Down and down it goes

The Dow is down around 45% over the last six months and around 53% over the last 17. Those declines exceed any since the Great Depression. Markets around the world are also tumbling. Germany's, for example, is down 48% over the last six months.

Brutal.

BILL GROSS shares his latest thoughts on the market here, including whether or not we're headed for a depression, how we got into this boat, and how bad things may get. One excerpt:

Question: Why do we assume that the U.S. can unilaterally do whatever it wants?

Answer: Much like we are the world’s strongest nation militarily, we entered this crisis with certain economic and financial strengths relative to all other nations. Our reserve currency status was the primary one which means that we can write checks in our own currency and they are accepted all over the world – sort of like American Express Travelers Cheques. This privilege, however, can be and is being abused. Travelers Cheques are acceptable only when redeemed at 100 cents on the dollar. Lately, quasi-American dollars in the form of Aaa CDOs, corporate bonds, and even national champion bank stocks have floundered closer to zero than par. There is fear on foreign shores that even U.S. agency debt may not be honored and that U.S. Treasury debt itself, when “repoed” as in prior years, may now suffer from counterparty risk. Global willingness to accept American dollars is being tested. Granted, the U.S. currency has appreciated strongly against its counterparts during most of this crisis, but technical short covering as opposed to a flight to quality may have been the dominant consideration. Watch the dollar. If it falls hard, there may be nothing policymakers can do to restore the ensuing financial chaos. [emphasis added]