Fed is now underwater by a little over $2 billion plus lost interest.

From Naked Capitalism….

In case you weren’t keeping tabs (the number and variety of handout-recipients grows with every passing day), AIG was first given a loan (really, akin to a maximum borrowing authorization) of $85 billion with much fanfare and high drama, which was later quietly increased by another $37.8 billion. In the last ten days, AIG has said it intended to borrow perhaps as much as $10 billion through a separate, new commercial paper program.

Bloomberg indicates that AIG is now saying that it might need even more dough, although its latest plea does not have a figure attached to it.

Edit: From Brad Setser….

When the pound falls more in a week than it did during the week of Black Wednesday, the week when Soros famously “broke the Bank of England,” you know big changes are afoot.

From the New York Times…

The American market ended the day down about 3.5 percent, making it one of the best performers in the world.

In short, the whole world went nuts. Still trying to figure out what was going on.

The next exciting saga in the unfolding disaster will come from emerging markets. Hints of the impending trouble are all over the net today. None of it is all that exciting yet, but in the past these kind of rumors and small stories have singled the start of a big blowup (by past, I mean over the last couple of months).

You can see some of what I am talking about with this post at Macro Man.

Or in this story from the Wall Street Journal.

Or in this from Felix Salmon.

Or in this from Naked Capitalism and this as well.

Plenty of more stories out there just like the one’s above.

From the New York Times…

The Wachovia Corporation announced a $23.9 billion third-quarter loss on Wednesday as it prepared to be taken over by Wells Fargo.

From the same article….

Wachovia’s quarterly loss appears to be one of the largest in banking history. It is bigger than the market values of 422 companies that make up the Standard & Poor’s 500-stock index, and slightly more than the gross domestic product of Panama.

From a different New York Times article….

For decades, Americans have considered money-market mutual funds as safe as bank accounts. On Tuesday, the Federal Reserve pledged $540 billion to make sure they really are.

From the Wall Street Journal……

The California Public Employees’ Retirement System, known as Calpers, said its assets have declined by more than 20%, or at least $48 billion, from the end of June through Oct. 10.

Unless returns improve, Calpers is poised to impose an estimated increase in employer contributions of 2% to 4% of payroll starting in July 2010 for about two-thirds of its state employer members, and in July 2011 for the remaining third. Any decision will be made after Calpers knows its returns for the fiscal year.

From the Wall Street Journal….

The government said its reason for taking control of the private pension funds was to protect investors from losses resulting from the global turmoil. President Kirchner said in a speech: “The main member countries of the [Group of Eight] are adopting a policy of protection of the banks and, in our case, we are protecting the workers and retirees.”

But economists said the motive is to provide the government with about $5 billon in annual pension contributions to help plug the government financing gap and avert a second default. “They were in a tight situation and this was an accessible source of funds,” said Buenos Aires economist Aldo Abram.

From Market Wire….

Who would ever have thought that in oil-rich Western Canada we would see diesel fuel being rationed? That’s exactly the scenario taking place in Alberta, Saskatchewan and Manitoba where a severe shortage of truck diesel fuel was playing havoc with truckers throughout the region. Carriers were seeing their fuel supplies rationed by as much as 10% to 50%. The card-lock privileges for all new accounts were suspended by at least one oil company and the hours that card-lock service was being made available to existing customers were being restricted. We were being told that things would not be returning to normal for at least several weeks, if not for the rest of October and November.

All these shortages are beginning to bother me. It is as if even the first world is not first world anymore. It is one thing if prices go up and down, it is another if there is no fuel to be had at all.

It’s more of an emotional thing then anything else. Of all the problems we face, fuel shortages are least of our worries. The slowing economy is likely to cut demand by so much we will not be worrying about refinery capability for awhile. Though that is cold comfort to Canadian truckers who are trying to ship products right now.