Risk Takers return…  Bank of America gets more cash!  30-year mortgages below 5%!  Looking for direction… And Now… Today’s Pfennig!

Warning that the timing of an economic recovery is “highly uncertain,” Federal Reserve Chairman Ben S. Bernanke said yesterday (Tuesday) that an economic stimulus program might not be enough to do the job. Bernanke went on to say that the government might have to buy or guarantee banks’ toxic assets to revive growth.

In the currency market, the dollar stabilized against the euro after it pared back early losses that pushed the exchange rate past $1.43. Late Monday, the euro was trading at $1.4013 vs. $1.4065 on Friday.  As with other markets, the eyes of traders were on the deteriorating situation in the Middle East.

There is a growing body of data that suggests banks have recognized only a fraction of the overall potential losses – approximately $50 billion to $75 billion so far on subprime debt alone. And a variety of estimates suggest that total subprime losses may be more than $300 billion before we’re through.

Bank of American Corp. (BAC), which is getting $15 billion from the U.S. government as part of the Treasury Department’s $250 billion “recapitalization” effort, is doubling its stake in state-owned China Construction Bank Corp., and will hold a 20% stake worth $24 billion in China’s second-largest lender when that deal is finalized.

Executives from Detroit’s “Big Three” auto companies – General Motors Corp. (GM), Ford Motor Co. (F), and Chrysler LLC – yesterday (Tuesday) joined Congressional Democrats on Capitol Hill to make the case for an industry-wide bailout that could spare their troubled companies from totally collapsing. Detroit’s bigwigs have been met with considerable resistance so far, but will continue to make their case today and into the New Year.

Job losses begin to accelerate…  Currencies inch higher…  News of the weird…  China announces a stimulus plan!

Retail sales actually went up last month – how is that even possible?…The Beige Book says the U.S. economy is ‘generally weak’… The sky’s the limit for electronic money – but not so for real wealth…America’s money is snapping back… Calling into question the U.S.’s car culture…the next big thing in the search for an energy alternative…and more!

Has Federal Reserve chief Ben Bernanke suddenly turned into an inflation fighter? To my knowledge, Bernanke has never before stressed the dollar’s decline, the inflationary dangers it poses and his intention to guard against these as much as he did yesterday.

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