Were Going There, But Will It Work Now?

From the NY Times story "Panic Strangles Asia Stocks, Yen Jumps":

"No one is buying. Fundamentals don't matter any more and there's no explanation for such a plunge," said Yoshinori Nagano, chief strategist at Daiwa Asset Management in Tokyo, of the selloff in Japanese stocks."

That's not good news.

Here's more:

"The iTRAXX Asia ex-Japan high-yield index, a key measure of risk aversion for the region's "junk"-rated credit, soared about 90 basis points to a record 890/940 bps, a Singapore-based fund manager said. But traders warned of little activity in the credit markets, which tends to magnify price differences.

Extreme market volatility stoked talk that the major central banks would have to reduce interest rates again, just days after a concerted round of cuts led by the Federal Reserve and European Central Bank. There were also reports the U.S. Treasury was under intense pressure to inject funds directly into commercial banks.

"It highlights the enormity of the issue and the problem faced by the G7," said Adam Carr, a senior economist at broker ICAP. "Given the muted response in markets, certainly I think more rate cuts are to come, as ineffective as they are proving. Lets hope the G7 propose a good dose of fiscal medicine to the real economy as well."

Whether or not global policymakers have anything more planned, time was running thin.

The spread of 3-month London interbank offered rates over the 3-month U.S. Treasury bill yield widened to 426 bps, increasing more than 300 bps in the last month, with cash being hoarded and practically no lending between banks."

What's a good dose of fiscal medicine? We could sure use it.