Short dated treasuries are at their lowest yield in fifty years as the credit markets panic and flee into government securities. Bloomberg:

U.S. Treasury three-month bill rates dropped to the lowest since at least 1954 on concern that credit market losses will widen after the bankruptcy of Lehman Brothers Holdings Inc. and the federal takeover of American International Group Inc. Investors pushed the rate as low as 0.233 percent as the loss of confidence in credit markets deepened.

Meanwhile, the well managed and well capitalized investment bank Morgan Stanley fell 50% in the last few days, and Goldman’s decline is not far behind. There is even talk of forced mergers of these leading banking giants, companies that stand to gain tremendously from the demise of their lesser bretheren.

This is panic, the genuine article, foolishness on a grand scale: “the Dow fell 449.36, or 4.06 percent, to 10,609.66, finishing not far off its lows of the session. After a nosedive Monday, the index is down more than 7 percent on the week, and has fallen more than 25 percent since reaching a record close of 14,164.53 on Oct. 9 last year.”

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