The Arte Johnson Crisis...

Arte Johnson is a comedian who was famous for falling in slow motion. Dressed in a black overcoat as a 'dirty old man' he would fall off a tricycle or a park bench in such slow motion that it defied gravity in its own way.

This financial crisis reminds me of Arte's work.

In the US we are familiar with a new warning from Citibank about potential losses. But the day started with the Swiss National Bank reminding us that its large financial institutions had made a great deal of progress but still were fighting off problems. The BNS points out that many institutions are still trying to to reduce the amount of RISK on their balance sheets. It's ongoing, not over.

Now we are even seeing more articles wondering if the Fed did TOO MUCH. Others suggest that had the Fed been more aggressive even earlier all of 'this' would not have happened. Bear Stearns has said much the same of its fate. But is preventing crisis the Fed's job? Especially when the crisis comes to the financial institutions that created it; should the Fed stop that? This is little more than Wall Street crying for a bailout before the crisis comes.

We can propose many counter-factual scenarios and presuppose what good they might have done. But for what purpose?

One interesting wrinkle is the notion that bond insures have NOT been called on make good on their guarantees because that would set firm prices for distressed merchandise that everyone would then have to mark to, creating other losses. We are in a real Catch 22 world.

Ambac has just terminated its deal with Fitch as Ambac desires to no longer be rated.

And as we are trying to deal with the here and now we are dogged by the problems of the past that just won't go away... meanwhile new issues for the future are cropping up.

If you think that the economy is almost out of the woods you just aren't paying attention. It's unraveling in slow motion. It's the Arte Johnson Crisis... and there are no more enchanted Walnettos to hand out.