From WKBW…

Erie County Executive Chris Collins says because of the unexpected increase of fuel prices this year the county will soon run out of money to pay for fuel for county vehicles by the middle of this month. This shortage would impact important services such as sheriff road patrols, snow plowing, and emergency response. “I’m asking for the third time for the legislature to approve this administrative transfer of funds,” Executive Chris Collins said in a news conference Wednesday.

Are counties too small to be bailed out? Everyone else is getting free money.

From Reuters….

DETROIT (Reuters) – General Motors Corp (NYSE:GM – News) shares fell as much as 21.6 percent to their lowest level since 1950 on Thursday amid financial market turmoil and the car maker’s report of European sales declines through the first nine months of 2008.

Should be zero, but I guess the markets are thinking that the government will bail GM without wiping out shareholders.

From Felix Salmon…

If Morgan Stanley was in distress back in mid-September, it’s much worse today, trading as low as $12.50 a share: that’s just 40% of its stated book value. For all the denials coming out of the bank, clearly the market is very skeptical that the injection of cash from Mitsubishi UFJ Financial Group is going to happen — or that even if it does happen, it will be sufficient to stave off insolvency. After all, even $85 billion wasn’t enough for AIG, and MUFG is putting much less than that into Morgan Stanley, which has a similarly-sized balance sheet to AIG.

People in the comments section are just about ready to shoot Mr. Salmon for writing that post. They think he is going to bring down poor innocent Morgan Stanley by pointing out that the market is losing faith that the bank will survive. It is amazing how many people still think that this is crisis of confidence. They must not be paying attention to the skyrocketing default rate.

From Naked Capitalism….

First it was banks and securities firms, and now the focus of worry has widened to include insurance companies. Reader John referred us to a Reuters article that MetLife credit default swaps are now trading on an upfront basis, which means buyers of protection against the default of MetLife bonds must make an upfront payment as well as agreeing to periodic fees. Only companies seen as being in serious risk of failure trade on an upfront basis. Another story shows similar pricing of XL Capital CDS.

One of the things that they used to push through the bail out package was the claim that a big insurance company was about to go bust. I thought they were talking about AIG (which had already received a bail out from the Fed) but maybe they were talking about MetLife.

This also from Naked Capitalism….

One has to wonder whether the FDIC’s giving a wink and a nod to Wells Fargo’s attempt to snatch Wachovia away from Citi will prove to have been too clever by half. The apparent motivation was the lower explicit cost to the taxpayer of the Wells deal (note Wells was going to take large tax writeoffs, which reduce, indeed may eliminate the cost differential, but that point seems lost on the mainstream media), but it may also have been to keep pressure high to wrap up a deal before anyone could take too hard a look at at the supposed prize. Wachovia is looking less desirable than it once did, now that both sides have dug deeper as a result of the negotiation process, further complicating achieving a quick resolution.

This is why I don’t buy the “if we could stop the panic we would be fine” argument. Every time outside parties start looking at the balance sheets of these banks, it turns out that things where worse then everyone thought.

From the Globe and Mail….

“It’s Armageddon out there,” Mr. Tonken, the chief executive officer of junior oil and gas company Birchcliff Energy Ltd., said yesterday.

“I’ve lost millions. Everyone has.”

The value of Canada’s energy companies has been devastated since oil plunged from record levels in the summer. Among the 58 companies in the S&P/TSX capped energy index, about $110-billion in market value has been wiped out in the past six weeks, calculations show.

Higher cost oil producers the world over are being killed. When demand goes down the people who have to pay 60 dollars just to get a barrel of oil out of the ground have a hard time competing with those who can do it for 20 to 30 dollars a barrel.

The bottom line as far as most Americans are concerned is this….

The Dow Jones Industrial Average is now below 8900 8800 8700.

The S&P 500 is off 40% from the peak of last October.

From Belmont Club…

If the events have gone nonlinear, then Barack Obama and John McCain may ironically be struggling for the privilege of sitting in the cockpit of an airplane which has become aerodynamically unstable. In such a situation, second prize is getting the White House. Barack Obama will be to politics what the bailout package has been so far to financial markets. There’s an old joke about dogs who chase cars and can’t figure out what to do when they catch them. Now Presidents and Central Bankers all the world over know how it feels to reach the perches they always dreamed of and finding themselves spectators just the same.

From Felix Salmon….

Here’s how fluid things are: last week, Iceland nationalized Glitnir, the country’s third-largest bank. Today, it unnationalized Glitnir, putting it into receivership instead: clearly the bank’s liabilities were too large for the Icelandic government to take on.

Yesterday, Iceland pegged its currency to the euro; today it unpegged the currency, saying “there is insufficient support for this exchange rate”.

This is turning into an international incident. A lot of people in the U.K have money in banks based out of Iceland. Its looking like they won’t get their money back.

From Blomberg…

“America’s homeowners are going to get uncomfortably familiar with ‘LIBOR’ starting next month,” the New York-based Citigroup analysts wrote.

Libor rates have soared since the bankruptcy of Lehman Brothers Holdings Inc. last month as financial companies hoard cash.

The average subprime borrower facing an adjustable payment for the first time next month would face a monthly payment increase of about 18 percent based on Libor rates as of Sept. 30, rather than the 10 percent that would have occurred based on the rates on Sept. 15, the analysts wrote. The payment would be $1,951, instead of $1,807, they said. Fannie Mae and Freddie Mac loans would be boosted to $1,021 on average, instead of $904.

(h/t Felix Salmon)

Macro Man has a post up today where he blogs his reaction to the markets in real time. Read it and keep checking back if you want to be able to say that you where there when the world changed. I don’t know how long he will be able to keep it going though. He is on London Time so he will need to go to bed earlier the those of us in the US. Then again, he might not be able to sleep tonight.

Edit: Check on the comments on Macro Man’s post if you have time. I feel sorry for those who thought a rate cut meant a bounce.

From the AP….

The misery worsened on Wall Street Tuesday, with stocks piling on losses late in the session and bringing the two-day decline in the Dow Jones industrials to more than 875 points amid escalating worries about credit markets and the financial sector.

The Dow lost more than 500 points and all the major indexes slid more than 5 percent. The Standard & Poor’s 500 index saw its first close below 1,000 in five years.

Steps by the Federal Reserve to reinvigorate the dormant credit markets ultimately weren’t enough to calm nervous investors. News about financial companies only added to their despondent mood.

“The calls I’m getting — every money manager I deal with, and every client I talk to — are just very emotional. This is a very, very emotional time, and most of them are taking steps to shore up their defenses, reducing exposure to stocks just to defend their portfolios,” said Hugh Johnson, chairman and chief investment officer of Johnson Illington Advisors.

In other news, the Fed will now loan money to commercial enterprises directly.

Iceland is begging Russia for for a loan because no one else will give them one.

And Spain is begging people to turn in all their cash money. This has a risk of backfiring. Around these parts if the the Government started begging people to turn their money in people might start to pull their money out just to be on the safe side.

Stock Markets are all down. And there was some really wild moves in the foreign exchange markets. Brad Setser has the charts.

I wonder if the really wild moves in the foreign exchange markets were due to hedge funds trying to raise cash.