Watching Rome Burn?

Another bloodbath day for the DOW, which is off 20% from its pre-bailout peak, along with the S&P 500, which is off 40% (and Gold is now more expensive than the S&P 500).  My, my… reality is finally setting in en masse.

In some further bizarre news (warning, possible hoax?), we hear that GOP fundraisers, using John McCain’s name, have sent pre-paid FedEx mailers to the offices of Wall Street employees imploring them to make emergency donations of several thousand dollars apiece, good luck with that!

Meanwhile our eerily prescient Dr. Roubini, is shouting from the rooftops that a stock ‘crack’ and a global depression may be imminent. One should probably take the kwisatz haderach of our times at his word, as gossip continues to spread about the likely nationalization of heretofore untold banking institutions by the treasury.

But the big story of the day has to be the commencement of the Lehman Credit Default Swaps unwind. Panic has (yet again!?) set in as one of the largest remaining (apparently) solvent solvent banks, JP Morgan, looks set to take a big hit from the settling of Lehman’s CDS contracts. For background, please see my post ‘What’s a Credit Default Swap, and Why You Should Care‘. Looks like that emergency meeting can’t come too soon.