One might think that with the financial system in the world's largest economy in need of additional liquidity to avert a financial panic, foreign investors would be preparing similar fixes at home and/or standing at the ready to assist the United States, if needed.

Not quite.

Although central banks around the world have coordinated policies and cooperated fully, leaders of foreign governments balked at similar bailout plans, and many foreign sovereign investors also remain on the sidelines, The Washington Post reported Thursday.

While policy makers in Europe and Latin American agree that the global financial system is facing its greatest stress and threat since the period up to and after the 1929 stock market crash, they saw little need - - so far - - for major rescue packages in their own countries, The Post reported. Further, sovereign wealth funds, likewise, showed little interest in stepping up to the plate.

The world: well-capitalized spectators

Economist David H. Wang said Britain has cooperated fully, France has proposed a special G-8 summit to deal with the financial crisis, and Russia has acted to stabilize its stock and credit markets, but the rest-of-the-world is "watching the events as they unfold."

Wang said three factors are at work in the rest-of-the-world's cautious stance: national interest, a shift in the geopolitical balance of power, and posturing.

"Regrettably, but predictably, much of the world has turned inward and chosen to focus on its own domestic banks and institutions. There's also the belief, in nations like Brazil and in Middle Eastern economies, that they're more-insulated from the crisis, due to expanded non-U.S. trade relationships and the ability to undertake financial transactions and store value in other currencies, such as the euro," Wang said. "They also see the financial crisis in the context of a transition to a multi-polar financial world, from one dominated by the United States."

A flight to the dollar? Amid the United States' worst financial crisis in more than 20 years, perhaps since The Great Depression of the 1930s? It seems almost paradoxical, but that's the reality. So far. Stay tuned, an economist says.

The dollar has lost ground versus the world's other major currencies, amid this latest round of write-offs, bankruptcies and mortgage-asset-related stress on Wall Street, but the greenback has not plunged. In fact, the dollar is off its lows registered early Monday.

In early Tuesday trading, the dollar rose about a half-cent versus the euro to $1.4198, 1.5 cents versus the British pound to $1.7854, and a half-cent versus the Swiss franc to $1.1101. However, the dollar fell about 1 yen to 103.68 versus Japan's yen.

Themes: flight to quality, de-leveraging

Economist David H. Wang told BloggingStocks Tuesday the dollar's recent track displays two tendencies: a flight to quality and an unwinding of the carry trade -- i.e. a global de-leveraging.

"Although the U.S. Government and taxpayers are likely to spend more to deal with this financial crisis, and that implies more dollars in supply and inflation, institutional investors fear a decline or collapse in stock markets around the world, and are piling into the dollar," Wang said. "That is offsetting the dollar-weakening-effect of more U.S. Government spending. Essentially, it is flight to quality, so far."

Japan's yen resumed its rise against higher-interest currencies Thursday, suggesting that the prospect of additional credit market losses continues to lower investors' confidence in global growth and performing assets.

The yen rose as institutional investors continued to decrease their use of the carry trade.

In a carry trade, investors, especially institutional investors, borrow funds in a country with a low interest rate (or borrowing cost) and buy assets in a country where returns are higher. The investment can take many forms, including stocks, bonds, funds, or even the higher-interest currency itself.

The yen strengthened about 1.6 yen to 160.71 versus euro, about 3 yen to 201.95 versus the British pound, and about 1 yen to 108.20 versus the dollar.

Another big mortgage write-off ahead?

Currency trader Andrew Resnick told BloggingStocks Thursday sentiment is building in the foreign exchange and other markets that there will be "another, major housing-related write-off by a bank or series of banks in the U.S. or U.K, or possibly Fannie Mae (NYSE: FNM) or Freddie Mac (NYSE: FRE) problems."

The reduction in global economic growth and growth expectations is leading to one benefit: a sharp decline in commodity prices, creating hope inflation may be peaking in many parts of the world, The Wall Street Journal reported Monday (subscription required).

Rice and palm oil, two commodities critical for the developing world, are both down about 40% since May, while the world's most vital commodity, crude oil, is down abut 23%, The Journal reported.

