– If the stars of yesterday’s going were toxic mortgage twins Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FRE), Lehman Brothers (NYSE:LEH) put in a damned good supporting role. Traders pummeled the bank’s stock after a proposed investment deal with a Korean bank fell through. Lehman’s shares dropped 45%. Lehman wasn’t the only Wall Street bank to fare badly. Financial stocks overall tumbled more than 6%.

– This morning, the bad news continued for Lehman. It told Wall Street it will post a second straight quarterly loss but promised to slim down in the future, putting an end to a brief pre-market rally in its shares.

– The futures of the nation’s smaller banks isn’t exactly rosy, either. Rumor has it that Warren Buffett’s Berkshire Hathaway (NYSE:BRK.A) has “told one of its subsidiaries to stop insuring bank deposits above the amount guaranteed by the federal government.”

– The government’s multi-billion-dollar social welfare program for Wall Street continues to make news. Regarding the bailout of Fannie Mae (NYSE:FNM) and Freddie Mac (NYSE:FNM), Forbes asks a surprisingly good question: Why is it necessary to inject taxpayer funds into these companies as equity?

Ordinary companies need capital so that they can meet their obligations, but both these companies will have access to a financial facility at the Treasury that will allow them to borrow all the funds they require.

They don’t need capital. The injection of capital is, in fact, a gift to the existing shareholders, who–as the owners of insolvent companies–own nothing and deserve no benefits from the taxpayers. By injecting these taxpayer funds and enabling the companies to survive, the Treasury plan opens the possibility that the existing shareholders will eventually profit from their investments, when, by all rights, they should be wiped out.

Instead of conservatorship, says the mag, which keeps the status quo, the government should have but the toxic twins in receivership.

Could the government’s judgment on the matter was clouded by all the money Fannie and Freddie lobbyists were throwing at it? Fannie and Freddie spent $7.4 million on lobbying in the first six months this year. Since 1998, they have flung $174 million at the nation’s public servants.

– Yesterday, Jim Rogers called the bailout “socialism for the rich.” “This is madness, this is insanity, they have more than doubled the American national debt in one weekend for a bunch of crooks and incompetents,” Rogers said. “I’m not quite sure why I or anybody else should be paying for this.”

– Despite all this, the dollar is continues to defy gravity. This from yesterday’s 5 Min. Forecast:

Incredibly, the dollar continues to rally. The dollar index is currently hovering around yesterday’s high of 79.7. If you’re a chartist, keep your eye on that 80 level… it’s been a rallying point for the greenback ever since the dollar index was introduced.

– However, GoldMoney’s James Turk, quoted in the 5, says this is “this bounce has all the characteristics of a bear market rally. It is sharp and swift and happened without any change for the better in the fundamental outlook for the dollar.”

In fact, if it has changed at all, the outlook for the dollar has worsened, which is the first reason to suggest that the buck stops here, namely, that its bear market rally is ending. As the recession in the U.S. deepens, the probability of the Federal Reserve raising interest rates anytime soon has fallen. Consequently, real (i.e., inflation-adjusted) U.S. dollar interest rates remain negative.

– Eric Roseman, The Sovereign Society’s investment director, agrees with James. Yesterday, Eric said the commodities correction will be short lived, thanks to a lack of real support for the greenback. He recommended picking up oil, drillers and gold stocks in anticipation of a commodities bounce.

– This morning, oil climbed $1.12 to $104.38 a barrel on news that OPEC has moved to reduce output levels. If you’re looking for a reason why oil is still way off this year’s peak, Rick Pendergraft at Investor’s Daily Edge has an interesting theory. He says the goverment’s recent ban helped killed oil prices.

– Finally, gold has staged a recovery in Europe on Wednesday after hitting an 11-month low in Asian trade. Reuters reports that “spot gold was at $775.50/776.60 an ounce against $775.80/777.80, well off its session low of $762.55 an ounce, its weakest since Oct 2007.”

–  Commodities expert Lee Lowell at The Smart Profits Report reckons gold is oversold:

Gold topped out right near $1,000 an ounce back on July 15 and has given up roughly $200 an ounce since then – a $20,000 move in equity.

As with the other commodities, that’s a big swing. And just like silver, gold is oversold and could see just as impressive a bounce if people start to pile in.