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.

From The New York Times…

“It doesn’t matter how much Hank Paulson gives us,” said an influential senior official at a big bank that received money from the government, “no one is going to lend a nickel until the economy turns.” The official added: “Who are we going to lend money to?” before repeating an old saw about banking: “Only people who don’t need it.”

From Gene Logsdon…..

A cash grain farm in the cornbelt sold recently for an eyebrow-raising price just shy of $9000 an acre. It sold for farmland, not industrial development. I suppose that shouldn’t be surprising when USA Today reports that yachts over 80 feet long are still selling at all time high levels despite these disastrous financial times. But I can’t see how corn and soybeans will pay for such high-priced land. The grain markets are way down from summer. Demand for grain from developing countries is down. At least five ethanol plants that were supposed to turn corn into fuel have declared bankruptcy. Fertilizer, seed, and fuel costs are still historically high— fertilizer is selling for as much as a thousand dollars a ton. Some farmers have already bought their seed and fertilizer supplies for next year, thinking that these costs would continue to rise along with grain prices. What if grain prices stay down? We could be looking at a possibility of what one farmer I talk to a lot calls “instant bankruptcy.”

From Felix Salmon…

It’s not easy, being an airline. Thanks to high fuel costs, United lost $252 million in the third quarter, on an operating basis. On the other hand, United was hedged. And as a result of those hedges, United ended up losing, um, $779 million. As a result, United stock rose by 9% today, to $13.75 a share.

From the AP….

The Dutch government says it will invest 10 billion euros ($13.4 billion) in banking and insurance company ING Groep NV to boost its capital position.

Finance Minister Wouter Bos says the move was necessary to calm “market expectations” even though the bank was “healthy.”

Bos said at a news conference Sunday the government’s stake would be around 8.5 percent of the company, but the investment is temporary. The government will name two members to ING’s supervisory board.

ING said separately it will cancel dividends for the year and the company is reviewing executive pay.

From the Economist….

As a result of this security, TIPS have traditionally offered a pretty low yield. But recently that yield has been rising; the 20-year issue was this week offering 3%. As a contrast, the index-linked gilt (a similar security issued by the British government) with a 2035 maturity was offering a yield of just 1.5%. Three percent is better than the yield on offer from most money-market funds, and it will rise with inflation.

And then latter on in the same article…

Nevertheless, lower inflation seems fully reflected in prices, to say the least. One measure of value is the break-even inflation rate, which is the rate of annual price rises above which the investor makes more from TIPS than from conventional Treasury bonds. Mark Capleton, a strategist at Royal Bank of Scotland, says the break-even inflation rate is zero over the next five years and just 1% over the next ten. It would be a remarkable period of history for such a low rate to be achieved. Indeed, the temptation for governments round the world in the face of the credit crisis will be to inflate the problem away.

Just to make it perfectly clear, the only way you would make more money buying a conventional Treasury bond over TIPS (which is the same as a treasury bond except it is indexed for inflation) is if inflation stays below zero over the next 5 years and below 1% over the next 10. If inflation stays at 0% or above for the next 5 years or above 1% for the next 10, you will make more money buying TIPS. With those kinds of odds, why in the world would you ever buy a conventional Treasury bond.

To me, this is proof that the treasury market has gone insane. I can imagine that inflation rates might reach reach zero for one year. But 5 years? I think you will see solders on the streets handing out free dollar bills before you see that happen. I don’t have much confidence in the powers that be, but I have confidence that the can create inflation if they really set their mind to it.

From Macro Man…

And let’s make no bones about it- the US (and almost certainly the world) economies are sliding into recession, if they ain’t there already. Yesterday’s monthly drop in industrial production (2.4%) was the lowest since Mrs. Macro was born (i.e. 1974.) Ex-post, of course, the figure was spun off as being negatively impacted by the hurricanes and Boeing strike last month.

This, of course, begs two questions:

1) Haven’t there been other hurricanes and strikes in the last 34 years?
2) It’s not exactly new news that there were hurricanes and strikes last month, so why weren’t they in the economists’ forecasts (which expected a 0.8% monthly drop)?