An end to surging commodity prices?

Economist Glen Langan told BloggingStocks Monday that while the commodity price-lower trend is still young, continued commodity price declines would be a welcomed sight, provided they don't drop too much.

"The pullback is welcome because many commodities had reached prohibitive levels, hindering commerce and really hurting the modest budgets of the poor/working poor in developing countries," Langan said. "However, too much of a price slide in commodities would be a sign of a pronounced global economic slowdown, which is something we don't want."

Further, Langan said that while regulators in various nations probe 'speculator' activity and alleged price manipulation in commodity markets, he argues that many of the price rises are consistent with historical price booms in other asset classes / sectors.

Some market signals are well-known and easily understood. Others are arcane and more-complex, but just as telling.

There's mounting evidence that the "carry trade" is ending, or that at least institutional investors are decreasing their use of it as an investment tactic.

In a carry trade, investors, especially institutional investors, borrow funds in a country with a low interest rate (or borrowing cost) and buy assets in a country where returns are higher. The investment can take many forms, including stocks, bonds, funds, or even the higher-interest currency itself.

Carry trade: A growth confidence indicator

Now, investors/readers may legitimately ask, Why is it important to know what's happening to the carry trade?

Economist Peter Dawson told BloggingStocks that it's important to monitor carry trade flows and data because it's one indicator of investor confidence in a market's ability to produce a return on equity, and by extension, in its economy to grow.

In other words, the carry trade abounds when investors are confident; it wanes when they're not, he said.

Add another case study to the controversy over speculators and market manipulation.

The Commodity Futures Trading Commission is investigating whether cotton prices were 'artificially inflated' in early March, The Wall Street Journal reported Wednesday (subscription required). The March 4 price spiked from about 70 cents per pound to an intra-day high of $1.09 and closed at 93.1 cents.

In Wednesday morning trading, cotton rose about four-tenths of one cent to 70.070 cents per pound.

The Journal reported that the price spike in early March was unusual and baffled traders because cotton inventories were at their highest level in four decades, towel and fabric demand was weakened by the housing slump, and global supplies were high.

On the other side of argument, one which argues that market forces set the price, some cotton merchants themselves were trading aggressively; a little-used exchange rule suddenly required merchants to unwind sell orders; and financial investors, including pension and hedge funds, started to enter the market, which generated an eight-fold jump February 19-26 in net buying, The Journal reported, citing CFTC data.

Oil fell more than $5 to $136 per barrel Tuesday morning as concern about a global economic slowdown prompted traders to conclude that oil demand growth may slow in the quarters ahead.

Oil fell $5.11 to $136.26 per barrel -- a drop that brought its two-day decline to more than $8. (Oil is still about 90% higher than a year ago, and about 400% higher than in 2000.)

The other major energy commodities, likewise, plunged for a second day, in early Tuesday trading. Heating oil plummeted 14 cents to $3.83 per gallon, unleaded gasoline fell 12 cents to $3.36 per gallon, and natural gas plunged 45 cents to $12.53 per million BTUs.

Some bloom off the energy rose?

Economist Peter Dawson said investors and traders are taking a harder look at the energy picture, in light of recent corporate and economic data points. While underscoring that "it's always difficult to try to evaluate events in motion," Dawson said a protracted recession in the U.S. combined with a global slowdown "would take some of the bloom off the energy asset rose."

The economic boom in emerging markets has driven up both the value of commodities and the food production process itself.

Moreover, the long-term trends look good, with out-sized gains likely to stretch for more than five years, if current emerging market economic growth trends continue.

That suggests the sector is likely to continue to attract new investors, and huge investment funds - - not a conventional source of capital for farming, historically - - have already started making bolder and longer-term food-related investments, by buying farmland, fertilizer, grain elevators, and shipping equipment, The New York Times reported Thursday.

One example: the BlackRock fund group plans to invest hundreds of millions of dollars in agriculture, chiefly farmland, from sub-Saharan Africa to the English countryside, The Times reported.

