Every solution has a cost, says Bill Bonner. And trying to solve this credit crisis could cost the government over $2 trillion a year. That why when the Fed says is it “going for broke” to avoid all-out financial collapse, it really means it.

This from The Daily Reckoning:

It’s war, remember. The feds are spending more on this war than on WWII. They’re ‘pulling out all the stops.’ They’re ‘throwing caution to the wind.’ They’re ‘riding hell for leather’ to rescue the US economy. Getting in their way is dangerous.

Investors should check their shorts. A major rally could be very costly. Stocks could easily bounce back half way to where they began. That would put the Dow at about 11,000. If that happens – and it could – don’t forget to sell.

It says in this [Monday] morning’s International Herald Tribune that the feds are “going for broke”

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It takes time to correct the errors of a 25-year bull market, says Bill Bonner. There is a dark valley to cross before the market can climb again. But the Fed and Treasury continue to try and stop the correction process. Bill says all they are likely to do is cause some spectacular damage.

This from Daily Reckoning:

Financial markets are part of public life. As a consequence they follow the rules of all public spectacles. That is, they are one part rational and sensible… one part incomprehensible… and one part pure humbug. You never know exactly which part it is you’re looking at.

But the markets are also moral, not mechanical. That is, they follow moral rules, such as – Thou Shalt Buy Low and Sell High… Thou Shalt Save Thy Money… Thou Shalt Not Speculate Unless Thou Knowest Exactly What Thou Art Doing.

Break those commandments… and you’re

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During the Great Depression, a spike in protectionism deepened the global crisis for many countries. Sara Nunnally says greater co-operation between Asian and Latin American states should prevent a similar mistake being made this year. It should also help keep some of these nations out of recession.

This from Taipan’s Emerging Markets blog:

Members of APEC, Asian-Pacific Economic Cooperation, ended their annual summits today in Lima, Peru. One of the main topics, besides the economic crisis, was free trade.

(By the way, APEC consists of member economies like China, Vietnam, the U.S., Canada, Russia, Peru, and Chile, among others.)

Free trade is a hot topic right now, with the dreaded “P” word floating about: protectionism. Protectionism is when governments restrict or restrain international trade. Most times the intent is to protect local markets from competition.

Like if the U.S. government says a tomato farmer in Mexico can no longer export

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Japan, the world’s second largest economy, officially entered into a recession in the third quarter, as growth shrank at an annualized rate of 0.4% after posting a second-quarter contraction of 3.7%. Japan’s downturn is worse than many economists had expected and could worsen, as consumers in the United States continue to retrench. “Downside risks to the economy are growing further,” Kaoru Yosano, Japan’s finance minister, told reporters. “Japan is in a very serious situation.” Japan’s domestic economy remains weak with declining wages and rising unemployment. But the greater danger is a sharp drop in exports, especially to the United States. Net exports shaved 0.2% off of growth, as imports outweighed a slight increase in overseas shipments. Exports rose just 0.7% in the third quarter, less than the 1.2% forecast. Meanwhile, imports climbed 1.9%, as the cost of oil spiked in the July-September period....

This week is shaping up to be another active one on the bailout-and-financing front. First and foremost, Congress returns to work this week to consider a once-unthinkable proposal: Put up billions in taxpayer-backed loans so that Detroit’s “Big Three” can be saved. Expect a fight, however, as the bailout debate finally moves past banks to focus on General Motors Corp. (GM), Ford Motor Co. (F), and Chrysler Corp.

The situation is dire. GM is burning through cash at a pace that could mean bankruptcy, and all three players are struggling with high costs, weak vehicle sales, frozen credit lines and dwindling cash reserves calling into question whether they can survive much longer without government help. The answer, of course, is that they probably can’t.

But it’s here that the debate turns political, the Detroit Free Press reports. Congressional Democrats are pushing for some form

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The election of Barack Obama does not change America’s fundamental economic flaws, says Bill Bonner. The slump caused by too much debt will continue. And a US dollar crash caused by reckless money printing is still just around the corner.

