Meredith Whitney, the Oppenheimer & Co. (OPY) analyst famous for her prescient financial sector calls during the ongoing banking crisis, has downgraded Wachovia Corp. (WB) to “underperform,” saying prospects are “bleak” for shareholders of the Charlotte-based commercial bank.

The government has come to the rescue!

U.S. Treasury Secretary Hank Paulson has announced an emergency response plan to prevent troubled government-chartered mortgage firms Fannie Mae (FNM) and Freddie Mac (FRE) from facing a major liquidity crunch.

But what does it all mean for investors? That depends on your point of view. The further decline of the dollar, more banking failures as the fed’s money supply tightens, more burden on American taxpayers. Take your pick…

The reality is that regardless of how much money the US government pumps into Freddie and Fannie, the US financial system is in big trouble – and the sooner they face up to it, the better…

Canadian Solar Shines; Battle of the Trash Barons; Run on IndyMac; Bush Lifts Drilling Ban; New iPhone Sells 1 Million Units; Middle Eastern Airlines Dominate Airshow; Russian Oil Producers Miss Targets; Shell Buys Canada’s Duvernay

We’ve published a good deal about how contrarian investors can play the bear market.

Rick Pendergraft says careful selection is crucial. Brian Hunt thinks financial stocks could rally during earnings season. Keith Fitzgerald says the biggest returns come from the darkest days.

So far, nobody is calling an end to this bear market. In this extract from The Daily Reckoning Bill Bonner says there have only been four official bottoms in the last 108 years, and they’ve all happened when U.S. stocks were a hell of a lot cheaper than they are now…

Thrift lender IndyMac (IMB) has become the fifth U.S. bank to go belly up this year. It’s one of the the largest U.S. bank failures ever. This from MarketWatch:

The Federal Deposit Insurance Corp. said in a statement it will take over operations of IndyMac, which will open for business on Monday as IndyMac Federal Bank. The thrift – the fifth U.S. bank to fail so far this year — had total assets of $32.01 billion as of March 31.

Much of IndyMac’s business was built on Alt-A single family mortgages, which were often made to borrowers with poor credit.

Bill Bonner says the world as we know it is finished. We are entering a new era of inflation and dollar weakness, and it’s here to stay. Even T-bonds aren’t a safe haven anymore…