Tuesday, October 9, 2007 started as a nice day in New York City. A lovely early fall day, with the temperature still a balmy 80° at 2:00 in the morning. By evening, though, the temperature had dropped twenty degrees, the clouds had rolled in, there was thunder and rain. As with the weather, there were some hints of trouble here and there on Wall Street. But all in all, things could not have seemed better. Little did we know, the stormy end of 10/9/07 signaled a very large bubble that had just popped.

Auditors: GM Bankruptcy Necessary; Ford Plans to Reduce Debt by 40%; Wal-Mart Feb. Numbers Strong; Google Sitting on $8.6 Billion in Cash; Mortgage Delinquencies Hit Record High; Blockbuster Won’t File for Bankruptcy; Citigroup Shares Break the Buck; Oil Falls Below $44

The appetite for “Crystal Ball” predictions seems to be insatiable. Despite the fact that I am consistently wrong on the timing of my predictions, not the direction, I’m good at that, but when it happens, not so good, I have been asked to do another prediction article.

With a wheezing economy that’s struggling with housing and credit problems – as well as a weak dollar – it’s clear the United States won’t be in the investment spotlight this year.

In the first quarter, Goldman Sachs Group Inc. (GS) packed another $27 billion worth of illiquid assets onto its balance sheet – a 39% increase that brought the total to $96 billion.

“A full 3% of U.S. homes could go into foreclosure before the housing meltdown is over, according to a new report from the Pew Charitable Trusts,” says Dave Goingam.

“That’s 1 out of every 33. In Nevada, it’ll be more like 1 out of 11.”

“The forecast is based on data from the Mortgage Bankers Association and the Center for Responsible Lending.”

With the banking system going through a period of turmoil, the question of federal regulation will not be going away any time soon. Are market influences enough, or should the government be taking a closer look at how these banks do business.

Thomas G. Donlan’s new essay in Barron’s is titled “Lands of Waste and Debt” with the subhead “The states send signals that it will not be a happy Spring”, which makes me ask the obvious question “It won’t be happy for who?”, as I am all in gold, silver and oil, and I am dead-bang sure that I will be VERY happy for a long, long time…

George Soros first made a name for himself with The Quantum Fund, a hedge fund that’s often described as the first real global investment fund, which he and partner Jim Rogers founded in 1970.

Clearly, we can no longer believe U.S. banks when they claim to be done declaring multi-billion-dollar losses.