Sovereign Society’s investment director Eric Roseman says he would rather hold investment-grade corporate debt than Treasury bonds. The yield in the corporate debt market is at a multi-year high and can be easily accessed via low-cost ETFs. But Eric says it is wise to avoid financial firms, as more trouble lies in store for this sector.

It’s worth repeating: “The U.S. is not out of the woods.”

These are the words of Harvard professor and former IMF chief Kenneth Rogoff, who warned investors this week that “the worst is to come” in the credit crisis. Rogoff predicted a “whoppper” of a bank is going to go under, probably one of the toxic twins, Fannie Mae (NYSE:FNM) or Freddie Mac (NYSE:FRE).

Bryon King in Penny Sleuth says we are witnessing a “tectonic shift” in national economic policy. The Bush administration has massively expanded government’s role in finance. It will have disastrous consequences for the dollar…

Whiskey and Gunpowder editor Dan Amoss says the recent rally in financial stocks has more to do with short covering than regular buying.

Weak institutions were shorted so much that a bounce was inevitable.

Despite an SEC clampdown on shorting, Dan says legitimate shorting is vital for the stock market and is not to blame for the stategic mistakes of U.S. banks.

For those still looking for new short ideas in the sector, Dan says Allied Capital (NYSE:ALD) is a good place to start…

“Bindra ends 108 year wait” proclaimed the DNA headline. And indeed it was a day to celebrate. But there was another not so golden bit of news. The price of gold, which began the year at USD 834 per troy ounce, peaked at USD 1032.7 on March 17, 2008, and slipped to USD 818.63 on August 11, 2008, the low for the year. Year to date, gold has declined (-)2%.

Since July 15 when U.S. markets hit another intermittent low amid the ongoing credit crisis, the Dow Jones Industrials Average (Dow) has gained 7.2%.

Just like Thursday, neither gold nor silver did much on Friday until the Comex opened. Both metals got hit hard on the jobs report, but that only lasted a few minutes before a rally began. Then the usual not-for-profit seller showed up shortly after the London p.m. fix…and that was all she wrote for the rest of the trading session.

The federal budget deficit hasn’t received a lot of press lately, what with all the worries about the U.S. financial system, the home mortgage market, and the rescues that might be necessary to save both. In fact, it’s a bad sign, since the Bush administration and the Democrats in Congress have joint responsibility for keeping the budget deficit under control, so they would both be crowing about it if they were doing a good job.

Editor’s Note: The Dow Jones Industrial Average index hit a year low today. It was led by a 10% slump in shares of General Motors (GM) after Goldman Sachs issued a ’sell’ rating.

American International Group Inc, the world’s biggest insurer, has announced it will replace CEO Martin Sullivan. The news comes after AIG reported record losses due to risky mortgage bets.

Sullivan follows the departure of a wave of Wall Street top execs, including the recent bloodletting at ailing investment bank Lehman Brothers.

“On Wall Street, after Bear Stearns fainted, the other financial firms took smelling salts,” says Bill Bonner in The Daily Reckoning.

This week saw Lehman Brothers replace two of its top executives: CFO Erin Callan and COO Joseph Gregor. The two will remain at the bank in lesser roles.

“As recently as a month ago,” says Justice Litle in Taipan Daily, “Erin Callan was on top of the world.”

The WSJ did a glowing piece on her rise through the ranks. Condé Nast’s Portfolio magazine dubbed her the most powerful woman on Wall Street.