Concerned about the recent decline in stock prices, French President Nicolas Sarkozy, yesterday (Tuesday) called for the creation of European sovereign wealth funds. The funds would be virtual carbon copies of the state-owned investment vehicles that have sprung up from Beijing to Abu Dhabi to disperse their respective nations’ cash reserves in foreign assets.

The current financial crisis is supersized, inexorably linked to the rest of the world, ruled by chaos and precariously perched atop a mountain of debt, says Oilver Garret, CEO of Casey Research. And “a rapidly growing money supply at the same time the biggest credit bubble in 25 years bursts makes for a less than desirable scenario.” We could be facing a period of “depflation” says Oliver — an inflationary depression.

Crude is testing the $70 a barrel mark. Gold has fallen below $800 an ounce. Most metals are now selling close to cost price…any lower and mines will be forced to shut down. This means commodity prices are hitting a bottom, says Keith Fitz-Gerald. And there are three strong reasons why prices are about to kick off once again.

Good day…And what a day it was! As I stated in yesterday’s Pfennig, Columbus day is just sort of a holiday for the markets. These ’semi-holidays’ can create some volatile trading, as not all of the markets are open and many desks are short staffed. So with the Federal Reserve and the banking system closed, the equity markets had the largest one day gain in over seven decades.

Paul R. Krugman, a Princeton University professor and New York Times columnist known as much for his attacks on Bush Administration policies as for his academic achievements, was named the winner of the Nobel Prize in economics for his theories on global trade.

In the mid-80s Money Morning contributing editor Shah Gilani ran a hedge fund from the floor of the Chicago Board of Options Exchange Inc. As an independent market maker, he could trade in any pit on the floor. The most important lesson he learned there was how to play the crowd. It’s one of the four basic rules of contrarian investing.

U.S. stocks yesterday (Monday) staged their biggest rally since the Great Depression – with the Dow Jones Industrial Average soaring an all-time record 936 points – on a Federal Reserve-led push to flood the ailing global financial system with dollars and on a U.S. government plan to buy stakes in banks.

Governments across Europe yesterday (Monday) took the first step in a new, coordinated effort to subvert the widening credit crisis and restore functionality to the markets by guaranteeing new debt and using taxpayer money to bail out troubled lenders all over the continent.

Just one question… If, per Hank Paulson, “taxpayers” are going to own stock in financial companies, where do I sign up to get the dividend checks? OK, I concede that’s a lame attempt at humor, especially on a day when Paul Krugman wins the Nobel Prize in economics. Brings to mind what Tom Lehrer said 35 years ago about political satire becoming obsolete with Henry Kissinger winning the peace prize.

Italy yesterday (Thursday) became the third European country in two days to offer funds to at-risk banks in a bid to restore investor confidence, promote market stability and save its economy from a prolonged recession.