Funda

*Disclaimer:Most of this stuff is boring*

If you are a money obsessed wonk - please watch those weekend shows / late night shows on CNBC - a classic, often (like every 20 years or so) repeated phenomenon is playing out around the globe.

A bit of crisis in one place triggers a huge chain of events across the world - and because of excessive leverage and the the strain on liquidity it puts on all affected parties - all capital tends to take flight towards safety (Possibly AAA rated US Treasury bonds) - for eg. it runs like hell from places like India, Brazil, Thailand etc. - and back to the US - where they are put into Treasury bonds, which are, like, as safe as the US government - so to speak.

Read this article from Paul Krugman's blog - the spread between AAA rated Tbills - and the prime rate at which money is lent to less assuring, more risky companies is a staggering 4% - this is 2% and that is close to 6%. Warren buffett must be licking his chops - im sure when things settle down - he'll bet on this spread to narrow down back 1 - 1.5% - by probably buying up good quality B grade bonds which are yielding 6% odd and short T bills or something.

Lots of similar screaming long term things - betting on the crude to be at 50 or 60 dollars a barrel - from what, 35 dollars a barrel today - fixing up a level of like 51 or 52 for the Re/Dollar spread and short the dollar whenever it goes above 51 or something .

BUT - but - a lot of people are saying this one is special - its like this - say, the world as a whole is a company with a total worth of 100 units - its been growing like 2% in the last 20 years - and the total net worth wud have been like 149 (Compounded 2% annually) - as per what pundits are saying - the last 8 months or so has actually WIPED OUT - nearly like 10 or 12 units of nett worth- and we are back at where we were in 2000 or 1999. (Like at 135). Any of you get this ?

If you like all this - read this phenominal book by Roger Lowenstein - for someone who understands basic fin jargon - it reads like a dream - teaches you LOADs of stuff.