The situation is dire but you wouldn?t know it judging from the weird parallel universe of presidental election year politics that preoccupies the mostly mediocre U. S. press, its politicians and public. While Rome burns, the Neros on the stump think only about polling, irrelevant policies to woo votes and inappropriate pronouncements aimed at segments of society.

Fortunately, Washington?s financial honchos are running the show in concert with a global steering committee of G7, G20, G50, IMF and all the other usual suspects around the world.

As for the rest of us, we need only note that guys like Warren Buffett also operate in a parallel universe of cash-rich, long-term value investing. He?s making big bets on U. S. stocks.

We should not for lots of reasons. He?s just plain wrong.

The Oracle of Omaha last week advised people to buy bargains now, because everyone is fleeing, and then hang on for markets, multiples and activity to return.

Far be it from me to contradict one of the world?s greatest stock sages and business analysts, but it?s pretty obvious we are in uncharted territory with this panic, which will worsen until the U. S. election is held on Nov.

4. I also believe all bets should be off until the global community (and I mean every country) demonstrates that it is going to appoint sheriffs to patrol the financial ?streets? in order to put an end to the kind of jurisdictional arbitrage gun-play that led to the ruination of the financial system.

The problem with stock markets right now, and for an indefinite time, is that they cannot fulfil their function, which is to properly determine price for equities and debt.

This is due to the proliferation of secretive and massive hedge funds, which are another fundamental regulatory failure worldwide. Hedge funds, some US$2 trillion in the U. S. alone, have been allowed to be outlaws to the system and operate in secrecy havens without any disclosure as to their ownership or activities.

Now the hedge funds are weapons of mass destruction to markets because of the high, but unknown, number of redemptions by unitholders. These redemption notices came on Oct. 1 and more will occur on Nov.

1. These investors were allowed to give 60-or 90-day notice to hedge funds managers that they want their cash back by the end of the year.

What this means, as one trader told me on Wall Street a month ago: ?The hedge redemptions are enormous, which means that these funds will be selling stocks into every stock market rally in order to get cash to meet redemption requests. This will push the market down and down.?

Because there have been zero disclosure requirements imposed by governments on these players, the bottom is impossible to guess or, possibly, to reach for months.

So stay out. The worst may be yet to come until the world?s governments step in to sort it all out.

One of the solutions is for governments to close markets for a day or two, then forbid redemptions but mark down hedge fund commissions and profits so that investors can recoup some of the damage sustained. But that?s pretty drastic.

The bottom line is that there is no reliable pricing mechanism in the world right now, which means there is no way to buy or sell stocks.