Farms: the new asset class-of-choice

Economist Glen Langan told BloggingStocks Thursday the investment fund / managed fund money flow in farmland and food is the logical next step for agriculture, given the large gains in global food demand projected for the next 5-8 years.

"The equity markets have not fully come to grips with the enormity of his increased demand, but investment funds are beginning to comprehend it, and the money flow toward farms has begun," Langan said. "Think about this - - China and India combined could add about 3-5 million members to the world's middle class each year over the next decade. Those are consumers with money to spend, and they'll consume more food. And that total does not include expanding middle classes in South America, Eastern Europe, and the Middle East."

U.S. regulators Friday disclosed a broad nationwide investigation into potential oil-market manipulation and said they are expanding surveillance of energy markets, The Wall Street Journal reported Friday.

The Commodity Futures Trading Commission announcement of an ongoing and widening inquiry occurs amid a 4-year rise in crude oil prices in which gasoline, diesel, and heating oil prices hit record highs, Reuters reported Friday.

Oil closed Friday up 73 cents to $127.35 per barrel. Oil has risen about 100% in the past 12 months.

Many Congressional officials and consumer groups have been arguing for a systematic investigation into futures prices, asserting that institutional investors and other speculators have manipulated oil prices and driven them "artificially higher."

Others, including economists and oil executives, argue that the price increases have more to do with the sector's bullish fundamentals, including inadequate crude oil production growth amid rising demand.

Oil Analysis: Strong evidence suggests that the bulk of oil's 4-year bullish run is rooted in fundamentals, with the reduction in the global safety cushion -- the spare oil between daily global oil supply and demand -- accounting for today's near-record oil prices. Still, that's not to say a rigorous inquiry would not yield compelling data or new insights. One area of interest that the inquiry will explore: whether oil storage operators have issued misleading information about oil in their tanks to profit from oil trades, Reuters reported Friday.

It has looked like LBO loans were going to be hard for banks to syndicate to institutional investors. They tend to be fairly risky because the companies taken private often have to do very well to cover the debt service. Concerns about that happening in a recession are growing.

All of this means that big money center banks are being stuck with the loans. Since they are almost certainly worth less than their face value, that could lead to another round of write-downs at banks.

According to The Wall Street Journal, "with the prices of existing loans tumbling, investors have little incentive to buy new loans unless they are sold at steep discounts, something banks are reluctant to do." JPMorgan (NYSE: JPM) held $26.4 billion in LBO loans at the end of last year. Other large banks probably have similar amounts on their balance sheet. Many of these will be sold for 90 cents on the dollar, if they get sold at all.

Banks may have another series of financial problems just around the corner.

Douglas A. McIntyre is an editor at 247wallst.com.

According to an article published by Bloomberg Cheapest Stocks in 16 years draws investors, "Investors are preparing to snap up shares of telephone, health-care and computer companies after last week's $2.1 trillion global stock market rout left U.S. equities the cheapest in 16 years."

I am always pondering stock valuations in search of bargains and have been thinking that there are many bargains to be had. Having come to this conclusion though is not based on the relative market strength or weakness, or whether the over all market is cheap or not. I am not interested in bear markets or bull markets. The average investor should view all markets and promoters of said markets as full of bull. The best way to invest in stocks is the same way you invest in friends - one by one, respectfully, fairly and refraining from judging the proverbial book by it's cover. You should look deeper and think long term.

Some companies have reported terrific earnings Intuitive Surgical (NASDAQ: ISRG), Apple Inc. (NASDAQ: AAPL) and some have been lackluster Johnson & Johnson (NYSE: JNJ). Some have been dismal like housing stocks Pulte Homes (NYSE: PHM) and Toll Brothers (NYSE: TOL). While one could make the argument that stock valuations are at a low point there is more to the story.

Since valuations -- think price-to-earnings (P/E) ratios -- are at a cumulative low, and the market prices stocks based on future earnings and growth of equity potential, then one has to assume the brokerage houses, investment banks, hedge funds, institutions and the like have priced in a continuation of the same low interest, high liquidity conditions that lead to this economic situation. I do not have such clarity in regards to this future.

