Who's minding the store?

First, the subprime mortgage mess..then the rating agencies scandal about AAAA ratings for not-so-credit worthy securities. As if that aint fun, we have a bunch of hedge funds writhing in pain (bear stearns' fund collapse , goldmans sachs' rumble ,bnp paribas' groans and bunch of other suboptimal returns from other hedgies)

Aa clear article showing that free markets arent that free (echoes with that song Nashville) which is kind of sad because we never fathom what "true" free market would return..

It don’t worry me, it don’t worry me. You may say that I ain’t free, but it don’t worry me.

Now, inflation is gonna take a li'l hike thanks to the extra liquidity.Meanwhile, european banks previously said they werent exposed to the american mortgage securities as much (oh! yeah what the heck was BNP's pinching all about then with a bunch of other people groaning a bit).

There's the other fun angle of all the quants wincing at the markets from August 3. This was one week of rumble tumble that upset almost all the models out there(not enough history was incorporated, you see, :-) . These Phds built closely guarded economic models and firms automatically tie their long poles relative to the expectation of the model outcome. This last one week showed that the epsilon (things which happens once in 100 years, also called black-swan incidents) has everyone scratching their you-know-what and worrying that tragedy of commons wont happen with investors..

Lets take a look at the last free-market, currencies. The swiss franc and yen-carry over trade are decent but as you know highly leveraged also means multplicative losses there should some fundamentals change (like yen increasing the interest rate or swiss guys buckling up a bit and add a spice of margin calls by those above banks). Trouble seems looming but thankfully the almighty-dollar is holding its ground despite the tremors in the stock and financial markets.