Canadian money is momentarily binary

Pulled up the exchange rate toy:

1 Can$ = US$1.0100 = ¥101.1110

Right, um, not much post today. The US$ is tanking, hard. It was actually up for a couple of days in a row, then fell over today. If it falls below ¥100.20 decisively then technical targets, I'm told, are in the ¥80 area. Fun times. This is only part of why oil bounced past US$110/barrel today tho'.

Minyanville asks, Can the Fed go Bankrupt? quoting the Financial Times as describing the new US$200B Fed plan as using “the best quality mortgages” as collateral for Treasuries. Here's the problem: the "best quality mortgages" in question are crap. And Karl at Market Ticker found the article and blogged about it before me, but I did find it on my own: Bloomberg did an investigation into the "AAA" CDOs, which are the kind of residential mortgage securities being used as collateral here. Only six (6) of 80 are actually worth their AAA ratings, and yet they all continue to have AAA ratings from at least one agency. The appalling (yet brilliant) interactive Shockwave chart must be seen. 74 of the 80 "AAA" CDOs they checked were below investment grade. 14 are effectively bankrupt outright already. Despite this all 80 have AAA ratings from Moody's. Of the 14 bankrupt CDOs, 13 also have AAA ratings from S&P. Fitch does less badly. And again: only six actually deserve their AAA ratings.

This is a farce, and it has been a farce, and it continues to be a farce. It's also fraud.

BTW - Fitch, being the least bad of the three, downgraded Countrywide as an issuer today to BBB-. Buh-bye.

As for the rest, no real analysis, just some links. Mish notes that everything has been worse than expected so far, and recommends continuing to bet on that when people say things like "no recession" and "mild recession" and all that. Kevin Depew describes Americans as "shot by both sides." And something is going on that we can't see; in addition to the US$200B new facility, and the TAF being expanded to US$100B, and the regular discount window operating at US$77B, today's 10-year bond action was freaky weird. Carlyle Group expects asset seizures by banks and seems to be going under in the next few days; Morgan Stanley has an emergency conference call scheduled for Friday at 2pm (these are never good); and everybody and their mother is looking at Bear Stearns for an explosion of some sort, with Washington Mutual hanging around the corner. Maybe one or more of those is it.

how does this work then?

I don't understand how this is possible, but, the NY Times has some of the funny tonight.

No theme today, but mostly it's currencies

Oil bounced off $111/barrel on Thursday. In the overnight, the US dollar is under ¥100, albeit barely. The basket's at 71.74, and the Euro at US$1.564. Is this what capital flight looks like? Interestingly, over the last couple of weeks, the Yuan conversion rate suddenly leveled off, and stayed essentially flat - until the last couple of days, when the dollar started heading down against the Yuan again, too. Central banks are now officially alarmed and planning action.

The mid-March H3 is out, banks are still in massive reserves default; about a -$8B swing since the previous release at the end of February; that puts us back at the mid-February lows. Also, today, somebody asked for $117.250B from the Fed overnight and didn't get it. That's not counting the $80B TAF (going up to $100B), much less the longer-term $200B new facility.

Some bullet items:

• Minyanville wants to know how anyone could call the lousy sales report "unexpected." Seriously, people.
• Mish says market internals on the S&P500 still look bearish; the NASDAQ looks a bit better. Given that it never recovered from the dot-com crash, can you make an argument that this only makes sense? I've no idea. Some are suggesting that the low volume is indicative of buy moves by large agencies; I don't know how that's supposed to work either, unless it assumes that everyone else is sitting this mess out right now.
• Things are getting ugly in Florida, as fights break out and riot police come in to quell a proto-riot at the Boca Raton Housing Authority.
• Brad Setser's post, "central bank intervention ... unprecedented in size and scope," has a better than typical set of news links in the comments.
• We're Not Immune: insanely overpriced condos on the Kitsap peninsula going to auction at 50% off, which makes their prices only somewhat too high. I really do consider the original build prices to have been absolutely batshit insane, even for the boom era, up here.

And now the dollar's popped up a bit, up against its lows. Small moves, but widely distributed.