The First of Two Parts.] Keith Fitz-Gerald Investment Director Money Morning/The Money Map Report VANCOUVER, B.C. – The U.S. financial crisis has cut so deep – and the government has taken on so much debt in misguided attempts to bail out such companies as Fannie Mae (FNM) and Freddie Mac (FRE) – that even larger financial shocks are still to come, global investing guru Jim Rogers said in an exclusive interview with Money Morning. Indeed, the U.S. financial debacle is now so ingrained – and a so-called “Super Crash” so likely – that most Americans alive today won’t be around by the time the last of this credit-market mess is finally cleared away – if it ever is, Rogers said. The end of this crisis “is a long way away,” Rogers said. “In fact, it may not be in our lifetimes.” During a ...

If you’ve been wondering why the dollar has rallied so sharply, then stop wondering. The kind folks over at the Wall Street Journal have framed up the situation rather well.

We’ve been keeping our Members up-to-speed on the relative game playing out in the currency market. Basically, even as the US economy fails to show any absolute improvement, the relative weakness from its competitors (primarily Europe and the United Kingdom) is driving their respective currencies lower and sending investment capital into the buck.

Here’s what we found over at WSJ online ... we we think it’s a nice little snapshot highlighting the broad, relative shift that’s moving in the US dollar’s favor:

The second quarter was a tough one for all the economies in the graphic at the left. Notice though how the US showed the best quarter-over-quarter GDP growth.

This shift lends itself to become a major influence on the currency markets

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By Jennifer Yousfi Managing Editor Mitsubishi UFJ Financial Group’s (ADR: MTU) $3 billion bid to obtain California’s UnionBanCal Corp. (UB) suffered a blow yesterday (Thursday) when a shareholder advisory committee determined the offer price was too low. “The proposed price does not reflect the strength of UnionBanCal’s strong capital position, the superior credit quality of its assets, and its potential for profitable asset and core deposit growth in the current market environment,” Richard Farman, chairman of the special committee said, The Financial Times reported. Soon after the $3 billion offer was announced, investors bid the share price higher. Shares closed at $65.46, yesterday, over $2 more than Mitsubishi’s offer price. The $63-a-share offer, “is not in the best interest of UnionBanCal’s minority stockholders,” the bank said in a statement. UnionBanCal’s majority stakeholder is, of course, Mitsubishi itself. The Japanese ...

Merrill Lynch CEO John Thain was interviewed after today’s market close by CNBC’s Maria Bartiromo.  Thain discussed the recent decision to sell distressed CDO’s for 22 cents on the dollar, raising more capital, his critics, and future prospects.

It is an excellent interview (see it all here),  Maria, as usual, has a deft balance.  Unlike many journalists who think they are themselves the story, she has a knack for keeping the focus on the subject.  She was respectful and engaging, but not soft.  She asked the tough questions.  She also offered Mr. Thain the opportunity to cover any point that might have been missed.  It was a fair opportunity to air the issues.

The CNBC headline writer, capturing the pervasive negative sentiment of recent times, called this Merrill’s Thain Won’t Rule Out Further Writedowns.  (This is what we …

guess it all depends on what you look for.

Analysts and the talking heads have largely chosen to ignore several key developments in their assessment that it’s time to buy financials stocks. As I mentioned in Monday’s essay, this current market rally, led by financials, was largely the work of the SEC crushing shorts. The icing on the cake for the “worst is over” crowd were better than expected results from Citigroup and Bank of America.

Setting aside the fact that most of these “better than expected” results came from smaller write-downs—a bogus reason given that most of the assets on these firms’ balance sheets are valued in-house (subjective), not by the market (more objective)—consider that all of these firms are still losing money. For instance, Citigroup announced a 29% decrease in revenue from 2Q07, write-downs of $7.2 billion, and a total …

Great article from Bloomberg.com about worldwide investors aremore than $1 trillion on a collapse in stock prices. Fun Fact: Even after a 90% rebound by Fannie Mae and a 75% surge by Freddie Mac in the final three days of trading last week, ...

By Martin Hutchinson Contributing Editor The bailout of mortgage giants Fannie Mae (FNM) and Freddie Mac (FRE) is extremely confusing to holders of their debt and equity securities, because it’s very difficult to figure out what the final outcome of the “rescue" might be, and if so, who benefits. However, as a service to Money Morning readers who are unfortunate enough to have been holding Fannie or Freddie paper, or to the venturesome few who wonder whether there is any among the debris, I thought I’d peer through the fog of uncertainty and try to figure out what the different classes of Fannie and Freddie securities may be worth. Tread Lightly and Bury a Big Debt Let’s start - gingerly - with the politics. It would be politically impossible to allow $5 trillion of mortgage debt to default, particularly since its ...

By Jennifer Yousfi Managing Editor Bank of America Corp. (BAC) shares soared today (Monday) as it followed Citigroup Inc.’s (C) lead to become the fourth large domestic bank to beat Wall Street’s earnings expectations and provide hope that the battered banking industry might finally be leaving the worst of the subprime mess behind. Bank of America shares were up an even $2, a gain of over 7%, to trade at $29.49 at 1:30 p.m. in New York. The share gains came after the Charlotte-based Bank of America announced that second-quarter profit dropped 41% to $3.41 billion or 72 cents per share from $5.76 billion, or $1.28, from the same period the year prior. Despite racking up its fourth consecutive quarter of declining profits, earnings beat analyst expectations. Bank of America joins other large U.S. banking industry firms such as JPMorgan ...

“The end is neigh” was what many despondent investors were starting to believe as the past week kicked off with volatile trading amid concerns that US regional bank IndyMac’s demise was a harbinger of many more bank failures.

Furthermore, Treasury Secretary Henry Paulson’s plan to rescue the Government Sponsored Enterprises (GSEs), Fannie Mae (FNM) and Freddie Mac (FRE), left investors unconvinced.

The US government plan caused some agitation since Paulson was essentially asking for a blank check to ensure the funding backstop would be successful in helping the GSEs fulfill their role of providing financing for the US mortgage market. Debt holders were happy with the implications of the plan, but equity holders faced the possible dilution from a government purchase of

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Citigroup today reported earnings that were”good” enough to allay Wall Street’s fear about the bank’s condition and the stock is currently up $1.53. The bank only lost $2.2 billion in the quarter or $0.49 per share. Revenues declined 49% to $18.65 billion. This was in an environment where  write-downs on credit losses totalled $11.7 billion and total assets under management fell. When a Wall Street firm announces a write down and a very short term later Wall Street is reporting they’ll announce another write-down, it would seem from a cursory glance that some financial intitutions have controlled how much write-downs they’ll claim for the quarter instead of just taking it all in one fell swoop. Should we wonder if they are tempering their losses as well? Bank of America reports next week and if they come out with positive earnings, one would really have to wonder. ...