Credit Markets in Disarray

This is partly what I talked about in the last post. The credit markets are screaming that there are problems.

http://www.bloomberg.com/apps/news?pid=20601087&sid=aaFjf7VDAX20&refer=home

Interest-rate derivatives are showing that investors are preparing for another round of turmoil in credit markets amid renewed concern that the U.S. will have to bail out Fannie Mae and Freddie Mac.

and

The five-year swap spread traded at more than 104 basis points late yesterday. The spread moved above 100 on July 17 for the first time since March, then retreated later in the month. The spread peaked at 116 basis points on March 6, the most since at least 1988, when Bloomberg began compiling data.