If there’s a proverb that captures the outlook for the U.S. economy in the New Year, it’s the one that says: “It’s always darkest before the dawn.”

A tentative Bush Administration plan aimed at keeping as many as three million homeowners who are behind on their mortgages from losing their houses will be difficult to administer, and could end up costing the country hundreds of billions of dollars more than the plan’s architects expect.

The Bush Administration is considering a plan that could keep as many as 3 million homeowners who are behind on their mortgages from losing their houses, The New York Times reported today (Thursday).

By relaxing the US financial system’s mark-to-market accounting standards, the government is effectively deactivating the financial “early warning system” that let investors know that a global credit crisis was brewing, says Jennifer Yousfi in Money Morning.

The markets haven’t exactly soared on the passing of the bailout bill. But Andrew Gordon says some firms are going to make huge profits from the bill.

Andrew says, “Real estate companies, hedge funds, and private-equity firms have raised tens of billions this year alone for the specific purpose of buying distressed debt. The bailout is about to kick off the biggest fire sale of real estate in US history.“

However, these firms may also inherit heaps of bad debt if they don’t do their research properly. There will be plenty of big losers for every big winner from this bailout.

Delinquency rates on single-family mortgages have reached their highest level on record (the Fed started tracking this statistic in 1991), dragging up the delinquency rate on all loans held by U.S. banks.

“Have we seen the worst from the financial sector?”The question - a very good one - came from an audience member following my global investing presentation at the Agora Wealth Symposium in Vancouver, British Columbia. During my entire time there, the interest in the ongoing credit crisis was intense.

I took a deep breath and launched into my three-point response.

First, I’m encouraged by what I see lately but still believe there is a fair distance to travel before all the skeletons are cleaned out of the financial sector’s closet.

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.…