Are you panicking yet? LEH, WM, MER, FDIC Failed Banks + Drop Oil Gold Silver??

While paying a few silent moments in honor of the September 11th attack victims in World Trade Center, switching my focus to the stock market today seemed like another barrage is happening on the various exchanges.

Quick glance shows Washington Mutual (WM) down another 22% (below $2...from $35 a year ago), Lehman Brothers (LEH) is down 40% ($4.85), and Merrill Lynch down 20% or so.

Stocks slump on economic woes

Wall Street retreats as investors worry about Lehman Brothers' outlook, a big jump in the trade deficit and a weak jobs report.NEW YORK (CNNMoney.com) -- Stocks tumbled at the open Thursday as investors faced renewed worries about Lehman Brothers' solvency, a wider-than-expected trade deficit and a weak unemployment claims report.

The Dow Jones industrial average (INDU), the Nasdaq composite (COMP) and the Standard & Poor's 500 (SPX) index all slumped at least 1.2% in the early going.

On Thursday, the Commerce Department said the trade deficit for July surged to $62.2 billion. That's compared with the $56.8 billion in June, and much worse than expectations from a consensus of economists surveyed by Briefing.com, who had projected $58 billion.

At times in these markets, one has to step away from the monitor, the tickers, and the various Blackberry devices alerting you how fast your 401K's and RSP accounts (for Canadians) are dropping like flies. Think clearly and ask yourself...

did you really believe investing in major banks are safe? Well, so far 11 banks have failed, including our notable IndyMac in the NY States which was the biggest one in recent news. Whatever ended up happening to the BSC Bailout investors, did they get $10/share for their $2 investments?

Not counting the Ivy-League investment banks like Bear Sterns and the eerily-similar stock price of renowned Lehman Brothers (LEH) in the last few days, 11 is (take a look at the picture to left), the highest number of record bank failures per year... in the last 20 years.

Are we in a bear market? I think the cold reality has to be accepted.

What generally is the hedge again skyrocketing inflation, slow economy, and everything else - has been housing, gold, copper, and commodities.

So why isn't it the case this week? If you haven't noticed, gold and silver prices has been dropping. Copper has been holding steady however around the $3.20 mark.

Price of Gold has dropped past what many considered to be the "resistance level" since the last gold run up to $1,000.

As I'm writing it's now around $740/ounce.
Silver is faring much worse, with prices dropping to $11 and lower. This is below the one year-low and with no bottom seeming to end. Various analysts have issued theories about the uncontrolled spectulation in the futures market and ComEx.

Today's market opening was grim for the Financial Sector. Can the US Government afford more banking bailouts?

SeekingAlpha's Prudent Investments offers the following insights:

Simply put, yes it can. In the days following the bailouts of Fannie Mae (FNM) and Freddie Mac (FRE) there have been countless pundits on television and many articles on Seeking Alpha and other investment sites proposing the misplaced thesis that we should worry about the US government's finances following the recent bailouts. The prevailing idea is that if the market's bad debts are transferred to the government, then the government will be the one having the problems.

The responsibilities piling onto the government include the Bear Stearns (BSC) liabilities, the Fannie Mae and Freddie Mac liabilities and potentially Lehman Brother’s (LEH) liabilities. While these are significant issues and will likely act as albatrosses around the neck of the next administration, they were necessary actions that will support the financial framework of not only the United States but the world as well.

Below are some of the more common questions that have appeared around the financial community over the last several days:

• How much can the government add to its $9.6 trillion debt before it too cannot handle its own liabilities?
• When will foreigners refuse to let the US government borrow money?
• When will the dollar truly collapse?

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I think the answer is more like the US Government will have to.

The consumer confidence is already shaking. Gone are the days where financial news only affected the elites on Wall Street and Bay Street. Food prices, oil prices, job loss in the markets % all have started to impact even your everyday 9-5 working families. On a slightly entertaining side news, divorce rate is set to drop, as unhappy couples can no longer afford a divorce (and/or paying separate rent).

Back to adding to the National Debt - it simply does not make sense that USD$ is rising again Euros and Chinese's RMB when more bailouts are expected. Stick with your tangible resources companies of Gold and Copper. Questions and comments are happily answered, cheers!