Another Paulson Low

When Treasury Secretary Paulson suddenly changed course, stating publicly on November 12 that he would abandon efforts to buy troubled mortgage assets, credit costs went up significantly, causing stocks to fall to new lows today.

Only 2 months ago, on September 12, Paulson was "adamant” that no government money be used to bailout ailing Lehman Brothers. The Treasury must surely have come to rue his words and actions, according to Nobel laureate Paul Krugman. Lehman's demise clogged up the credit markets' vital arteries, and put the "deleveraging process" on steroids, fanning the flames of an economic meltdown. The costs of the meltdown and damage to the international financial system far outweigh how much a Lehman bailout would have cost.

Paulson will now need to move quickly to contain the damage he's done - if that is still possible - and secure additional funds in an emergency session from Congress to restore some semblance of confidence in the Treasury and the markets. Paulson will likely be remembered as America's most expensive Treasury secretary.

HSBC - The World's Local Bank?

HSBC advertises itself as the "world's local bank". Yet, the bank charges its credit card holders a not so local 3% fee on every transaction abroad. While almost every credit card issuer charges a foreign currency transaction fee, HSBC's is one of the highest. Before heading overseas, it's best to call your credit card companies and find out which of your cards is the least expensive to use.

How not to invest now

At this point, I pay no attention to the mainstream media proclaiming how inexpensive stocks are. The risk of investing in stocks at this point is extraordinarily high as the volatility (or risk) indicator VIX shows. The VIX is like the vital signs of an intensive care patient - which are all over the place at this point. I believe these spasms - at unprecedented high levels - will leave investors so jarred that they will stay away from stocks for a long time to come - and leave the stock markets at lows we haven't seen in a decade.