When The Bad News Never Seems to End.

That's the headline of today's "Morning Brief" from the WSJ and it certainly captures the mood of the moment. Here are the first two paragraphs:

It was a day when even the monolithic U.S. government might be forgiven a sense of being overwhelmed by the current financial and economic situation.

The mortgage giant Fannie Mae and sprawling insurer AIG reported massive quarterly losses, their first since the government essentially seized control of their operations as part of a skein of interventions aimed at stabilizing credit and other financial markets. Fannie's $29 billion loss came with a warning that "the mission it was given by the government, to help revive the mortgage market, could be compromised unless the Treasury Department takes new steps to support the company," as the Washington Post reports. But sources familiar with discussions between Fannie and the Treasury Department tell the Post that Treasury Secretary Henry Paulson has demurred. American International Group reported a $24.5 billion quarterly loss, even as the government offered more help, including extension of a new, $152 billion loan on easier terms than AIG's previous deal.

Things That Make You Go "Huh?"

Did you know that General Motors is looking to increase its stake in a Chinese car manufacturer? I didn't. I was under the impression that they were in desperate need of cash.

Give That Black Hole Some More Money

Evidently, if you run a completely rogue operation, and you run it down to the brink of bankruptcy, you can still get a bailout from the Federal Government. And then, after you've burned through nearly $100 billion of taxpayer money in less than two months, you get a mulligan; a bailout from your first bailout.

It's a sweet deal. And the likelihood is that when Bailout 2.0 fails, we'll all be on the hook for Bailout 3.0.

The Black Hole

The Black Hole, where cash goes and never comes back, is back at it again. You guessed it, AIG needs more money. So it has come up with a scheme to convert our debt to equity, an ominous signal. Kedrosky explains .

Obama

The joke was that whoever won last night would wake up this morning and demand a recount. Here's why it's an unfunny joke. President-elect Obama has basically 60 days to set in motion a radical austerity program. If he doesn't, his presidency, in all likelihood, will end in failure.

To make matters worse, as Iraq has improved, Afghanistan has deteriorated. And to make matters even worse, as Kedrosky points out, the fate of the global financial system hangs on the solvency of Italy, Spain, Brazil and the Russian Federation.

We are on the edge of catastrophe. One hopes that President-elect Obama knows this in his bones and engages the very best minds and most seasoned policy-makers -- Mike Hayden, Robert Gates, Bill Gross, Warren Buffett, Paul Volker, John Doerr, Jeremy Grantham, Robert Rubin, David Swenson, Mohamed El-Erian -- to help him parse the policy responses required.

All that said, Obama's victory is something I thought I would never see in my lifetime. I voted for Senator McCain. But Obama's victory last night was a great thing. A truly great thing.

Ellisblog Returns

Beginning the day after the election, the long dormant Ellisblog will restart. I doubt I will be posting on a daily basis, but I will be posting much more frequently.

And You Thought Roubini Was Pessimistic

Just read this. And then read this. And then read this. And then read this. It's enough to make one think that Roubini is a realist.

Juan Enriquez on the Global Economic Crisis

How bad is it? Juan Enriquez provides an excellent overview of where we are and what the situation requires. It's thirty minutes long and well worth your time.

The Obama Administration

The people running the Obama campaign are getting way ahead of themselves with all this chatter about the transition and the first 100 days of an Obama Administration. While Senator Obama is ahead in both the popular vote and the electoral college math, there is reason to believe that virtually all of the undecided voters will go McCain's way.

Arnon Mishkin has a good analysis of why the election may well be much closer than most people expect.

When He Paints His Masterpiece.

Jamie Moyer was magnificent last night. Tom Boswell captures the man and the moment in a wonderful column today.