It takes more than a globally competitive economy to have a sound banking system. For the third straight year, the United States finds itself at the top of the Global Competitiveness Index (GCI), published by the World Economic Forum (WEF) as part of its annual Global Competitiveness Report.

Swiss banking giant UBS AG (ADR: UBS) succumbed to government intervention yesterday (Thursday) and the country’s other banking powerhouse, Credit Suisse Group AG (ADR: CS) announced it would raise fresh capital from private shareholders after rebuffing central bank assistance.

Even the Swiss are joining in the bank bailout game. The two biggest banks, UBS (NYSE:UBS) and Credit Suisse (NYSE:CS), have taken dramatic steps to offload toxic debt and raise working capital. But Bob Bauman says investors shouldn’t worry about the country’s banking system. It is still the place to safeguard your assets from the financial meltdown.

AIG (AIG), the largest U.S. insurance company by assets, may have to sell more than half its businesses to repay the $85 billion federal loan package it received last week. But it could actually reap as much as $115 billion by selling all its business units, analysts at Credit Suisse (ADR: CS) said yesterday.

Citing balanced threats from weak economic growth and inflation, the U.S. Federal Reserve yesterday (Tuesday) voted to hold the benchmark Federal Funds rate at 2.0%, reports Money Morning’s Jennifer Yousfi. This was despite a financial market that has been rocked in recent days by the continued fallout of the credit crisis.

Gold had a very good day, holding steady from Hong Kong through to mid-morning in New York, then moving higher straight through the Globex, and finishing at $763.70, up $17.10. That allowed gold to pare its losses for the week to 4.9%.

The capitulation of resource stocks continued during Tuesday trading on the Canadian Markets with even cash-rich companies getting dumped by investors.

Gloomy Beige Book Report; Weak August for Autos; Layoffs at GMAC; Fraud Charges for Former Credit Suisse Brokers; Factory Orders Rise; Staples Profit Squeezed; United Technologies Lands $80m Jet Deal; Liberty Spins Off DirectTV

Dave Gonigam discusses the Fed’s efforts to protect Lehman Brothers (LEH) in The Daily Reckoning’s Desidooru Saloon blog. It is a sign of the current fragility of the banking sector that the Fed is now ready to step in to quash any unfavourable rumours that could cause a run in the stock market. And some rumours are truer than others…

Valero Energy Corp. (NYSE: VLO), the largest independent refiner in the U.S. market, is a well-known and avidly traded name. Despite being a member of the super hot energy sector, Valero has seen its stock price collapse from its 52-week high of $75.75 to Friday’s close at $34.72 (a 54% decline).