To the mattresses

For an idea of how scary things are right now in financial markets, check out the price of gold. Gold rose 11 per cent yesterday, its biggest one-day gain EVER. Yields on short-term US debt sank to their lowest since World War II. Interbank lending, the machine that keeps global commerce humming, stopped. It's time to re-examine portfolios not just for overexposure to risk assets, but to risk institutions. Is all your money in a bank that just might end up in Lehman's shoes, maybe not losing your money, but preventing you from getting access to it as you try to meet your own obligations (car payments, mortgage, credit card bills)? Maybe a second bank or brokerage account is in order. It appears that the new vortex of financial woe is about to sweep into London, as Lloyds looks to snap up HBOS and Barclays swoops in to feast on Lehman's still-warm flesh. HSBC is rumoured to be eyeing Morgan Stanley. But weaker institutions are looking shaky in the City, particularly hedge funds.