Panic buying this morning, as the price of oil collapsed over the weekend in the absence of any obvious damage from Hurricane Gustav. However, as Bloomberg points out, valuations are, to say the least, extended.

Wall Street forecasters, who were too optimistic about earnings for the past four quarters, predict income at America’s biggest companies will grow by a record 62 percent in the final three months of 2008, according to data compiled by S&P.

Oil (and commodity) prices are collapsing because the runup, or at least the terminal stage of the runup, was a bubble. As was pointed out here and as can clearly be seen from the “pop.” Stock prices, I expect, are the second last bubble. T-Bond (bill, note) prices will be the last.