This from The Daily Reckoning:

America’s voters spoke yesterday [Tuesday]. And they said “Give us Obama.” And it came to pass that the man called Obama was given unto them.

“America is a place where all things are possible,” said the man himself in his victory speech.

And yes, it is possible for a half-black man to be elected. But no, all things are not possible. It is not still not possible to get rich by spending money. Nor is it possible to save a man from too much debt by giving him more credit. And you still can’t trust a politician… or his money.

The election “changed everything,” shouts the

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Back in mid-October, Samuel Charap and Andrew Kuchins published a thoughtful op/ed piece in the International Herald Tribune entitled "Russia's Peace Offensive," which argued that there were signs that Dmitry Medvedev was striving for a more cooperative tone during his speech at Evian, signaling the beginning of a campaign to thaw the recent freeze in relations with the West. Perhaps somewhat preemptively, the authors conclude "Now that the Russians have apparently realized that their national interests lie in greater cooperation, and not confrontation, with the West, it is time to reach out to the Russians." I have some nitpicking problems with this breezy reasoning about what Russia realizes and doesn't realize, but Charap and Kuchins were certainly right about one thing: the Kremlin would very much like to play good cop for a while to ease the reputational damage caused by the ...

Exxon Mobil Corp. (XOM) set a U.S. profit record today (Thursday) when it announced its third quarter profit topped $14.8 billion on record-high oil prices.

Exxon Mobil, the largest U.S. oil company, earned $14.8 billion, or $2.86 per share, a 58% increase from the $9.41 billion, or $1.70 per share it earned in the third quarter of 2007. Exxon Mobil’s record-setting profit was enough to beat analyst expectations of $2.38 a share, according FactSet Research data.

Exxon Mobil beat its own record for the largest quarterly profit for a U.S. company, which it had previously set in the second quarter of 2008 with a gain of $11.68 billion.

Royal Dutch Shell PLC (ADR: RDS.A, RDS.B) also announced third quarter earnings today, beating Bloomberg’s average analyst estimates. Europe’s largest oil company saw a 22% increase in profit to $8.45 billion from $6.9 billion in the same period the

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Short-sellers scrambling for cover sent shares of Volkswagen AG (OTC ADR: VLKAY) rocketing up more than $1,000 each Tuesday, to briefly give the German automaker the most valuable market capitalization in the world.

Volkswagen’s Frankfurt-traded shares soared as high as $1,258 (1,005 euros) before closing at $1,186 (918 euros) yesterday.

On Monday, Porsche SE (PINK: POAHF) announced it had acquired options on 31.5% of Volkswagen’s stock, in addition to the 42.6% direct stake it already controlled. With the German state of Lower Saxony controlling another 20.2% of Volkswagen stock, that left a very small amount of shares available for short-sellers who had bet on a decline in Volkswagen’s share price - given the poor outlook for the global auto industry - to cover their “short” positions.

“We’re getting a sense of the Sturm und Drang in the markets now,” Michael Holland, the manager of Holland & Co., an investment management firm,

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Short-sellers scrambling for cover sent shares of Volkswagen AG (OTC ADR: VLKAY) rocketing up more than $1,000 each yesterday (Tuesday), to briefly give the German automaker the most valuable market capitalization in the world. Volkswagen’s Frankfurt-traded shares soared as high as $1,258 (1,005 euros) before closing at $1,186 (918 euros) yesterday. On Monday, Porsche SE (PINK: POAHF) announced it had acquired options on 31.5% of Volkswagen’s stock, in addition to the 42.6% direct stake it already controlled. With the German state of Lower Saxony controlling another 20.2% of Volkswagen stock, that left a very small amount of shares available for short-sellers who had bet on a decline in Volkswagen’s share price - given the poor outlook for the global auto industry - to cover their "short" positions. "We’re getting a sense of the Sturm und Drang in the markets ...