Well, what a fun weekend we have had!

Do you remember my Market Update posting from September 17, 2008, And then there were none??? For those of you who still don’t think I have a grasp on what is going on, I ask you to reflect back on my prophetic quote from those comments on 9/17: “And my guess is that within three months a major U.S. commercial bank, such as Wachovia or Washington Mutual, is going to go bust.” Who duh thunk? This weekend, in the course of only three days, both banks failed! Washington Mutual died on Friday and Wachovia just passed away this morning.

Note that I said that “both” banks failed. I almost busted out laughing this morning when I caught the breaking news on CNBC that the FDIC had just announced that “Wachovia did not fail.” Does the FDIC (i.e. one of the bankrupt quasigovernment agencies of the bankrupt U.S. federal government) really think that anyone will believe such a ridiculous assertion? I guess they have to say such things to try and calm the markets and the many nervous Americans who are only one more bank failure away from running on all their banks.

And the other big news since I penned my September 17 posting is that as of last week all five U.S. investment banks are gone. Last week the final two IBs standing, or maybe I should say the final two IBs that were bent over in pain, decided that they would cease to exist as investment banks. Both Morgan Stanley and Goldman Sachs have given up on the IB business model as well. Both companies announced that they have decided to get the equivalent of a financial sex change; they will change their charters to become deposit-holding commercial banking institutions. All I can say is WOW!!! It must be really bad out there!

As I write this, it is 9:52am on Monday, September 29, 2008, possibly just days or even hours before something really big happens, the U.S. stock market has been heading straight down since it opened at 9:30am this morning. The Dow has already lost over 250 points and the Nasdaq looks set to breach the 2100 level. At least there is some good news: gold is up $1.00! But the best news of all is that I had the foresight to keep both my personal and business checking accounts with what used to be the fourth largest bank in America, good ‘ole Wachovia. Since I thought Wachovia would likely be one of the first banks to fail, I figured the FDIC would still have enough money left to guarantee my deposits.

Now that I am a Citibank depositor, I am not so sure where my money stands going forward.

Who will be the next bank to fall? I don’t know, but we will know more later. Until then, Happy Investing!

Gregory