US economic data releases make grim reading these days. Jobless claims hit their highest level for seven years in September. US factory orders tumbled 4% in August.

MarketWatch says recent data “make it all but certain that the academic economists will eventually declare that the economy is in a recession.”

Charles Delvalle says we are in a deflationary cycle that will only get worse as more credit is sucked out of the financial system. He recommends high-yielding corporate bonds for investors looking to avoid the stock market gloom.

– The Senate has passed a modified version of the $700 billion bailout bill Congress shot down on Monday. The bill passed 74 to 25.

– The bill passed by the Senate includes provisions to increase the FDIC’s bank deposit insurance limits and a $150.5 billion package tax cuts.

– Despite the passing of the bill in the upper house, US stock futures slipped this morning. MarketWatch reports that “S&P 500 futures fell 9.9 points to 1,158.50 and Nasdaq 100 futures dropped 5.5 points to 1,573.25. Dow industrial futures dropped 71 points.”

The $700 billion bailout is dead in the water. For now. Does this save working American’s tax dollars? Not according to Taipan Daily editor Justice Litle. In the absence of a bailout passing into law, Bernanke & Co will simply crank up the printing press and try to inflate the problem away. This is taxation by another means. It just doesn’t feel like it.

Tonight, the Senate will vote on a revised version of the bill Congress trashed on Monday.

Eric Roseman says the passing of the bill will not address the root of the banking crisis: asset price deflation. This could takes years to reverse; Japan is still suffering from the deflationary hangover of the real estate slump there in the late 1980s.

Eric says it’s difficult to see a bull market in US stocks in the near future. He recommends investing in assets that produce regular income… like high-quality corporate bonds.

– “The US may face its longest recession in a quarter century no matter what action Congress takes on Treasury Secretary Henry Paulson’s $700 billion plan to rescue the battered banking industry,” says Bloomberg. The US economy shrank in the third quarter, and “a further contraction is likely in the next two quarters … which would make the recession the longest since 1981-82.”

– After the biggest one-day point drop in history for the Dow US stock futures are pointing to a recovery today. “S&P 500 futures rose 25 points to 1,143.80 and Nasdaq 100 futures added 13.5 points to 1,525.50. Dow industrial futures rose 136 points,” reports MarketWatch.

Hank Paulson’s bailout bill is in the dustbin thanks to the 94 Democrats and 133 Republicans in Congress who voted against it.Congressman Ron Paul (Rep.) pretty much summed it up in his speech before the doomed bailout bill.

He put the blame for the current crisis firmly on the shoulders of the “managed economy,” “an inflationary system,” “corporatism” and “a special interest system.”

He also warned that promoting more and more US government intervention would have “disastrous” consequences for the global economy and the US dollar.

See for yourself…

The government gravy train is at full throttle. The “big three” automakers in Detroit don’t want to be left out. They’re close to snapping up a $25 billion bailout. It’s another nail in the coffin for the dollar, according to Smart Comodities UK editor Garry White. This will send gold prices into orbit.

The biggest financial bailout in history hangs in the balance today as House Republicans and Democrats lock horns over the small print.

Keith Fitz-Gerald says the political posturing and wrangling over the plan distracts from the key financial issues. Can America afford a $700 billion rescue package?

Keith says investors need to understand three keys points. A bailout will cause national debt to climb, the US inflation rate to soar and the US dollar to tank. Bottom line: Investors need to go overseas for growth and profits in the foreseeable future.

The $700bn Paulson Plan came unstuck at the 11th hour last night. Predictably, House Republicans and Democrats disagreed on the details of the bailout.

Andrew Snyder says campaign managers, not economic advisers, are now shaping the bailout plan. This is bad news for US stocks. The Dow Jones Index (DJI) opened 100 points down from Thursday’s close.

Andrew says investors need to go short to profit from this mess. Sportswear retailer Under Armour (NYSE:UA) is primed for a heavy fall. Andrew recommends buying the firm’s January 30 Puts (UAMF.X) to profit from a weak holiday season for retailers.

Gold prices have fluctuated wildly in the last week as jittery investors reacted to the meltdown in the financial markets and the government’s bailout proposals. Ed Bugos says gold’s fundamentals remain strong, however. He says the recent correction was a mistake by the market and that the outlook for rising inflation and a tumbling dollar makes a strong case for gold. Ed says investors should take advantage of short-term price dips to buy the shiny metal on the cheap.