(FFB) Tim’s Bank Looking at 20% Haircut - Bruce Krasting -  The Federal Financing Bank makes loans to Government Agencies. FFB is owned by Treasury and Tim Geithner is the Chairman of this outfit, As of the end of August this bank had a balance sheet of $54b of dodgy loans. A good chunk was out to the Post Office. Another big slug was out to the National Credit Union Administration. This balance sheet shows it: ...  

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Paul Krugman:  Default Is In Our Stars - Not in ourselves. - ... The default could be implicit, via a period of moderate inflation that reduces the real burden of debt; ... Or, if not, we could see a gradual, painful process of individual defaults and bankruptcies, which ends up reducing overall debt. And that’s what is happening now: as this story in today’s Times points out, the main force behind the gratifying decline in consumer debt appears to be default rather than thrift. ... - NY Times
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The Biggest Issue of 2010, In One Chart - If you were asked to produce a single chart illustrating the biggest single political issue in America today, what would it look like?  ... In this chart, where we've graphed the trajectory of the total spending of the federal government with respect to the median household income in the U.S. for the years from 1967 through 2009, we see that the U.S. federal government's spending today has decoupled from the primary source of income that is required to sustain it.  Worse, it has literally "gone vertical" during the last two years ... - Political Calculations Blog
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(has slide show) Morgan Stanley: Bond Mania Is Now Bigger Than Tech Mania Was During The .Com Bubble - Joe Weisenthal -  Bond yields have come off a touch from their rock-bottom lows seen in recent weeks, but the bottom line is that investors are still hungry for Treasuries, particularly the slightly longer dated ones that still have some yield.  A fresh look at fund flows from Morgan Stanley confirms: investors are allergic to stocks, CRAZY about bonds, and still really into emerging markets. - Money Game at Business Insider 
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Stan Druckenmiller is Leaving - by Bill Gross - PIMCO Investment Outlook
1.  The New Normal has a new set of rules. What once pumped asset prices and favored the production of paper, as opposed to things, is now in retrograde.
2.  The hard cold reality from Stan Druckenmiller’s “old normal” is that prosperity and overconsumption was driven by asset inflation that in turn was leverage and interest rate correlated.
3.  Investors are faced with 2.5% yielding bonds and stocks staring straight into new normal real growth rates of 2% or less. There is no 8% there for pension funds. There are no stocks for the long run at 12% returns.
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good read - The Keynesian Solvency Standoff - Paco Ahlgren - The Bottom Violation