The FDIC is considering tapping its emergency line of credit with the Treasury. FDIC Chair Sheila Bair recently hinted after a speech at Georgetown University that all options are on the table when it comes time to replenish the dwindling Deposit Insurance Fund. We’ll find out more in the next few weeks after the FDIC board of directors meets.

Stock market bulls aren’t concerned about the inevitable acceleration in bank failures — at least for now. Even though deposits will be insured against loss, the loss of local banks will still have a depressing effect on hundreds of small communities. These communities are going to lose their only access to business credit when their local zombie banks — loaded with toxic construction or commercial real estate loans — are liquidated or merged into other weak banks.

Meanwhile, the latest monthly figures show that commercial bank balance sheets are shrinking at a fairly

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It’s no secret the market this past week has been having a hard time going anywhere — but we expected that. That being said, there is a lot of order to this week’s action and the action off the most recent peaks.

Should the markets follow the script I’m about to lay out below, we test the Blue support levels. Then, we can look for a bounce. This could be considered a tradable bounce, followed by a final move to those June breakout levels in the DOW near 8900 — 950 for the S&P 500.

For now, we’ll take it one step at a time..

This first chart tells you why Friday’s run stopped where it did:

Why? Because those are multiple resistance levels as shown above in the Red Line and the pink downtrend channel as well. Sure, it skirted the line, but we aren’t reading

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How do you say bubble in Mandarin?

Chinese property sales are up over 60% so far this year, the nation’s National Bureau of Statistics proclaimed yesterday. That puts the housing bubble here to shame. We’ve heard a bunch of nosebleed data points come outta there in the last few weeks… check these out:

New loan issuance has tripled in the first half of 2009, to $1.1 trillion. That’s more than half of the entire Chinese GDP over the same period. 95% of those loans went to state-owned enterprises or provincial entities The Shanghai Composite is up 79% year to date, the best major market performance in the world Stocks on the Shanghai Composite trade for 35.4 times earnings, double that of the MSCI Emerging Markets index M2 money supply rose over 28.5% in the first half of the year The seven largest bond sales in the world this year were domestic transactions in China.

Damn near everything is

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Quality Systems Inc. (Nasdaq: QSII): Stock of the Day

by David Fessler, Advisory Panelist

Lowering the Cost of Healthcare: Getting Rid of the Doctor’s Manila Folder

Walk into most doctors’ offices these days and you’ll see the crux of the problem: thousands upon thousands of manila folders, each containing a patient’s vital medical record history.

The manila folder is a relic that has its roots in the earliest days of medical record keeping. It’s standard procedure for many older physicians, who are still used to walking around with them, scribbling nearly illegible notes about their patient’s medical condition.

Talk about an antiquated and inefficient medical morass… I asked one of the administrators at my doctor’s facility why the office hadn’t gone to electronic record keeping.

“That’s a really good question,” and she then went on to describe

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So Then, Bonds for the Long Run? … P/E Ratios at 200? Really? … Mark-to-Market Slip Slides Away… Housing Sales Improve?  Not Hardly

Investors, we are told, demand a risk premium for investing in stocks rather than bonds. Without that extra return, why invest in risky stocks if you can get guaranteed returns in bonds? This week we look at a brilliantly done paper examining whether or not investors have gotten better returns from stocks over the really long run and not just the last ten years, when stocks have wandered in the wilderness.

This will not sit well with the buy and hope crowd, but the data is what the data is. Then we look at how bulls are spinning bad news into good and, if we have time, look at how you should analyze GDP numbers. Are we really down 6%? (Short answer: no.) It should make for

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US Treasuries are in a bubble, making them ripe for shorting. But that trade is too obvious, says Justice Litle. And the situation is more complex now that the Fed is getting involved. Bernanke & Co could support T-Bills in the medium term, but that will only increase the odds of an epic decline after.

This from Taipan Daily:

U.S. Treasuries look so lousy here that shorting them has become the “obvious” trade. But there is more to this mystery than meets the eye, as Justice explores…

Jim Grant nailed it in a recent Financial Times piece. Known for their “risk-free return” in more normal times, Grant observes that U.S. Treasuries (or USTs for short) now offer “return-free risk.”

Treasury buyers, in other words, choose to lend to Uncle Sam for free these days… or, worse still, to pay for the privilege. As 2008 draws to a close, USTs are an

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Warren Buffett says buy. Jeremy Grantham says it will get worse. Both are celebrated value investors. Who is right? It all depends upon your view of the third derivative of investing. Today we look at valuations in the stock market. This is the second part of a speech I have given in the past few weeks in California and Stockholm. I am updating the numbers, as the target keeps moving. 

While from one perspective things look rather difficult, from another there is a ray of hope. What can you expect to earn from stocks over the next five years? It should make for an interesting letter. Note: this will be a little longer than usual, but part of it is there are a LOT of charts.

I likened this to the economic situation we are in now. With consumer spending “resetting” to a new lower level, we are going to have to

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