An almighty bafflement befogs the nation as the first full business week of 2020 commences and events pile up like smashed vehicles on a weather-blinded highway. Before we even smoked that Iranian bird on the Baghdad airport tarmac, something ominous was tingling away in the financial markets, in fact, has been since way back in September. Perhaps one-in-100,000 Americans has the dimmest clue as to what the repo mechanism stands for in banking circles, but it has been flashing red for months, with klaxons blaring for those who maybe missed the red flashes.

The repo market represents trillions of dollars in overnight lending in which bonds (or other "assets") are used as collateral for ultra-short-term loans between large banks. Theoretically, this flow of supposedly secured lending acts as mere background lubricant for the engine of finance, like the motor oil circulating in your Ford F-150. You don't notice it until it's not there, and then all of a sudden you're throwing rods and sucking valves, and the darn vehicle is a smoldering goner in the breakdown lane.

The strange action on the repo scene suggests that some big banks are in big trouble, and probably because the "innovative investments" they've engineered — as a substitute for the true purposes of capital, such as enabling production of real goods at a profit — are proving once again to be little more than swindles and frauds, like last time. Things like interest rate swaps and credit default "insurance." Have your eyes glazed over yet? The bottom line is an impressive potential for losses to go critical, multiply daisy-chain style, cascade wildly, and then start wrecking real things — like the supply lines to your supermarket.