– The credit crisis has spread. Over the weekend, Germany issued a blanket guarantee of consumer bank deposits. The German government also bailed out lender Hypo Real Estate Holding AG that was close to collapse after private lenders pulled out of an their own bailout plan.

– European stocks are getting trashed. According to the Financial Times, “Dizzying falls across the [financial] sector came across the continent and led to big overall losses on leading indices.”

– There are calls for a European-wide fund to recapitalize banks. So far, European governments are acting individually to stem the crisis.

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In April, Treasury Secretary Hank Paulson called the bottom in the financial sector. He said: “I think were closer to the end of the [credit crisis] than we are to the beginning.

“The Rude Awakening’s editorial director Eric Fry thinks Hank was way off the mark. Eric says financial stocks will by a buy one day, but he doesn’t believe we are looking at a bottom now.

In the second part of The End of Peak Greed, Eric says investors are better off putting their money into companies that are making the world go around than betting on financials, which are sending it not a tailspin.

The Era of Peak Greed is over. The Era of Caution is upon us. The Rude Awakening’s editorial director Eric Fry, says the credit crisis has taught investors important lessons. Like how to avoid excessive risk. This is why Eric advises readers to stay away from bottom fishing in the financial sector. There’s too much complexity. Sell risk, buy caution. Sell complexity, buy simplicity, says Eric…

Ratings agency Standard & Poor’s has rattled Wall Street by downgrading investment banks Merrill Lynch, Lehman Brothers and Morgan Stanley.

S&P’s said the “outlooks on the large financial institutions sector in the U.S. are now predominantly negative” and that “the pace and extent of earnings improvement could be considerably more muted than we previously anticipated.”