We are indeed drifting into the arena of the unwell.

Yves Smith picks up on the FT warning about the potential for disaster in the upcoming CDS settlement auctions.
Is this why banks are hanging on to so much cash? It would explain the immense heights reached by the Ted spread and the virtual absence of interbank liquidity at the long end.

Meanwhile, Goldman Sachs insists it doesn't have any real exposure to AIG. Suspicious Greg is suspicious. But Salmon suspects that more information from GS wouldn't help a bit and adds: "My gut feeling is that we can trust Viniar on this one. He says that Goldman had hedged its AIG exposure, and I don't think he's the type of person to come out with a bald-faced lie."