A Wild and Wacky Wednesday…FOMC leave stimulus and QE in place…Will G-20 try to throw cold water on commodities? GATA receives a letter from the Fed…And Now… Today’s Pfennig

Beijing continued a delicate balancing act yesterday (Wednesday), vowing to keep stoking its economy with funding from its $787 billion stimulus program even as it implements new controls on bank lending.

Banks are starting to trust each other more. The three-month Libor – which sets the borrowing cost of $360 trillion in financial products – dropped the most in four months on Monday.

Rejoice! The credit crisis is over. Sort of… maybe.

Well, with the US$ down a half a cent, and decent gains in both platinum and palladium, you have to be pretty much brain dead not to have seen the footprints of the Gold Cartel in the gold and silver markets yesterday.

Goldman Raises $5 Billion to Repay TARP; Cost Cutting Will Save Royal Phillips $664 Million; Johnson & Johnson Earnings Saved By Cost Cuts; Singapore Forecasts 6%-9% 2009 Decline; Discover to Cut 500 Jobs; LIBOR Rate Dropping Fast; Coal Prices to Stay Low in 2009; Madoff Firm Files Bankruptcy

Given the implicit government guarantees, Eric Roseman says it is likely that investors will soon start to switch from low-yielding Treasury bonds to high-grade corporate debt. The Fed’s balance sheet is now polluted by the toxic debt it has taken on from banks. And demand for Treasuries will not keep pace with the deluge of supply in the coming year. Eric says this could make investment grade corporate debt the new safe haven in bonds in 2009.

There is a growing body of data that suggests banks have recognized only a fraction of the overall potential losses – approximately $50 billion to $75 billion so far on subprime debt alone. And a variety of estimates suggest that total subprime losses may be more than $300 billion before we’re through.

I want change too!  Euro leads a currency rally!  Factory Orders plunge!  Carry Trades back on the table! And Now… Today’s Pfennig!

The winner is… Deflation!  Trading theme in place…  RBA cuts rates 75 BPS!  Manufacturing collapses! And Now… Today’s Pfennig!