Maybe the headline should not read "Stocks are the cheapest they have been in 16 years", maybe it should read "Large investors are more tenative than they have been in 16 years". After all look how fast they were jumping ship last Thursday and Friday. In any event, I will continue to write about specific opportunities and resist characterising the over all markets.

Those of you who are new to BloggingStocks can check out my other stories and read Chasing Value or Serious Money to find more potential opportunities and verify my track record as well.

Disclosure: As of this writing I own shares of ISRG and JNJ.

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm.

If you're a fan of James Cramer then you have to read Cramer vs. Cramer, his latest column in New York Magazine.

I learned two things from this article.

• Cramer believes that the way to make money in the market is to predict where institutional investors are heading. I really like this idea and wish he provided more insight in the article into how he does this. As he suggests, investment fashions change and to make money stock buyers need to know those changes before the institutional investors.
• Cramer appeals to 28-year-olds because his show is co-written with his 22-year-old nephew, Cliff Mason, who manages to fill the script with all sorts of references and thought patterns that appeal to younger viewers. To quote him: "I come up with the ideas and the serious content, then I write a preliminary story with as much smart and funny stuff as I have time and brains enough to dream up, and I e-mail it to Cliff. Then he e-mails me back with a revised story that ranges from having a handful of changes to being barely recognizable, then I make changes and tell Cliff to fix any problems or make clarifications, and we keep batting it back and forth like that until it's done-usually four or five different cuts between 1:30 and 3:30 (the show starts taping at about 4:30 and airs at six)."

One thing I had a hard time with was his conclusion. For all the critics who attack him for creating lemmings who blindly follow his stock recommendations, Cramer wants them to know that he hates himself more than they do. I'll give him the last word: "I remain completely and utterly repulsive to myself." Do you feel sorry for him now?

Peter Cohan is President of Peter S. Cohan & Associates, a management consulting and venture capital firm. He also teaches management at Babson College and edits The Cohan Letter.

In the current issue of Barron's (subscription required) (September 11, 2006), the financial weekly conducts a survey of 85 institutional investors. The purpose of the poll is to rate the 100 largest public corporations based on market capitalization in order of the respect they have garnered from these institutions. The survey allows the companies to be ranked in one of four categories: "respect highly", "respect", "respect somewhat," and "don't respect." The respondents said that they key factors they used to make their decisions were strong management, sound business strategy, consistent sales and profit growth, ethical business practices, and competitive edge.

The company that scored the highest was Johnson & Johnson with a mean score of 3.97. The lowest score was assigned to Time Warner Inc. (NYSE: TWX) with a mean score of .63, ranking its last on the 100 company list. None of the respondents rated Time Warner "respect highly." Fifteen of the institutions polled gave the company a "respect" rating. Forty-two ranked the company "respect somewhat" and thirty-two rated Time Warner "don't respect." The Barron's article said that the failure of the AOL merger and $584 million in restated earnings were the main factors that pushed the company to the bottom of the list

The top five companies were rounded out by General Electric Company (NYSE: GE), Procter&Gamble, Toyota Motor, and Berkshire Hathaway. Several companies did not have large enough market caps to make last year's list but were on for 2006. This included Google Inc. (Nasdaq: GOOG) at No. 20, and Comcast at No. 52.

A few companies also made big moves. Microsoft Corporation (Nasdaq: MSFT) dropped from No.3 to No. 22. Home Depot dropped from No.15 to No. 67. Intel dropped from No. 8 to No. 28.

Companies with notable moves up from last year included Honda, which rose from No 20 to No. 9. Also rising was Wal-Mart Stores (NYSE: WMT) from No. 22 to No. 17, and Chevron which moved from No. 44 to No. 26.

Time Warner's largest competitors also made the list. Disney was at No. 46, up from No. 76 last year. News Corp came in at No. 43. Last year the company was not large enough to be ranked.

While the survey is bad news for Time Warner, it also shows that companies can resurrect their images fairly quickly. Disney's jump in the survey with Robert Iger at the helm is a good example of this.

Investors would expect that Time Warner would have to make fairly significant changes to be viewed differently by institutional investors, but at least it can be done.